What do Ben and J. Lo's wedding and the California recall election have in common? Both have been called "hurried and constitutionally infirm" and put on hold.
OK, we really don't give a care about Ben-Lo, but California -- California we are starting to get worried about. Only today did a federal appeals court call a halt to preparations for the Oct. 7 recall.
On the one hand, we want to ask how it could have possibly taken this long for reason to thrust itself into the race. On the other hand, the California farce has at least been a distraction from accounting scandals and improprieties on Wall Street. Maybe Gary Coleman and Arnold can run for chairman of the New York Stock Exchange once Dick Grasso is out.
In today's Motley Fool Take:
- Four Funds to Avoid
- Quote of Note
- Motorola Dials Up Microsoft
- Shameless Plug: Motley Fool Stock Advisor
- The Coming Job Boom
- Discussion Board of the Day: Buying or Selling a Home
- And Finally...
Four Funds to Avoid
By Rex Moore (TMF Orangeblood)
The mutual fund families named in New York Attorney General Eliot Spitzer's probe of illegal trading practices may be in far more trouble than they first thought. Morningstar, the influential Chicago outfit that rates funds and offers advice, has taken a hard line and urged investors to sell out of these families.
"If Spitzer's allegations prove true," it writes, "it's a clear indication that all four fund firms were willing to put their companies' own profitability ahead of the interests of their fund shareholders."
Here's Morningstar's analysis on the four firms' breakdown:
-
Bank of America
(NYSE: BAC)
-- Advises investors to avoid BofA's Nations Funds unit, which, if Spitzer's charges are true, exhibited "a serious breakdown of compliance and a culture that placed sales ahead of fund shareholders."
-
Janus
(NYSE: JNS)
-- "What has soured our stomachs with Janus in particular is that the firm already had two major strikes against it: poor bear-market performance and noteworthy management departures. This ethical breach is the third strike against it. Three strikes, you're out."
-
Bank One
(NYSE: ONE)
-- Advises investors to sell all One Group funds "until Bank One can get to the bottom of this apparent breach of duty and demonstrate that it can be a reliable steward of investors' savings."
- Strong -- Spitzer's charges just add to reasons to avoid Strong. "First, performance at the shop has been mediocre, particularly on the equity front." Strong also has had trouble keeping costs under control, and has undergone several manager changes.
You can bet that each of these fund families is gravely concerned about how much all this is going to cost them. I've been corresponding with a Fool reader who said he was going to sell his Janus funds, and was even thinking about terminating his Bank of America bank account. He asked the company, "If you can't respect SEC laws, or at least look out for your investors, how can the banking client expect you to respect FDIC laws and look out for your depositors?" Here's part of the BofA reply to him:
"Finally, I want to emphasize that our company has not been charged with anything. Nevertheless, our primary concern is our reputation. [CEO Ken] Lewis expects every employee to put the customers' interest first and has said that those who 'violate that trust' will have to go... Give us a little more time, and judge us by what we ultimately do."
What they and the other three fund families do better be convincing.
Quote of Note
"It's the most important decision I've had to make since 1978 when I decided to get a bikini wax." -- Arnold Schwarzenegger, on his running for California governor
Motorola Dials Up Microsoft
When Motorola(NYSE: MOT) announced late last month that it was selling its 19% stake in operating software conglomerate Symbian to fellow investors Nokia(NYSE: NOK) and Psion, speculation ramped up that it would join with Microsoft(Nasdaq: MSFT) to introduce new "smartphones."
After all, the world's largest software company wanted entry into the growing cellular phone software market, and the world's second-largest cell phone maker wanted additional means to differentiate itself from industry-leader Nokia. Sounds like a match, right?
Today, the parties made it official, with the marriage resulting in the MPx200 smartphone. The Motorola-branded, Windows-enhanced phone will be released and distributed in the U.S. this fall by AT&T Wireless(NYSE: AWE), and in Europe through the French wireless firm Orange.
Hoping to capitalize on Microsoft's desktop dominance, the new phones will come loaded with versions of Windows Outlook, Internet Explorer, and Media Player. They'll also have a memory card with expandable memory up to 1 GB.
Busy professionals will be able to quickly and easily sync up their cell phones with their computers to handle contacts, emails, or appointments. They'll also be able to download video clips or music, should they want more entertainment and less work stuff available on their handsets.
For Microsoft, the alliance marks an important move into a growing business segment. It's been wanting into the cell phone applications market for years, but largely shut out by Nokia and others.
It's a positive development for Motorola, too, though the company isn't going "all Windows all the time." It will keep making handsets with other operating systems, as well.
Shameless Plug: Motley Fool Stock Advisor
If you're interested in advice that's geared toward average investors instead of rich hotshots, check out David and Tom Gardner's newsletter, Motley Fool Stock Advisor. Each issue features a Tom and David tête-à-tête, during which they explain their stock ideas.
The Coming Job Boom
Weekly new jobless claims have exceeded 400,000 for more than five months, underperforming even amidst speculation of an economic recovery, but the ailing labor market didn't stop Business 2.0 magazine from titling its September cover story, "A Job Boom is Coming."
The article argues that within two years a skilled labor shortage will begin as the first baby boomers start to reach retirement age, and by 2010, the country's labor shortage will become acute. As a wide swath of the workforce nears retirement, the size of the college-educated employee pool is on track to actually stagnate in the next few decades, rather than grow sharply as it had since the 1950s.
As soon as this decade, the article posits, the labor shortage of the 1990s will look like "a minor irritation" compared to the skilled labor shortage that will befall companies. By 2010, analysts in the article estimate a 5.3 million skilled-employee labor "gap," and the shortfall is estimated to balloon to 21 million by 2020.
Economists aren't alone in tolling the warning bell. Companies as diverse as Intel(Nasdaq: INTC), Sprint(NYSE: PCS), Whirlpool(NYSE: WHR), and others (including the largest job-placement firm in the world), told Business 2.0 they fear "that the supply of labor is about to fall seriously short of demand." Larry Summers, a former Treasury secretary and the current Harvard president, regards a skilled labor shortage as "all but inevitable."
Sprint went on to point out that half of its 6,000 field and network technicians are older than 50, while at Cigna(NYSE: CI), about a quarter of its 3,400 information technology (IT) workers will surpass 55 years of age in the next six years.
Today's 6.2% unemployment rate is the country's highest in nine years, making warning calls of a coming labor shortage ring hollow to many. But baby boomers -- the country's largest generation -- make up nearly 60% of the primary workforce, and the number of workers coming up behind them is not nearly big enough to fill the giant gap they'll leave as they retire.
Unless most baby boomers work longer into retirement years, a labor shortage (especially in skilled technology and medical fields, Business 2.0 argues), may be much closer than you think.
Discussion Board of the Day: Buying or Selling a Home
You probably know that our Home Center is an excellent resource to gauge the housing market and go over the various financing options, but have higher rates scared you away? Do you think mortgage rates will rise or fall over the next year? All this and more -- in the Buying or Selling a Home discussion board. Only on Fool.com.
And Finally...
Today on Fool.com: As the East Coast prepares for Hurricane Isabel, what's an investor to do? We have answers.... Meanwhile, on drier land, Mathew Emmert is Banking on Small Banks, Footstar trips up, and the Stent Wars rage on between Boston Scientific and J&J.... And if you're in the mood for a Fool classic (cue the love songs and light the candles), check out Check That Proxy.
Contributors:
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim
