What lies ahead in 2003? Your guess is as good as ours, which is why it really gets our goat when "experts" claim they can predict the future.
BusinessWeek's annual "Where to Invest" feature has Bill Mann all wound up today. He takes a look at the magazine's previous market forecasts and concludes that, yep, even BusinessWeek can't predict the future.
The truth? No one can consistently guess market direction. So what's a Fool to do? Identify individual businesses exhibiting growth and value. You don't need projections or gurus -- you need the tools necessary to make educated, smart decisions.
We resolve to continue offering those tools in 2003. Thanks for making us your trusted destination for financial resources.
In today's Motley Fool Take:
- Cut Bait Before 2003
- Quote of Note
- Kimberly-Clark Settles Suit
- Discussion Board of the Day: Current Events
- Quick Takes: T. Rowe Price, eBay, Lockheed Martin , Pepsi, more
- And Finally...
Letting go is hard to do, even if it's with a losing stock. Unfortunately, this psychological drive to make every stock a "winner" tends to be a money-losing proposition. As you do your year-end portfolio review, consider the following three factors that favor booting your dogs.
First, your losers tend to remain losers, while your winners tend to remain winners. Such was the conclusion of Terrance Odean, a finance professor at the University of California, who in 1998 published a report entitled, "Are Investors Reluctant to Realize Their Losses?" Odean studied the trading records of 10,000 investors and found that individuals tend to hold their losers too long and sell their winners too soon. Over periods of one and two years, the winner stocks that were sold tended to outperform the loser stocks that were held -- by an average of about three percentage points in each time period.
Second, perish the idea that selling equates "giving up." Think, rather, of selling as "taking a timeout." If a stock falls a material level from your purchase price -- say, 20% -- you may want to automatically take a timeout. Once you're on the sidelines, you'll be free from the emotional baggage of owning the stock, thereby enabling you to objectively reevaluate the company and any issues weighing on the stock. If, after a thorough review, the stock still seems attractive, you can always repurchase. No harm done, and you may in fact have prevented much larger losses. Also, in a taxable account, as long as you don't repurchase within 31 days, the taxable loss can be used to offset other gains.
Third and finally, Uncle Sam offers some nifty incentives for selling your losers. These losses, whether short or long term, can be used to offset gains up to $3,000. If you're in the 27% bracket, selling enough loser shares to generate a $3,000 loss will save you about $810 in taxes. (That's just one of several portfolio-pruning tax tips.)
Yes, it's tough to say goodbye to a stock that initially showed so much promise. But if you keep the above three factors in mind, it'll help you overcome the emotional pull of those puppy dog whines.
"A preoccupation with the future not only prevents us from seeing the present as it is but often prompts us to rearrange the past." -- Eric Hoffer (1902-1983), The Passionate State of Mind
The paper-goods giant announced it has settled a pair of lawsuits stemming from the Safeskin acquisition. The all-stock deal completed back in 2000 was tax-free, but taxing allegations soon surfaced that Safeskin's directors weren't acting in the company's best interest to maximize shareholder value. While these kinds of class-action lawsuits are common, and more often the work of sour grapes, Safeskin investors had a right to expect more.
Kimberly-Clark's proposed purchase price was a third less than what the shares were fetching just months earlier, before Safeskin got rocked after restating its 1998 results. Sure, like a pricked glove, the company was damaged goods after that. Still, BT Alex Brown issued a report stating that even in the worst of cases, the company would still be worth between $15 and $19 a share in a buyout situation. Kimberly-Clark offered closer to $13 in the stock deal, and Safeskin didn't hold out for higher bids or shore up operations to command a higher ransom later.
In retrospect, the $55 million settlement may be a cheap price to pay for Kimberly-Clark to lay the securities and shareholder derivative lawsuits to rest. It's just a buck more for each of the 55 million Safeskin shares outstanding, and the company will only take a $21 million pre-tax charge -- or just $0.03 a share -- as its insurance will cover the bulk of the settlement.
For a company that prides itself on owning the top brands in its conglomerate empire, it's little more than a slap on the wrist for the right to own the top dog in the $3 billion disposable glove market.
Are class-action lawsuits good or bad for the corporate landscape? While it's been four years since we covered the topic in a Dueling Fools feature, is the practice still relevant today? All this and more -- in the Current Events discussion board. Only on Fool.com.
From stockings to stocks, investors got into the holiday spirit by loading up on stock mutual funds. Trim Tabs reports that equity funds experienced an inflow of $300 million over the past week. That follows outflows of $4.2 billion the week before. Is it just market timers looking to cash in on a historically bullish seasonal trend this time of year, or are investors creeping back in for keeps? Investors in publicly traded mutual fund companies like Stilwell Financial
If you blinked, you may have missed it, but eBay
Defense contractor Lockheed Martin
But Lockheed has no say in the Cola Wars, where Pepsi
Today on Fool.com: Bill Mann says BusinessWeek has it all wrong and offers his own suggestions for 2003.... In Fool's School, why layouts can be a good thing for companies.... You've got less than a week to get your 2002 taxes in order. We can help.... And the Post of the Day: Santa came to town.
Bob Bobala, Robert Brokamp, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim
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