Ever considered taking investing advice from your U.S. senator? We haven't either, but a recent study done for the Journal of Financial and Quantitative Analysis makes the case that our senators may be doing all right for themselves in the market.
A mock portfolio that mimicked stock purchases of 62 senators who invested in stocks from 1993-1998 showed our erstwhile representatives besting the stock market by a total of 0.85% per month. A portfolio containing the stocks senators sold would have trailed the market by 0.12% per month.
That's not bad. One can only wonder how well they would have done if they had The Motley Fool's best stock picks each and every month.
In today's Motley Fool Take:
- AOL: You've Got Bills!
- Discussion Board of the Day: Time Warner
- Leapin' Lehman!
- Shameless Plug: TMF Money Advisor
- 3M Makes More Money
- Quote of Note
- More on Fool.com Today
By Alyce Lomax (TMF Lomax)
Has Time Warner's
Do you pay a whole bunch of bills online, keying onto different websites with different user names and passwords? Through the proposed AOL services, users will be able to aggregate all such bills (at least, from the companies that allow them to pay online) through their AOL account. They'll receive email alerts when bills come due, for example, and the service will retain sites and the passwords for easy payment surfing.
Of course, I don't really think that the service will literally proclaim in a loud voice that "You've got bills!" -- I was just joking on that aspect (talk about anxiety!). I do think, though, that the whole idea of the bill-paying service is another value-added service for subscribers.
And that's the whole point here: stopping the flow of AOL defectors. After all, people have been shedding Internet training wheels in favor of cheaper and/or higher speed solutions. In January, Fool Rex Moore reported that AOL finally moved to address the bargain-bin ISPs, after having lost more than 2 million subscribers last year alone.
Companies like EarthLink
AOL's definitely seen better times -- like before it merged with Motley Fool Stock Advisor pick, Time Warner. Back then, most Internet users were newbies, welcoming an easy and entertaining way to navigate the mysterious World Wide Web. Let's call it the Google-ization of our society just for kicks -- now, many of us have racked up a few geek points at least, having grown up and moved out of AOL's nest into high-speed Internet and self-navigated Web browsing.
As the space continues to evolve, the next few years should be interesting as stock watchers observe ISPs compete not only on price and speed, but also through the myriad ways they can ease or enrich users' lives. AOL's bill-paying service may not be enough to woo more people to the service, but perhaps it will be among the reasons to stay.
Alyce Lomax does not own shares of any companies mentioned.
Discussion Board of the Day: Time Warner
Is this a brilliant idea? Do you think this might help bring more subscribers or keep existing ones? Or is AOL just floundering as it looks for ways to keep its subscribers from defecting? Talk to other Fools about the issues at hand on the Time Warner discussion board.
By Alyce Lomax (TMF Lomax)
First-quarter net income for Lehman Brothers came in at $670 million, or $2.21 per share, as compared to $301 million, or $1.15 per share in the same quarter last year. Analysts were anticipating net income of $1.66 per share. Net revenue soared 84% to $3.14 billion.
Foolish colleague Rick Munarriz suspected as much yesterday, as he outlined the string of investment banks reporting earnings. Others on the roster for the coming week include Bear Stearns
Meanwhile, online brokerage Charles Schwab
None of this is any great surprise, given the recovering economy and renewed interest in the stock market. Indeed, Lehman's robust numbers give good reason for investors to suspect a string of similar reports this week.
However, many investors already anticipated this type of success as trends improved over the last year. The above-noted firms are all trading near their 52-week highs. Investment banking firms are profiting from the recovery, and investors who placed that bet over the last couple years, when things were bleak, are happy ones indeed. At this point, though, whether record-breaking numbers like Lehman's are sustainable or a leap of faith remains an issue. After all, some possible chinks in the economic recovery remain, including a continued weak job outlook.
Alyce Lomax does not own shares of any of the companies mentioned.
It's tax season, again. Consider it like fiscal New Year, where you and your finances get to start anew come April. So take advantage! Kick those bad spending habits to the curb, and use TMF Money Advisor to help put you on track. Take an advisor for a spin for free. It can't hurt, and it sure can help.
3M Makes More Money
By Rick Aristotle Munarriz (TMF Edible)
Do the three M's in 3M
3M has a way of sticking to you. How can you not like a company that has hiked its quarterly dividend for 46 consecutive years? That kind of consistency simply cannot be ignored. Moreover, the stock has doubled over the past five years -- after nearly doubling in the five years before that.
And the revised profit outlook stacks up well against last year's $3.02 a share -- which was in itself a decent uptick from the previous year's $2.50. While a good chunk of that improvement can be attributed to currency translations -- as the company's presence overseas gives it more bang for the falling buck -- any number of global conglomerates haven't produced as well with the same fiscal tailwind.
Investors pay up for that kind of consistency, and 3M may not appear cheap at 30 times last year's free cash flow. Even with the earnings bumped higher for 2004, the company's forward P/E is still a bit over 20. No, that's not exactly cheap for a mature blue chip. General Electric
Because it's worth it. You're just not going to find a company that has been growing its dividend distributions every year for nearly half a century in the closeout bin.
Longtime Fool contributor Rick Munarriz uses Scotch tape and Post-it notes -- but he does not own shares in any companies mentioned in this story.
Qu ote of Note
"Do the right thing. It will gratify some people and astonish the rest." -- Mark TwainMo re on Fool.com Today
Two months ago, David Forrest debated shorting a stock he felt had risen too far, too fast. Now he's back to revisit that storied stock, which has fallen to half of its 52-week high. Get the scoop in Stocks at the Extremes, Take 2.... And Dayana Yochim, our resident guru on personal finance, has some dire news about the financial awareness of today's youth. They may be living for the moment, but their future is cooked. Find out more in The Kids Aren't Alright.
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