The two computer giants have been slugging it out over the past year, kind of like the Red Sox and Yankees. Of course, we all know how that ends up. The melodrama begins again in earnest tonight when the teams face off for the first time this season. It's a rite of passage -- and self-flagellation -- each spring for every Red Sox fan.
In today's Motley Fool Take:
- 9 Hot Investment Tips
- Shameless Plug: Motley Fool Champion Funds
- Netflix Not Done
- Discussion Board of the Day: Netflix
- No Rest for Nokia
- Quote of Note
- More on Fool.com Today
9 Hot Investment Tips
By Dayana Yochim (TMF School)
Oh, hello. Looking for some sizzling stock tips, are we?
Those of us who don't watch the ticker tape all day may be tempted to take a shortcut by clicking on enticing headlines and heading straight to our broker's website.
Shame on us.
The truth is that there are some shortcuts you can take -- like letting a few trusted analysts excavate the balance sheets of potential investments and present pro and con arguments. But even then, it's your hard-earned money on the line, not theirs. So perform some due diligence of your own to get comfortable taking the plunge.
Chasing hot stock tips and failing to do one's homework aren't the only ways investors handicap themselves. But lecture we won't. We promised you nine hot investing tips, and here they are:
Do something. Suffering from analysis paralysis? (That's when an investor feels overwhelmed by so many choices that he simply does nothing at all.) There is no guarantee that the market will go up the first day, month, or even year that you invest in it. But there is one guarantee: Doing nothing at all will not provide for a comfortable retirement. Take a baby step today. Which leads us to Hot Stock Tip No. 2...
Start now. Postponing your investing career is second only to not investing at all on the list of investment sins. You already know that the earlier you start, the better off you are. (Take a look at how compound interest works by noodling around with a few online calculators.) If you're already past those formative 20s (you don't look a day over 32 to us), let's just say, "Better late than never." Now hop to it.
Pay off your plastic before you plunk down for stocks. If you have money in your savings account and you have revolving debt on your credit card, pay it off. Many credit cards have an annual interest rate of 14% to 21% or more. Let's say you have $5,000 to invest, but you also have $5,000 in debt on your credit cards with an average annual interest rate of 18%. It doesn't take an astrophysicist to figure out that you're going to have to get an 18% return after you pay taxes just to break even on that $5,000. Pay the debt off first, then think about investing.
Don't invest the wrong dough. There are appropriate places for short-term money that you're actually going to need in the short term. Invest money in the stock market that you won't need for at least three years, and preferably five years or longer. If you'll need your cash next year for a down payment on a house or for the family Caribbean cruise, use one of the shorter-term and safer havens for your cash, such as money market funds or CDs.
Take the free money. You'd never turn down a dollar if it were offered with no strings attached. That's what you're doing if your company offers a 401(k) or similar retirement savings plan with an employer match and you're not participating. Take advantage of all tax-advantaged, employer-matched savings programs.
Take a few risks. If you're young, most of your investing dollars should be in the stock market – specifically the index fund. You have enough time to weather any dips in the market and to reap the rewards of long-term gains. Although you may want to transition into bonds later in life as you depend on your investments for income, stocks should make up a large portion of the portfolio of every investor.
Look both ways before you cross the speedway. Not every investment is for everyone. Even if you're a daredevil, you shouldn't pour all of your money into something that could end up going down the drain.
Enjoy your hobbies. Don't invest in them. If old comic books, Barbie dolls, and abandoned exercise equipment could be used to fund retirements, do you think the stock market would exist? Probably not. Don't make the mistake of thinking your jewelry, those Beanie Babies, or the lottery will provide for you in your later years.
- Stay put when it makes sense. We believe the best approach to investing is the long-term one. Pick your investments well and you'll reap more rewards over the long term than you ever dreamed possible. Trade in and out of the market and you'll be saddled with fees that chip away at your returns, and you'll potentially miss out on gains that long-term investors enjoy with much less effort.
Don't worry, we know you're busy, busy, busy. So let us do the heavy-lifting. That's why we launched Motley Fool Champion Funds, after all. Editor Shannon Zimmerman will give you the skinny on the best of the best in the mutual fund industry. He combs lists and lists of available mutual funds to find those most worthy of your investment dollars and publishes them each month. Check out Motley Fool Champion Fundsrisk-free for 30 days.
By Rick Aristotle Munarriz (TMF Edible)
How is last night's quarterly report from Netflix
On the positive front, the company grew revenues by 80% to a healthy $100.8 million, and its customer churn rate shrank for a sixth consecutive quarter. Netflix feels so confident about its animal magnetism, in fact, that it plans to raise its monthly subscription by two bucks come June.
However, one factor driving client retention is also spooking gross margins. The company's distribution center network has expanded to the point where overnight delivery is available to 80% of the country's population, something rivals Wal-Mart
At the same time, speedy turnarounds also prompt film buffs to rent more DVDs each month. Under the Netflix monthly subscription model, that's like opening a buffet just as science discovers a way to speed up the digestion process.
Acquisition costs also rose during the period. Management attributes the spike to a new television ad campaign, but one could as easily argue that this is the kind of "jump the shark" move that occurs when a high-growth company has absorbed the early adopters and has to aim higher to reach the mainstream.
When we singled out Netflix in the Oct. 2002 edition of TMF Select -- which since evolved to Motley Fool Hidden Gems -- it was a memorable call given that the stock was bottoming out at a split-adjusted $5.45 a share. The stock fell nearly 10% to just under $34 after hours last night as investors were banking on perfection.
Netflix is still healthy. The company expects to pass the 2 million subscriber mark early this summer, and while it did post a loss of $5.8 million, it nonetheless generated $9 million in free cash flow. With the company looking to close out the year with as many as 2.7 million subscribers, earnings should come in between $10.5 million and $18.5 million this year on $485 million to $535 million in revenues.
The move to hike the standard monthly subscription to $21.99 in June will bear watching. Will the company's churn rate rise or will happy subscribers realize the value and convenience of the Netflix experience? That will reveal plenty about the viability of the Netflix model and its pricing elasticity.
Longtime Fool contributor Rick Munarriz has been a satisfied Netflix user since 2002. He also owns shares in the company.
Are Netflix's days numbered? Will it cave to the pressure of big competitors, or breeze by with its streamlined business model? Where can Netflix go from here, and how is that rise in rates going to affect the bottom line? All this and more -- on the Netflix discussion board. Only on Fool.com.
No Rest for Nokia
By Seth Jayson
I'm starting to feel like Kevin Bacon in the parade scene at the end of Animal House, where he's standing in his ROTC uniform, drowning in the middle of the panicked mob, smiling and yelling, "All is well!"
To be honest, all is not exactly well at Nokia
After that pre-announcement, while everyone was screaming and heading for the exits, I quietly suggested that Nokia's past history of sisu (fortitude in the face of adversity), plus a little thing like ample free cash flow, was more than enough reason to stick with the stock, or even get some on a discount. (Oddly, there are some wise folks who seem to agree.)
With today's official Q1 earnings announcement on the wire, the firm has been hacked for another 10% loss. The reason's not the EUR 0.17 per share earnings, which represents a 15% slim-down from the prior-year quarter. The Street is dumping shares again because the firm lowered its second-quarter guidance to predict flat sales and earnings around EUR 0.14, which comes in about 25% less than estimates.
Let's be clear: Nokia screwed up. But let's also note that the remedy is going to take a little time -- a couple of quarters, by the firm's estimates. Unfortunately, for current shareholders, Mr. Market is not known for patience. Witness idiotic headlines such as "Turnaround Eludes Nokia." Please. How can anyone pretend to expect a turnaround in the 10 days between the preannouncement and now?
Luckily for patient, value-oriented investors who aren't afraid to move against the herd, stupidaggini like these cause further fear. Sure there's risk here, but if you believe, as I do, that Nokia is a survivor, the current panic will offer plenty of opportunity to get in at a discount.
"To travel hopefully is a better thing than to arrive." -- Robert Louis Stevenson
Whitney Tilson reveals more ways funds inflate their profits at the expense of investors in Funds' Dirty Little Secrets.... Google is coming under fire for a service that hasn't even launched. Rick Munarriz comes to the Internet darling in distress' aid in Hands Off My Google.... If it's value you're after, Nathan Parmelee has how to look low to put some cash to work in Watching the Low List.
In other news:
For a list of all our stories from today, see our Today's Headlines page.