The indexes plunged more than 3% after a "tough day" for coalition forces in Operation Iraqi Freedom signaled the conflict may take longer than Americans expected.

Financial publications sent conflicting messages, some from one page to the next, about the short- and long-term effects of war on the markets, reaffirming what the Fool has always said about the irresponsibility and impossibility of market timing.

Our economy has been struggling for a variety of reasons, many of which will still exist when the conflict with Iraq has subsided. Bill Mann reminds investors that companies make up our market, not geopolitical events. So, while the indexes may ebb and flow with each news story, investors should avoid the unpredictable waves and continue to look for solid companies with strong potential for growth.

President Bush said his war plan doesn't change with every development. Nor should investors'.

In today's Motley Fool Take:

Too Late to Buy a Home?

The stock market wasn't the only thing rocketing higher last week. According to's national survey, mortgage rates shot up by nearly a quarter percent over the past few trading days.

With the 30-year fixed-rate average gaining 22 basis points to 5.92%, and the 15-year option tacking on 23 basis points to 5.25%, one has to wonder if the window to buy or refinance a home has closed for good.

With rates hitting levels unseen since the 1950s this month, it may have been naïve to expect borrowing costs to get much lower. Besides, a year ago, 30-year fixed mortgages were going for an average of 7.1%. The window is still open. It's just not as wide as it was two weeks ago.

Home hunters may not feel much of an impact, if real estate prices inch lower as rates inch higher. Realtors commanded hefty property prices when the mortgage dollar stretched farther. If the interest-rate tide is, in fact, changing without a rebounding economy, we might have another bubble burst on our hands -- this time, in the real estate sector.

However, the rules are different for those simply looking to refinance their homes. The monthly savings of lower mortgage payments are immediate, while the principal balance remains the same. A buoyant market may have meant higher assessed values from which to borrow to build that white picket fence and wraparound porch, but the savings are still real if you originally financed at higher rates.

So, don't fret a closing window. Crunch the numbers, and if the view looks good, go for it.

Discussion Board of the Day: Buying or Selling a Home

Does the recent uptick in borrowing costs find you rushing to our Home Center to learn how to lock into low rates? Are you looking to make a move? Want to learn more about the state of real estate? All this and more -- in the Buying or Selling a Home Discussion Board. Only on

AOL Turns On Broadband

The Oscars are the Superbowl of award shows, and that's the likely reason AOL Time Warner(NYSE: AOL) decided to unveil its latest sexy advertising effort during the telecast last night.

Viewers were treated to an image of a satiated, negligee-clad Sharon Stone lying in bed, enticing her unseen visitor to stick around for a while. Cut to AOL's little yellow Instant Messenger running man and the new slogan for the campaign, "Welcome to the World Wide Wow."

Cute and clever, yes. Effective? Well, we'll just have to wait and see. AOL, spending $35 million on the six-week campaign, is definitely hoping for the best.

The spots support the new add-on service "AOL for Broadband," which rolls out March 31. As Internet users switch from slow dialup connections to speedy broadband hookups in ever-increasing numbers, AOL hopes its 27 million subscribers don't abandon ship. It needs to remain competitive with current, stripped-bare broadband offerings from companies like Comcast(Nasdaq: CMCSA).

The new service will cost $9.95 a month for existing subscribers, and will offer broadband goodies like music and video downloads. For traveling or other times when the customer is away from the broadband connection, the add-on will offer five hours of dial-up use. Non-subscribers will have to pony up $14.95 for the service.

Around 16 million American households currently shell out between $40 and $60 a month for high-speed Internet, either through a cable modem or digital subscriber line (DSL). AOL's new service and the charges for it would be piled on top of those fees. While that may seem prohibitively expensive, the ability to keep a long-standing email address plus the broadband extras may just do the trick. Plus, having a few dialup hours a month for traveling is a good bonus.

We won't know if AOL's broadband push is working until the company's second quarter, given the timing of the rollout. However, for a company long on trouble and short on luck, "AOL for Broadband" may just be the beacon of hope it needs.

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IBM's Stock Option Dance

An intrepid reader sent us a note about a shareholder proposal in IBM's(NYSE: IBM) most recent proxy statement, which would require the company to expense its stock options.

IBM's board of directors is "unanimously opposed" to the proposal, which is interesting because one of the board members is Ken Chenault, CEO of American Express(NYSE: AXP). This past year, AmEx elected to expense options. Must be one of those instances that Warren Buffett recently referred to as "boardroom culture" trumping actual protection of shareholder interests.

IBM's reasons for opposing the proposal are telling. First and foremost is the fact that IBM follows Generally Accepted Accounting Practices (GAAP) by having a footnote that describes the effect of options. What IBM does NOT say is that GAAP calls expensing of options "accounting best practices," so while companies are given the choice whether to expense or not, by not expensing they are electing to go a route that is less than best.

IBM claims to be awaiting the outcome of current discussions at the Financial Accounting Standards Board (FASB) as to whether to require options expensing. Apparently the fact that FASB has already declared expensing using current models an improvement on listing their economic cost at "zero" is not sufficient.

Last year, IBM gave out nearly 60 million options, more than 3.4% of total shares outstanding, significantly higher than its awards the previous two years. IBM has also allocated hundreds of millions in shareholder equity to buy back shares on the open market, essentially allocating shareholder money to offset the dilutive effect of these options. IBM is hardly an abuser of stock options, but its shareholders deserve significantly better than such a lame fob-off of a substantial issue.

Dear IBM shareholders: Your board of directors urge you to vote against this proposal. We urge you to vote "FOR."

Quote of Note

"America goes not abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own. She will recommend the general cause by the countenance of her voice and the benignant sympathy of her example. She well knows that by once enlisting under other banners than her own, she would involve herself beyond the power of extrication, in all the wars and interest and intrigue, of individual avarice, envy, and ambition, which assumed the colors and usurped the standards of freedom.... She might become the dictatress of the world. She would no longer be the ruler of her own spirit." -- John Quincy Adams

Quick Takes

The Wall Street Journal reports, "it was business almost as usual" at America's malls, car dealerships, and real estate offices this weekend, meaning there's no convincing evidence of a "CNN effect," where consumers stay glued to their TV sets instead of, well, consuming. Wal-Mart(NYSE: WMT) reported strong sales and reaffirmed its forecast for the month. Even those with weaker sales, such as Federated Department Stores(NYSE: FD) and J.C. Penney(NYSE: JCP), said things weren't as bad as they thought.

Shares of Altria(NYSE: MO) were off 5% this morning after winding up on the wrong side of a $10 billion court ruling. An Illinois judge said Friday the company's Philip Morris unit deceived smokers by marketing "light" cigarettes as having less tar and nicotine, even though it knew they were no safer than regular cigarettes.

Starwood Hotels & Resorts Worldwide (NYSE: HOT) plunged over 10% after it withdrew first-quarter and full-year guidance. The operator of more than 750 hotels in 80 countries said the war in Iraq has caused "significant deterioration in business" and has obscured its ability to forecast earnings.

In local news, Japanese Magnolia trees are just beginning to bloom across the county, providing residents a quiet lift as they commute to school and work.

And Finally...

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Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim