When was the last time you looked into your 401K investment choices?:
Bottom Line: It's more important than ever before to maximize the investment options we have available to us. To that end how often to you review your 401k options and make adjustments if needed? More than half of us never revisit and reallocate our investment choices after the initial setting up of a 401k account. That's not a good idea...
Let me us this example to explain just how different the results can be. I reviewed the ten year period from 2000-2010 to see what the average return was of the best performing mutual fund, average & worst. Here were the results:
Best: 19%
Average: 1%
Worst: 13%
Pretty staggering difference right? Let me put this another way. Let's say you had $1000 invested in each of those funds for that ten year period. What would the end result looks like?
Best: $6600
Average: $905
Worst: $271
And that's just on $1000 without any additional contributions. Hopefully this demonstrates the importance of managing your 401k contributions well. But what if you aren't confident in your ability to manage the 401k options yourself? Talk to the advisors that provide the plan or find an investment advisor you can work with.
Number of Americans on disability has surged aiding in near record low labor participation:
http://www.bloomberg.com/news/2012-05-03/disabled-americans-shrink-size-of-u-s-labor-force.html
Bottom Line: The labor participation rate is near a record low number at just about 64%. That's the main reason we've seen a reduction in the unemployment rate from the 9% range to 8.2% despite sluggish job growth of the past couple of years. As people drop out of the workforce they aren't counted in the non-farm payroll number which is the Government number used to calculate unemployment. This can happen a few different ways but the most common is that they exhaust unemployment benefits and aren't counted in the unemployment rate going forward. There is another phenomenon that's playing out that I hadn't considered.
Disabled Americans have traditionally experienced a higher unemployment rate that the average American (typically about a 2% higher unemployment rate than the average American) but the difference is much greater today. The average unemployment rate for the disabled has reached 16% or double the overall unemployment rate. This has caused many to seek unemployment insurance and drop out of the labor force all-together.
There has been a 22% increase in disabled Americans taking disability and leaving the labor market since the end of 2007. That's nearly two million Americans that are on disability and highly unlikely to ever enter into the labor market again.
President Obama's re-election odds and Electoral vote totals as of now:
http://allthingsd.com/20120503/kindle-fire-shipments-fizzle/?reflink=ATD_yahoo_ticker
Bottom Line: No changes in the projections this week. President Obama maintains an approval rating of 48% this week, which as we sit 6 months out from Election Day, provides the President with a 63% chance of winning re-election. Taking a look at the electoral vote count... Obama: 303, Romney 235. Currently
The Fire tablet wasn't so hot in the first quarter:
http://allthingsd.com/20120503/kindle-fire-shipments-fizzle/?reflink=ATD_yahoo_ticker
Bottom Line: The Kindle Fire tablet from Amazon was a star in the 4th quarter selling more than 4 million tablets in time for the holidays. There hasn't been follow through tough for Amazon's low cost tablet. They sold only 750,000 in the first quarter and fell to only 4% market share falling back into 3rd place in tablet market share (with Samsung resuming the number two spot with the Galaxy). What's clear is that after the initial rush of buyers for the Fire, it's still mostly about the iPad as Apple not only sold 11.8 million in the first quarter, they grew market share from 55 to 68% in Q1.
The Spirit carry bag fee is about changing behavior:
Bottom Line: Spirit Airlines has gained a lot of negative attention this week as they first didn't refund a ticket for a vet and now they have imposed a carry-on baggage fee of up to $100. Are they really looking to get you for the $100 fee though? It appears not. Let me explain.
Fees accounted for more than $3 billion worth of revenue to the airline industry in 2011. The airlines project revenue from fees as part of their ongoing financial guidance. So when Spirit added this new fee how much more revenue did they project to gain from it? Zero. That's the tip off that's it’s about changing our behavior.
In the modern era of check bag fees more of us have been cramming more into carry-ons and the size of them has been growing. This adds weight to the flight which does cost the airline more money and creates issues with lack of space in over-heads, etc.
What Spirit wants to do is create a number so high we'll just go ahead and check a bag for between $35-45.
Facebook's value = $96 billion:
http://www.cnbc.com/id/47290245?__source=yahoo|headline|quote|text|&par=yahoo
Bottom Line: So the game has begun as Facebook is nearing their IPO. Like most tech companies over the past few years they're going to try to create an artificial pop at the beginning. They are only offering a little more than 10% of the shares of the company at the IPO. This helps create artificial demand (along with the hype) that often leads to valuation having little to do with company fundamentals. You won't be surprised to hear this is a practice I don't care for. I've warned on specific companies that have done this previously like Zillow, Zynga and Groupon (my least favorite of all). The result? Day one price of Zillow: $60, today $40. Zynga $15.91, today $8.65 & my least favorite of all Groupon: $31, today $10 (I went so far as to say that Groupon would never hit it's day one price ever again - the day they went public).
Facebook is a great company but not at any price. Be careful before getting caught up in the hype.
New app is a hit in the cancer battle for young people:
http://mashable.com/2012/05/02/cancer-treatment-app/
Bottom Line: A newer app for children’s cancer treatment is showing a new method for research and benefit for children with cancer. The app "Pain Squad" sounds like something you might want to avoid but it's actually making a difference in childhood cancer treatment. The kids track their pain and feelings throughout the treatment which can be used to track the success or failure of certain treatment options. The kids get rewarded in game for participating which also includes them getting to participating in fighting the cancer as well.
