War... War... What's it good for? Absolutely nothing, but the fear of it whacked 200 points off the Dow today as President Bush made the case for invading Iraq at the United Nations.
Meanwhile, Fed Chief Alan Greenspan argued for tighter government spending and balanced budgets before the House Budget Committee. To top it off, the government released figures indicating that first-time jobless claims hit a three-month high. The end result: Investors were ill at ease and the major indices as well as the FOOL 50 fell more than 2%.
In today's Motley Fool Take:
- McDonald's Grimaces at Outlook
- Discussion Board of the Day : McDonald's
- Quote of Note
- Eight Commandments of Credit
- Shameless Plug: Money Advisor
- Execs Charged With Looting Millions
- Quick Takes: Bayer , AOL Time Warner , Georgia-Pacific , more
- And Finally...
Growth has stalled so much that you'll be lucky to next year match the $2 billion you earned in 2000. You're trying to sweet talk franchisees into a new dollar menu, leading folks to believe you've gone from a market leader to an industry copycat. You're talking about lowering the fat content in your frying oil, only you're forgetting that nobody wanted the McLean Deluxe, and that you might be messing with your french-fry faithful.
On our McDonald's discussion board, msurel probably said it best. "Why can't we all just admit to ourselves that McDonald's food is garbage and have the occasional burger and fries because we like the way they taste?"
This was supposed to be a recession-resilient company, stuffing the face of the bargain-seeking hungry, complete with a perpetual drive-through caravan. But that hasn't been the case, with the company's super-sized struggles to compete.
McDonald's, over the past few years, has shown a tendency to shoot itself in the foot every time it announces a refocus. Remember the Arch Deluxe? How about the "Made For You" campaign? These haven't just been failures, they've been financial disasters, costing hundreds of millions of dollars and burning goodwill from its franchisee system and its customers.
It's not an industry thing because Wendy's
Will remodeling older units and the new value menu rollout help the company gain market share or shed profit margins? It's probably going to get worse before it gets better. In the near term, like its burgers, McDonald's appears to be fried.
Did you enjoy the company's summertime menu? What must the company do to stay on top and are there lessons to be learned from Wendy's and Burger King? What exactly is Grimace anyway? All this and more -- in the McDonald's discussion board. Only on Fool.com.
"Above all things, never be afraid. The enemy who forces you to retreat is himself afraid of you at that very moment." -- André Maurois, novelist and biographer (1885-1967)
It's the most widely available financial product available. More than 80% of households have at least one credit card. And if you dare to classify yourself as "average," you've got about eight charge cards currently demagnetizing themselves in your wallet.
To bolster your standing as an upstanding citizen of the world of plastic money, follow these Fool's Rules of credit management.
1. A credit card is just that -- a credit card. You have been deemed creditworthy by some entity (Target, Visa, The Puppy Palace) that is willing to let you borrow money for a short period of time. Though your credit limit may add up to $34,538, that's not how much money you have to your name. (See also: "I still have checks, so I must have more money to spend.")
2. Ignore bankers' rules on what is an "acceptable" level of debt. Your debt-to-income ratio is the measure of how much debt you carry to how much money (after taxes) you have coming in. In the world of lending, it's acceptable to carry 25% of your income in debt. Consider this example, though:
Total credit card debt: $6,437
Total after-tax annual income: $30,000
Debt-to-income ratio: 6,437/30,000 = 21.4%
A 21.4% debt-to-income ratio is awfully high, in our opinion. The ideal number is zero. But at the very least, you want to keep your debt -- including car loans -- to 15% or less of your after-tax income.
3. Don't pay by their rules. The "minimum amount due" is cleverly calculated to keep you beholden to The Man for your entire adult life. A $4,500 balance will take 44 years to pay off, even if you don' t put another dime on the card. Oh, and the interest you'll pay on that loan? A cool 17 grand.
4. Play the system. Remember, you're the customer. Do you want a lower interest rate? Sick of paying an annual fee? Uninterested in paying the $35 late payment fee -- and swear that it won't happen again (at least in the next six months)? Just ask! Your lender would rather keep you as a customer than shell out (anywhere from $50 to $150) to acquire a new customer. Use your leverage.
5. When you get into trouble, stop charging. If you find yourself struggling to make even the minimum payments on your credit cards, stop, drop, and roll. (This advice works well if you happen to catch on fire, too.) Stop charging. Drop your spending. And roll your balance over to a credit card that charges a lower interest rate. And then pay it off with fervor. Lather, rinse, and repeat.
6. See yourself through others' eyes. You have the power to see how you rate in the eyes of the banking world. Your credit report (provided by three major reporting agencies) and your credit score (a three-digit number that lenders use as your credit GPA) is at your fingertips. Check out what's there to make sure your record is an accurate reflection of your borrowing ways.
7. Carry just what you need. Most people need only one or two credit cards: one for purchases they pay off each month, and another for emergencies (or business purposes). Any more than that is usually overkill. If you consolidate your spending on one card, consider getting a "rewards" card where you earn miles, points for stuff, or cash back on your spending.
8. Teach your children well. A totally cashless society is becoming less futuristic every day. If you have any critters, let them know that the shiny plastic card represents only the amount of money you have to spend on Barbies and Barney.
The best person to make any decisions about your money is you. And to help you with those decisions, we offer TMF Money Advisor. The service includes access to a financial advisor, our crash courses, self-paced online seminars, a monthly letter from our co-founders, your own online planning tool, Fool product discounts, and, yes, you guessed it, full access to The Motley Fool's discussion boards. Be the maestro of your own money! Sign up today and get our Choosing Stocks With The Motley Fool online seminar free!
Things got much deeper today for former Tyco
The accusations are staggering. Kozlowski and Swartz allegedly schemed to steal $170 million from Tyco, while gaining over $400 million in fraudulent stock sales. According to Stephen Cutler, the SEC's director of enforcement, the three executives "treated Tyco as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors."
The company itself has filed charges against Kozlowski in an attempt to get some of the money back. "Kozlowski was in charge of the enterprise," said Manhattan District Attorney Robert Morgenthau, "and looted the company by granting himself and others excess compensation."
As we mentioned a couple of days ago, thieving, looting executives have a far greater effect on the markets than terrorists. With today's indictments, at least we're seeing some of the alleged criminals being held accountable for their actions.
German-based drug maker Bayer
Federal Reserve Chairman Alan Greenspan reportedly told Congress today that although the economy has withstood shocks well over the last year, "Returning to a fiscal climate of continuous large [governmental] deficits would risk returning to an era of high interest rates, low levels of investment, and slower growth of productivity." For a view of the Fed's role in increasing credit risk to the economy, see today's Is a Crash Coming?
New America Online CEO Jonathan Miller began his overhaul of AOL Time Warner's
Lumber and paper products company Georgia-Pacific
Today on Fool.com: Forecaster Robert Prechter says watch out for a crash.... Drip explains price-to-free cash flow ratio.... What's a bond guy doing making stock predictions?... And in Fool's School, is pro forma useful?
Bob Bobala, Robert Brokamp, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Jackie Ross, Reggie Santiago, Dayana Yochim