Investing
Initial public offerings
HIT
:
Annie's Inc.
(symbol
BNNY
), a distributor of natural foods, opened March 28 at $36 and now
fetches $46-for a tidy 28% gain (prices and returns are through
October 4). The Berkeley, Cal., company makes organic and healthier
versions of comfort foods, such as macaroni and cheese, and is
expected to generate robust annual earnings growth of 25% over the
next few years, thanks to trends toward healthy eating. But the
stock has gotten pricey, trading at 45 times estimated earnings for
the fiscal year that ends March 2014.
SEE OUR SLIDE SHOW:
Fabulous Freebies 2012
MISS
: There were newly minted stocks that lost investors more money
than
Facebook
(
FB
)-at least on a percentage basis-but none were more costly in raw
dollars. After going public at $38 last May, Facebook saw its
shares peak at $45 on the first day of trading, briefly giving it a
market value of more than $100 billion. But insider selling and
disappointing results have pushed the stock down to $22, slicing
the Menlo Park, Cal., company's value by a cool $47 billion.
Stocks
HIT
: The year's best and worst performers (not including penny stocks)
were rags-to-riches and riches-to-rags stories.
Arena Pharmaceuticals
(
ARNA
), a money-losing San Diego biotechnology company, saw its stock
soar 369% in 2012, from less than $2 to $9, thanks to its
anti-obesity drug Belviq, which won U.S. Food & Drug
Administration approval in June. But don't expect a repeat
performance. The company still needs to clear hurdles before
marketing the drug, and analysts expect Arena to continue to lose
money through 2013.
MISS
: The worst performer of 2012 was a familiar name:
Groupon
(
GRPN
). The ubiquitous Chicago-based provider of daily deals went public
in November 2011 amid great fanfare, but it has since been buffeted
by increased competition from the likes of Amazon, Google and
Living Social. Worse, merchants are increasingly dissatisfied,
saying that Groupon customers spend too little and don't come back.
The stock, which traded for more than $19 in January, now trades
for less than $5.
Mutual Fund Managers
HIT
:
Will Danoff
has his hands full running $87 billion
Fidelity Contrafund
(
FCNTX
). But during his 22 years at the helm, he has demonstrated an
agility that belies the fund's immense size. Contra's 13.1%
annualized return over the past 20 years beats the S&P 500 by
an average of 3.6 percentage points per year. In the mid '90s,
Danoff trailed the index for four straight years. The large-growth
fund held 700 names, and critics called it fat at $20 billion. But
Danoff adjusted. He now holds fewer stocks (some 337 at last word)
and he lets his winners ride: Apple recently accounted for 9.9% of
the fund's assets.
MISS
: Then there's
Henry Van der Eb Jr.
, the perpetually bearish manager of
Gamco Mathers AAA
(
MATRX
). His pessimism paid off in 2008, when Mathers eked out a 0.2%
return while the S&P 500 plunged 37%. But in six of the past
ten calendar years (including 2012), his fund spilled red ink. As a
result, Mathers lost an annualized 1% over the past ten years,
which puts it at the bottom of the conservative-allocation
category.
Online Brokers
HIT
:
E*Trade
. Its revamped Web site wows. You can customize the view of your
account page by clicking and dragging windows around. For example,
want your market news at the top and portfolio summary on the
right? Just click a button. Plus, stock quotes update as they
change, in streaming real time. The firm wins, too, because of its
numerous investment offerings, including 50,000 bonds.
MISS
:
ING Direct ShareBuilder
makes it easy to start investing-there's no minimum to open an
account and you can buy individual stocks and
ETFs
for as little as $4 per trade. But it sank to the bottom of our
latest broker survey. The biggest drawback: You can't buy or sell
bonds.
Newsletters
HIT
:
Value Line Investment Survey
($598 per year) gives you access to research on 1,700 U.S.-listed
stocks. Value Line's reports include pithy syntheses of analysts'
opinions, plus a wealth of data on companies' balance sheets,
profitability and stock-price valuation. On average, the letter's
model portfolios gained 5.4% annualized over the past ten years
through September. Other letters returned more, but few give
subscribers more value.
MISS
: Had you stashed $1,000 in the picks of Doug Fabian's
ETF Trader
over the past decade, you would have just $76 today. Trader's
whopping 22.7% annualized loss over the past ten years makes it the
worst performer among all letters tracked by the
Hulbert Financial Digest.
Fortunately, the $995-a-year newsletter recently changed hands and
is now called Chris Versace's ETF PowerTrader.
Kiplinger Calls
HIT
:
Kiplinger's
began 2012 with a
bullish call on stocks
, predicting a 9% return-a markedly optimistic prediction at a time
when volatility ruled and nearly everyone had soured on stocks.
Midyear, we bumped our prediction to 15%, and worried that we might
still be too conservative. Year to date through October 4, the
S&P 500 stock index was up 16%, and dividends added another two
percentage points to the return.
MISS
: We said that the
yield on ten-year Treasury bonds
could approach 3% by year-end-the second year in a row we forecast
a rise in long-term rates. Wrong. Ten-year Treasuries now yield
1.7%.
Page 2 of 11
Online Advice
HIT
:
Financial Engines
, designed by Nobel Prize�winning economist Bill Sharpe,
is a useful program for do-it-yourself investors who want to know
whether their retirement-savings plans are on track. Once you've
provided information about your savings and investments-and in most
cases, you can link the program to your accounts-you'll get an
estimate of your retirement income. If you come up short, the tool
offers suggestions, such as increasing 401(k) contributions or
taking more risk, and shows you how the changes would affect your
retirement prospects. The cost is $150 a year; it's $300 if you
want to include taxable accounts.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
Smart401k
will review your 401(k) plan (or other workplace plan) and make
personalized recommendations. Smart401k also has financial planners
available to answer questions. But it doesn't cover most IRAs,
employee stock options or taxable accounts. At a cost of $200 a
year, those are expensive omissions.
Page 3 of 11
Retirement
IRAs
HIT
: The best brokerage firm for your IRA-one with a wide range of
investment choices and no annual fee or minimum to open an
account-is
TD Ameritrade
.
MISS
:
TradeStation
charges $35 per year to host your IRA and $50 when you close your
account.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
Tax-Friendly States
HIT
:
Alaska
. Retirees feel toasty just thinking about the tax breaks. Alaska
has no state income tax and no statewide sales tax. Real estate
taxes and home prices can be high, but homeowners 65 and older get
a break on property taxes.
MISS
:
Connecticut
. You can exclude Social Security benefits from state income taxes
only if your adjusted gross income is less than $50,000 ($60,000
for couples). Out-of-state government and civil-service pensions
are fully taxed (although half of military retirement pay is
excluded from taxes). And residents pay the second-highest property
taxes in the U.S., according to the Tax Foundation.
Target-Date Funds
HIT
: Target-date funds hold a mix of assets geared to your investment
time horizon. The mix gradually shifts to become more conservative
as you near the target date. All 12 target-date funds at
Vanguard
carry shockingly low expense ratios of 0.17% to 0.19%, helping to
boost nine of them to the top 20% of their categories over the past
three years.
MISS
: The five funds in the
DWS LifeCompass Target-Date Fund
series stink. In nearly every calendar year since 2007, each fund
has ranked well below average relative to other TDFs in their peer
groups. The problem: a shortage of solid DWS funds with which to
stock the target-date series.
Page 4 of 11
Banking and Credit
Cash-Back Cards
HIT
: With the
American Express Blue Cash Preferred
card, earn a generous 6% rebate on every dollar spent on groceries
(1% on supermarket purchases above $6,000 annually), 3% on
gas-station and department-store purchases, and 1% on all other
spending with no limit on the amount you can earn. Charge $20,000
and you could earn more than $500, justifying the $75 annual
fee.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
: The
Discover Motiva
card pays only 0.25% on annual spending up to $3,000 and 1% after
that.
Rewards Cards
HIT
: The
Chase Sapphire Preferred
card gives you two points per dollar on travel and dining, one
point per dollar on all other purchases, and 40,000 bonus points if
you spend $3,000 in the first three months. You can use points for
cash (100 points equal $1), gift cards, merchandise and travel. The
$95 annual fee is waived the first year.
MISS
: The
Capital One Sony
card
sounds
great-five points per dollar spent when you buy Sony items (three
points for restaurants and movies and one point for all other
purchases), but you usually must submit a form after each purchase
to receive the full five points.
Prepaid Cards
HIT
: Newcomer
Bluebird Prepaid
card from Wal-Mart and American Express doesn't charge an
activation or monthly maintenance fee, has online bill pay and lets
you deposit checks with an app. Authorize up to four users with
custom spending limits. Withdrawals are free at 22,000 ATMs, but
only with direct payroll deposit.
MISS
: The
Magic Prepaid MasterCard
, endorsed by basketball great Magic Johnson, charges outsize fees:
$4.95 to activate and $4.95 a month.
Credit-Score Sites
HIT
: Go to
Credit.com
for a free estimate of your FICO score and the
credit-bureau-designed VantageScore, along with Experian's PLUS
score. The majority of lenders use FICO scores, so if you're in the
market for a loan, go to
www.myfico.com
and pay $20.
MISS
: Besides assaulting TV viewers with its ads,
Freecreditscore.com
can quickly add up to big bucks. It gives you a free PLUS score
with a trial subscription to a credit-monitoring service. But if
you don't cancel in seven days, you'll pay $15 a month.
Places to Stash Cash
HIT
: The
Sallie Mae Money Market
account pays 1.05% with no monthly maintenance fee and no
minimum-balance requirement.
MISS
:
Fidelity Tax-Free Money Market
(
FMOXX
) recently yielded 0.01%, a dismal yield even for the dismal money
market sector. (Even tax-equivalent yields are low, at 0.01% for
the 25% bracket and 0.02% for the 35% bracket.)
Interest Checking
HIT
:
Lake Michigan Credit Union
's Max Checking account has no monthly fees or minimum-balance
requirement, and it pays 3% interest on balances of up to $15,000.
To earn the rate, you have to have one direct deposit and make ten
debit card purchases per month, plus meet a few other requirements.
LMCU refunds up to $15 a month in surcharges if you use ATMs
outside its network.
MISS
: Like most big banks,
Chase
is heavy on fees and light on interest. It pays a paltry 0.01% on
its Premier checking accounts-and if you don't meet transaction or
minimum-balance requirements, you'll pay $25 per month in
maintenance fees.
Online Banks
HIT
: A checking account at
Ally Bank
pays 0.4% or 0.75%, depending on the balance; the bank's savings
and money market accounts offer 0.95%. None of those accounts
require minimum balances or charge maintenance fees. Plus, Ally
refunds all ATM fees. By the end of 2012, Ally plans to introduce
remote check deposit.
MISS
: At 0.22% for a checking account, 0.32% for a savings account and
0.22% to 0.53% for a money market account, rates at
Ascencia
aren't competitive with those of top online banks. And its $29
overdraft fee rivals that of the big banks.
Page 5 of 11
Budgeting Sites
HIT
: Ten million users have picked
Mint.com
as their go-to site for money-management help. You link it to your
financial accounts by providing your user names and passwords (the
site uses bank-level security), and Mint automatically tracks your
spending. Its Trends tool uses colorful charts to show where your
money goes. With the Budget tool, you limit how much you can spend
on a given category each month. And with the Goals tool, you set
target amounts and dates for achieving financial goals, such as
paying off a credit card or saving for retirement.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
: We may have mentioned
MySpendingPlan.com
in March 2007, as the site points out, but that doesn't mean we
endorse it. Just signing up is a tedious process, starting with an
interview that mostly pushes products at you. If you get through
the setup, you'll find the site confusing, slow and riddled with
error pages.
Page 6 of 11
College Planning
Savings Strategies
HIT
: State-sponsored
529 savings plans
let your investments grow tax-free, and the earnings escape taxes
if you use the money for qualified college expenses, such as
tuition and room and board. Most states offer a tax break for
contributions. The plans set no income limits and a high limit on
contributions.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
Custodial accounts.
Known as UGMAs (for the Uniform Gifts to Minors Act) and UTMAs
(Uniform Transfers to Minors Act), these accounts let you hold
assets in trust for your child; you manage the account until he or
she reaches the age of majority. Problem: At that point, the kid
can use the money for anything, including a yearlong vacation. And
student assets count much more heavily than parental assets in
financial aid formulas.
Earning Potential by Major
HIT
: Of the top ten majors for salary potential in
Payscale.com
's most recent survey, six were in
engineering
, starting with the number-one major, petroleum engineering.
College grads with an undergraduate degree in that field earn a
median starting salary of $98,000, according to Payscale.com;
mid-career professionals pull in a median salary of $163,000.
MISS
:
Child and family studies
. As worthy a calling as it is, working with kids doesn't pay much.
Of the 130 majors on Payscale.com's list for salary potential, this
major-which trains day-care providers and preschool teachers-comes
in dead last. The median salary for college grads with a degree in
the field starts at $29,300 and inches up to $37,700 after 15
years.
Debt Level by Major
HIT
: The more you earn, the more manageable your debts. If you major
in
engineering
, you'll likely earn enough money even as a new graduate to keep
your monthly payments well below 10% of monthly income-the
benchmark for manageable debt. According to TG Research and
Analytical Services, based on data from the National Center for
Education Statistics, engineers just out of college pull in a
median monthly income, after taxes, of $3,250 and pay a median $229
a month toward their federal student loans-putting their
debt-to-income ratio at 7%.
MISS
: Literature may be food for the soul, but
humanities
majors will be hard-pressed to put food on the table and still make
their student-loan payments. According to the NCES survey,
humanities majors just joining the workforce earn a median monthly
income of $1,300 after taxes and pay 18% of that income-or $237 a
month-toward student loans.
Page 7 of 11
House and Home
Change in Home Prices
HIT
: Home prices in the
Phoenix
metro area rose by a whopping 23.9% in the year ended July 31,
2012, topping the list of 315 cities tracked by home-price data
gatherer Clear Capital. Investors drove the increase, but
homeowners will also benefit after experiencing a home-price
decline of 53.1% since the housing market peaked in 2006.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
Memphis
earned last place, with a 12% drop in prices over the past year.
Although home sales have begun to pick up, just less than half of
them are foreclosures, according to Clear Capital. The local
economy has been slow to recover, and unemployment slightly exceeds
the national average.
Mortgage Sites
HIT
: If you anonymously provide information (including the property's
purchase price, zip code, loan amount and your FICO credit score)
to
Mortgagemarvel.com
, it will provide several rate-and-fee quotes it draws from 230
participating lenders. Choose an offer and file a secure, online
loan application.
MISS
: More than 300 lenders pay
Lending Tree
to get marketing leads. You must give contact information, and you
may receive annoying sales pitches and lowball offers.
Insulation
HIT
: If you add
attic insulation
(as well as seal air leaks), you can cut heating and cooling bills
by an average of $202 annually. You could use more insulation if
what you have now is level with or below the attic floor joists.
With a job cost of $1,000 and annual energy savings of $200, you'd
recoup your money in five years.
MISS
: A
radiant barrier
is sometimes sold as a miracle cure for high heating and cooling
bills-even in cold climates, where it is least cost-effective. A
thin layer of highly reflective material, usually aluminum, is
installed under the roof trusses or over existing insulation on the
attic floor to keep your attic cooler when the weather is sunny.
Typical cost: $1.50 to $2 per square foot. Typical savings: 2% to
10% of the cooling portion of your electric bill, or an average of
$8 to $37 a year.
Lighting
HIT
:
LED bulbs
that are Energy Star�labeled are rated to last 22 years
(based on three hours' use a day) and use about 80% less energy
than incandescents to produce the same amount of light. The cost is
currently $15 to $40 per bulb, but it's falling. The Department of
Energy says that the average household that replaces 15
incandescent bulbs with LEDs will save $50 a year on energy
bills.
MISS
:
Incandescents
convert just 10% of the electricity they use into light and radiate
the rest as heat. In order to meet new federal standards for energy
efficiency, manufacturers have begun to phase them out.
Appliances
HIT
: Replacing a standard electric water heater with an Energy
Star�qualified
heat-pump water heater
($1,000 to $1,600 for a 50-gallon model) will save the average
family $290 annually, and the savings will offset its higher cost
in two to four years.
MISS
: Replacing a
refrigerator
(with top-mounted freezer and 20 cubic feet) manufactured between
2001 and 2008 will save just $14 annually. (But ditching a
circa-1980s fridge in the garage will save $142 annually.)
Home Improvements
HIT
: It's not the most exciting project, but
fiber-cement siding
won
Remodeling
magazine's 2011�12 "Cost Versus Value" comparison of 35
popular home improvements. Replacement of existing siding (1,250
square feet) with a fiber-cement product (such as HardiePlank) cost
$13,461 and recouped 78% at resale. Fiber-cement siding, which can
look like wood clapboard, is noncombustible, termite- and
water-resistant, and typically comes with a warranty of 30 to 50
years.
MISS
: A
home-office conversion
returned the least-43% of a job cost of $27,963. The project
included painting and carpeting a 12-by-12-foot room; installing
custom cabinets, a desktop and a computer workstation; and
rewiring.
Page 8 of 11
Shopping Deals
Grocery Savings
HIT
:
Safeway's "Just for U" coupons
download to your loyalty Club Card from online or the app. See
something tasty on the store shelf? Search the app for an instant
coupon. Available at partner chains, such as Vons and Randalls.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
Whole Foods.
More like "whole paycheck," its products might be cage-free and
gluten-free, but high prices and no free loyalty rewards program
make this chain a no-deal.
Sports Tickets
HIT
:
StubHub
helps you score deals on the secondary market, with fees mirroring
competitors' and a large selection. The best deals appear a few
days before game day.
MISS
: Leave
early box-office purchases
to the impatient super fans. By buying tickets 90 days before game
day, you'll pay 50% more than if you bought tickets 24 hours in
advance, says SeatGeek.com.
Daily-Deal Sites
HIT
:
Scoutmob
doesn't require you to purchase a coupon until checkout-so you
don't have to remember to use it.
MISS
:
Groupon.
We've soured on the laser-hair-removal and knitting-class deals.
Delete, delete.
Shoes Online
HIT
:
Zappos
offers free shipping and returns. Those in the free VIP club earn
next-day delivery at no charge.
MISS
:
Macy's
charges for shipping on orders up to $99; mailed-in returns aren't
free, nor are deliveries to the store.
Page 9 of 11
Technology
Web-to-TV Streaming
HIT
: The
Roku
box, starting at $50, streams more than 500 entertainment channels,
including Amazon Instant Video, Netflix and Hulu Plus.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
Google TV
lacks Hulu Plus on its lineup, and compatible streaming boxes are
$100 or more.
On-the-Go Internet Plans
HIT
:
Virgin Mobile
, which operates on Sprint's data network, charges $35 monthly for
2 gigabytes of 3G data or $55 for 5GB of data with a no-contract
Broadband2Go plan. If you're in a 4G service area, you get
unlimited 4G data.
MISS
:
Toast.net
also sells no-contract plans that run on the Sprint network-but it
charges $40 for 2GB per month or $60 for 4GB, and it offers no 4G
coverage.
Free Office Software
HIT
:
LibreOffice
, the creation of former top developers of Apache OpenOffice, has
become the front runner among free software for producing
documents, spreadsheets, slide shows and more.
MISS
: The brain drain at
Apache OpenOffice
means it has lagged in development. It has more bugs and fewer
features than LibreOffice.
Music Streaming
HIT
:
Songza
streams playlists to its Web site and iPhone and Android apps. Best
part: no audio ads.
MISS
:
Pandora
bases playlists on an al�gorithm but has poorly selected
tracks and ad overload.
Tablets for Kids
HIT
: For kids 5 and older, get the
Kindle Fire
($159). Amazon beefed up the parental controls for this version of
Fire. The $199 Fire HD version includes Kindle FreeTime, which
allows you to set time limits for tasks such as reading or playing
games.
MISS
:
Any of the tablets geared for kids under 10.
They cost between $80 and $200, but the range of choices for apps
and books are few and far between.
Page 10 of 11
Cars, New and Used
Fuel-Friendly
HIT
: When you compare ownership costs of uber-green choices, the
Toyota Prius
($24,795) is still a better bet than an electric car or plug-in EV.
Vincentric, an automotive-data firm, pegs the Prius's five-year
cost at $34,480.
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
The Chevrolet Volt
($39,995) has a high sticker price and costly maintenance and
repairs. Plus, when the battery runs out of juice and you have to
use gas, it takes premium. Its five-year cost is $40,231.
Family Sedans
HIT
: At the top of
Kiplinger's
2012 value rankings for family sedans
is Toyota's redesigned
Camry Hybrid LE
($26,785). It boasts high resale values and a revamped hybrid
system that boosts power and fuel efficiency.
MISS
:
Mitsubishi Galant SE
($25,094) is the lowest-ranked family sedan, with tepid power,
so-so fuel economy and a tiny trunk.
Midsize Crossovers
HIT
: A perennial
Kiplinger's
favorite, the best bet in this class is the
Lexus RX 450h
($46,110). It features top-notch safety plus luxury and is the most
fuel-efficient choice in the segment.
MISS
: The
Nissan Murano CrossCabriolet
($45,365) sinks to the bottom spot with poor fuel economy, a
cramped back seat and a price that's hard to justify.
Reliable Used Cars
HIT
: According to J.D. Power's 2012 study of three-year-old models,
Lexus
is the most dependable brand, with only 86 problems per 100
vehicles-well below the industry average of 132.
MISS
:
Chrysler
is the least dependable brand, falling far short with 192 problems
per 100 vehicles.
Used-Car Pricing Sites
HIT
: The Appraise Your Car tool on
Edmunds.com
lets you input options, miles and condition and gives you a
customized quote based on actual transactions.
MISS
: At Kelley Blue Book's
KBB.com
, the retail price is described as "the starting point for
negotiations." In other words, no one expects you to pay that
much.
Page 11 of 11
Airlines and Hotels
Frequent-Flier Programs
HIT
:
American AAdvantage
makes it easy to earn miles through its partner airlines, credit
cards and retailer relationships. Plus it's straightforward to
upgrade from low-fare economy to first class with 15,000 miles plus
fees. (If American merges with another airline, AAdvantage miles
would likely combine with the merger partner's program.)
SEE THE COMPLETE LIST:
Hits and Misses of 2012
MISS
:
Delta Skymiles'
unfriendly change policy wipes out the points you used for the
flight when you switch or cancel within 72 hours of takeoff.
Airline Baggage Handling
HIT
:
Virgin America
has logged less than one lost luggage report for every 1,000
passengers so far in 2012.
MISS
: Pack an extra toothbrush in your carry-on when you fly
American Eagle Airlines
. The Eagle racked up nearly six lost luggage reports per 1,000
flyers.
On-Time Airlines
HIT
:
Hawaiian Airlines
gets you to your gate on time, with 95.5% of flights arriving on
schedule and the lowest rate of canceled flights.
MISS
:
American Airlines
has you sprinting to meet your connection, with only 59.1% of its
flights arriving on time.
Hotel Review Sites
HIT
: Critics penning a review on
Booking.com
must purchase a room first. The site breaks down scores based on
cleanliness, comfort, value and other criteria.
MISS
:
Yelp.com
lets any Tom, Dick or Harry Hotelier post reviews, which can call
into question the honesty and motive behind the write-ups.