How the Wealthy Slash Their Income Tax Bills

Stories about millionaires and billionaires who pay little or no income tax make great headlines, especially when these people have committedtax fraud. However, the methods that most wealthy taxpayers use to reduce what they owe are perfectly legal tax-lowering strategies that anyone can use.

Charitable Donations

Taxpayers may donate up to 50% of their?adjusted gross incomes (AGI),?according to?IRS publication 526, Charitable Contributions. Deductions for donations exceeding 50% of a taxpayer’s adjusted gross income can be carried over for the next five years until they are used up. When carryovers are included, contributions are still limited to 50% of AGI per year. Most people cannot afford to donate anywhere near 50% of their AGI, but the super-rich have this option.

While making a large charitable donation helps wealthy taxpayers significantly lower their tax bills, it’s not as if these taxpayers are keeping the money for themselves and not paying taxes on it. The government may not get as much revenue, but it has granted taxpayers permission to give it less revenue in this circumstance.

Both the government and private charities run many programs intended to help people with limited means. Well-managed charities have lower administrative costs than government bureaucracies, and that means they can do more good with the same amount of money. Charities also have an incentive to use donated funds as efficiently as possible because they must compete with each other for contributions, whereas government welfare agencies have a monopoly. Thus, we shouldn’t be upset when the wealthy pay lower taxes because of their large donations to charity. This tax deduction helps to provide more assistance to people who truly need it.

Maxed-out Retirement Plan Contributions

The average taxpayer might have difficulty making the maximum $16,500 annual pre-tax contribution to an employer-sponsored?401(k), or even maxing out a?traditional IRA, with its low ! $5,000 a year pre-tax contribution limit. High-income taxpayers, on the other hand, often have no trouble maxing out their retirement accounts because their essential expenses, like food and housing, make up a lower percentage of their incomes.

People?who earn income as independent contractors, or who have their own businesses, have even better opportunities to make large retirement contributions. These options are not exclusively available to the rich; they are also available to taxpayers of lesser means. It’s just that the latter group may not be able to afford to take full advantage of tax-advantaged retirement contributions for the self-employed, since they don’t have as much?disposable income.

“Wealthy consultants, solo practitioners and business owners, especially those who are close to retirement, might consider establishing a defined-benefit pension plan,” says Jonathan Bergman, a Certified Financial Planner and vice president of Palisades Hudson Financial Group, a wealth management firm in?Scarsdale,?N.Y.;?Atlanta,?Ga.;?and?Ft.?Lauderdale, Fla. “Self-employed consultants and physicians’ practices are ideal for this type of plan.”

Such plans permit very large retirement plan contributions for owners who can afford to stash the money away until they’re older.

“Retirement-plan contributions reduce current year taxable income, and once the money is in the plan, it is not taxed until it is withdrawn. This income tax deferral can reduce, or even avoid, state income tax permanently if the contributor relocates to a tax-friendly state during retirement,” says?Bergman.

Investment Income

Some wealthy people are able to pay taxes on a lower percentage of their incomes than the non-wealthy because the wealthy generate significant earnings from investments that are taxed at a lower rate than employment income. The non-wealthy get most of their income from employment.

The money you earn from a job is subject to fed! eral and state income taxes. The more you earn, the higher the tax rate you pay on the last dollar you earn.

Regardless of how much you make, employment income is also subject to payroll taxes (FICA), which are currently 6.2% for?Social Security and 1.45% for?Medicare.?Self-employed workers pay almost double those amounts since they have to pick up the employer’s share of the tax. Employees lose out on the higher wages and salaries their employers could have paid them if not for the additional tax.

Investment income is subject to different tax rates depending on the type of investment and how long it was owned and the investor’s marginal tax rate, but the rates are often substantially less than the rates on employment income. Here are some examples of the federal tax rates on different types of investment income:

-Qualified dividends: 0% for taxpayers in the 10% and 15% brackets; 15% for everyone else
-Long-term capital gains: 0% for taxpayers in the 10% and 15% brackets; 15% for everyone else
-Tax-exempt municipal bond interest: 0%

Also, while interest income from U.S. Treasuries is subject to?federal income tax, it is exempt from state and local income taxes. This feature can help taxpayers in high-tax states and localities reduce their tax bills.

As you can see, investments are generally taxed at a lower rate than employment income. If you start building an investment portfolio, over time, your investment returns might generate a significant portion of your income, too. When they do, you’ll be glad that this income is taxed at a more favorable rate.

The Bottom Line

Many of the strategies that millionaires and billionaires use to reduce their taxes are perfectly legal and available to everyone, but taxpayers with modest incomes may not have the resources to take advantage of these techniques. Not everyone can afford to make large donations and retirement contributions or to hire sophisticated financial planners and tax accountants, but tha! t doesn& #8217;t mean that the wealthy are tax criminals.

Additionally, the wealthy may be less afraid to take advantage of every possible deduction because they have the resources to defend themselves against an IRS audit, but again, that doesn’t make them tax-evaders. Furthermore,?tax evasion is not a crime of the super-rich. People at all income levels refuse to pay the taxes they owe, whether they do it by not filing a return, filing a fraudulent return or attempting to circumvent the tax code. These people usually get caught and have to pay up sooner or later. The rest of us could learn something about legal tax minimization strategies from those who employ them.

 

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NBSK Pulp ¨C A Market Overview

Paper pulp stocks have tanked in the last few months. With the pricing of their commodity products falling, some of the stocks are off more than 50%. Although they are probably not out of the woods yet (pardon the pun), it might be worthwhile to take a look at the industry. I hope to provide a brief market overview in this post and then take a look at two pure-play pulp stocks, Mercer International (MERC) and Canfor Pulp Products (TSE: CFX)(PINK:CFPUF), that make NBSK (northern bleached softwood kraft pulp).

Here is a nice overview of the paper supply chain:



Market pulp makes up a relatively small portion of the material used in paper production, with most pulp coming from recycled products or in-house in the case of vertically integrated paper producers. The two major types of market pulps are BHKP (bleached hardwood kraft pulp) and BSKP (bleached softwood kraft pulp). NBSK is the premium grade of BSKP and is produced mainly in Canada and Scandinavia.

Demand

In analyzing demand there are two issues to look at. One is the growth in the production of paper end products (printing and writing paper, tissue products, etc.) and the other is the mix of pulp types used. The overall picture is one of moderate demand growth. In developed countries, the production of writing and printing papers is slowing while tissue and specialty paper production is growing steadily. And in the emerging markets, especially China, paper production of all types is growing quickly with the r! ise in s tandard of living. As China has limited domestic forest resources (per capita forest stock volume is one sixth of the world average), it relies on imported pulp for a majority of its paper production. In 2011 China will account for 23% of world market pulp usage, up from 15% in 2005. Tissue and specialty paper production in China is expected to grow at a more than 10% rate for the foreseeable future.

BSKP is a stronger material than BHKP and generally commands a higher price. Paper producers prefer to use hardwood where they can to save on production costs, but there is a limit to how much they can substitute for softwood before degrading product quality and losing production efficiency. As paper machine technology and production speeds advance, fiber strength becomes more crucial to prevent tears and maintain machine uptime. Additionally, the strength of BSKP is needed as paper industry growth is skewed to lower basis weight products. Over the past 15 years producers have found ways to use an increasingly larger percentage of hardwood, but the substitution cycle is slowing. One possible indicator of this is the widening price spread between hardwood and softwood pulp (based on RISI data, chart from recent MERC presentation):



This forecast has market pulp demand for BKSP going from 22 million metric tons in 2010 to 26 million mt by 2014:

Supply!

Supply is expected to be essentially flat for the next few years, as only one BSKP new build has been announced. This is in contrast to BHKP, where several million tons of new capacity is being added in the next few years (chart based on Terrachoice data, from MERC investor presentation):



There are several reasons for the divergence of BHKP and BSKP supply. One is that demand for BHKP is expected to grow faster than BSKP given the lower pricing on BHKP. The other is that the global stock of hardwood is double that of softwood, with softwood being concentrated in North America and Scandinavia. There is plenty of hardwood stock in Latin America and Southeast Asia where very low cost hardwood pulp plants are being built.

From 2006 to 2009, 5.3 million mt of high cost NBSK capacity was shut. Even with 1.9 million tons of capacity being restarted in the back half of 2009 and 2010, that leaves over 3 million tons that appears to be permanently shuttered. And by definition the restarted capacity is that of marginal players who will not be competitive as NBSK prices drop.

Pricing

While the supply/demand fundamentals for NBSK appear decent, the short term picture is not as strong. The pulp markets are very sensitive to short term swings in the macro economy. Interestingly, pulp is the second most volatile commodity after oil as measured by standard deviation of market pricing. Oliver Landsdell, one of the leading industry consultants, has said macroeconomic i! ssues ca use two thirds of the swings in pulp market pricing, with specific industry supply/demand issues only causing one third of the pricing changes.



As you can see from the chart, NBSK pricing has been a roller coaster the past few years. Pricing collapsed in the second half of 2008. Producer inventories plummeted due to capacity shutdowns and production slowdowns. This led to extreme supply tightness when the economy started picking up in the second half of 2009. And the February 2010 earthquake in Chile further exacerbated the supply issues. Pricing hit a record this summer at over $1,000/mt for the benchmark European NBSK index, in part due to the dissolving pulp craze which diverted some NBSK supply, as well as a significant ramp up in new Asian paper capacity.

In the last three months the party has ended, with Europe NBSK dropping to $870/mt. The culprits appear to be the general jitters on the part of buyers due to the European debt scare and the Chinese government credit contraction in their attempt to control inflation. Producer supply is up to 34 days, well above the 30 day balanced level. Chinese buyers appear to have built inventory and are waiting for lower prices. Pulp producers will need to reduce inventories in the fourth quarter and they are selling into a weak demand environment. China pricing has fallen to $700/mt, or a 17% decline in just two months.

So, where does pricing go from here? Of course nobody knows, as even the industry experts are not very good at predicting pricing in such a volatile market. If the global economy crashes then so will NBSK, although there appears to be a floor around the $600/mt ton area as higher cost producers will just shut their plants down. And we know that the historical peak is around $1,000/mt. That doesn��t help much, but gives us a range to think about. The pulp markets are so volatile that there isn��t really a ��normal! ized�� p rice, but those bullish on the fundamental supply/demand dynamics will argue it is closer to $1,000 than $600. It will be interesting to see how long and how deep the current NBSK downturn will be. Barring a macro meltdown things might tick up as early as the spring as producers reduce their inventories. I think there might be an interesting opportunity to go long pulp in the near future and to that end will take a look at Mercer International (MERC) and Canfor Pulp Products (CFX) in the coming days.

Disclosure: No position in stocks mentioned.

Elie Rosenberg runs a value investing research website at valueslant.com. Sign up here to get his free value investing ideas and analysis by email and get his free ebook, "16 Ways to Find Undervalued Stocks."

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Retailers Report Disappointing Increase in Their In-Store Black Friday Sales, Despite Solid Jump in Online Results

Steep discounts in November and a surge in online purchases meant that retail sales moved only slightly higher on the opening day of the 2010 holiday shopping season - despite a nice increase in the number of shoppers who crowded retail stores.

Retail spending hit $10.69 billion on Black Friday, the traditional start of the holiday shopping season, a 0.3% increase from the $10.66 billion in sales recorded on the day after Thanksgiving last year, reports ShopperTrak, a Chicago-based retail firm that tallies sales in more than 70,000 retail locations around the country.

However, ShopperTrak said the sales total was still a Black Friday record. The researcher is standing behind its prediction that holiday-season spending will rise 3.2%.

"It's hard to say Black Friday wasn't a success, it's just not the success we saw in the mid-2000s, when the day really became a phenomenon," said ShopperTrak founder Bill Martin.

Store traffic actually advanced a solid 2.2%. Martin says the disconnect between the traffic increase and the much-smaller sales increase suggests that consumers were searching for bargains - and didn't buy if they didn't find them.

"This means the American shopper has adapted to the economic climate over the last couple of years and is possibly spending more wisely as the holiday season begins," ShopperTrak's Martin said.

Two key factors may have crimped in-store Black Friday sales: Heavy discounts earlier in November and online shopping, which saw a big increase.

Shoppers who skipped the crowds on Black Friday gave online merchants a 16% percent spike in revenue, according to data from Web researcher Coremetrics.com that was released Saturday. The average order rose to $190.80 - a jump of 12% over the average order of $170.19 for Black Friday last year.

The solid increase adds to a 33% jump i! n online spending that took place on Thanksgiving Day. Online shopping still only accounts for 8% to 10% of all holiday spending.

Smartphone shopping continues to grow: About 5.6% of shoppers who log onto a retailer's Website do so using a mobile device - up from about 1% on Black Friday? in 2009.

"The [online shopping] season's off to a great start," said John Squire, vice president of strategy for Coremetrics. "It really shows really strong consumer sentiment for buying and for going online."

Some of the so-called "big box" retailers have already reported that HDTVs, laptop and netbook computers, and Zhu Zhu pets have been among the biggest sellers.

The hope is that today (Monday) - so-called "Cyber Monday" - will provide retailers with a nice tailwind as they head toward the holidays. Cyber Monday - the Monday after Black Friday - has become a huge online shopping day.

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Although growing, YUM, CMG and DPZ aren¡¯t worth their P/E's

Fast-food companies are doing well thanks to global growth and popular store concepts. But we’ll know just how well they’re doing when Yum! Brands (NYSE:YUM) reports its results Tuesday after the market closes. But YUM is far from the only restaurant stock out there — for example, there’s Chipotle (NYSE:CMG) and?Domino’s (NYSE:DPZ). Will any of these companies fatten your net worth?

Yum! Brands is a tale of two?regions — a slumping U.S., and a booming China and rest of the world. YUM operates 38,000 restaurants globally, many of those under the Taco Bell, Pizza Hut and KFC brands. But thanks to growth overseas, Yum! Brands is expected to report higher revenue and profit in its third-quarter report. Almost three-quarters of?Yum! Brands’ operating profit comes from China and other foreign countries — even though they account for a relatively meager 50% of its total restaurant count.

But one of the downsides of the growth in China is the risk that inflation — in the form of higher labor and commodity costs?– will take a bite out of YUM’s profits. Meanwhile, Yum Brands’ U.S. operations are flagging. In the second quarter, its operating profit there fell 28% in all three of its core brands.?Its biggest problem has been with Taco Bell, which accounts for 60% of its U.S. profit.

FactSet-polled analysts expect Yum! Brands to report 82 cents a share of adjusted earnings on $3.08 billion in revenue — that would be an EPS increase of 12.3% and a revenue rise of 73 cents per share on revenue of 7.1% compared to the third quarter of 2010.

Chipotle’s growth could accelerate if its new newly opened ShopHouse Southeast Asian Kitchen can do for Asian noodles what Chipotle already has done for Mexican food. Based on the popularity of its Washington, D.C., store, opened recently, ShopHouse��s prospects look g! ood.

And while Domino’s was dogged for years for its low-quality pizza, it made wholesale changes to its base pie in 2010, and the company recently introduced a new ��artisan�� line that features feta cheese and so-called Tuscan salami that may help boost public perception of its quality.

But is any of this enough to justify an investment in Yum! Brands, Chipotle or Domino’s? I would skip them all for now, as they are too expensive when compared to their earnings growth. Here’s my reasoning:

• Yum: Growing, profitable company; overpriced stock.?Yum revenues were up 4.7% to $11.7 billion in the past year, and its net income?grew 8.1% to $1.2 billion, yielding a solid 10.3% profit margin. But its price/earnings-to-growth ratio is an overvalued 1.61 (where 1.0 is considered fairly valued) on a P/E of?19.5 on earnings forecast to grow 12.1% to $3.19 in 2012.
• Chipotle: Rapidly growing, highly profitable company; overpriced stock. Chipotle’s revenues are up 21% in the past year to $2 billion, and its net income?climbed 41% to $192 million, yielding a solid 9.6% net profit margin. And its PEG is?a high?1.77 on a P/E of?48.4 on earnings forecast to grow 27.3% to $8.67 in 2012.
• Domino’s: Growing,?decently profitable company; pricey stock. Domino’s revenues are up 11.9% in the last year to $1.6 billion, and its net income exploded 10.2% to $93 million, yielding a slim 5.8% net profit margin. And its PEG is?a high?2.05?with a P/E of 26.5 on earnings forecast to grow 12.9% to $1.83 in 2012.

The market is overestimating the growth prospects for these fast-food purveyors. Avoid them for now, as they could unsettle your portfolio.

Peter Cohan has no financial interest in the securities mentioned.

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Hard Drive Makers Fall on Wedbush Downgrade

Shares of both Seagate Technology (STX) and Western Digital (WDC) are trading lower today, in the wake of somewhat bearish sentiment from Wedbush Securities. Analyst Kaushik Roy downgraded both of the hard-disk drive makers to Neutral from Outperform.

“We want to take some profits and reduce exposure to HDDs as weenter the seasonally soft June quarter,” Roy writes. “Inventories are not bloated at this time, but are starting to creep up and the directional change may make investors more cautious at this time.”

Over the last year, shares of Seagate are up 191%, with Western Digital stock up 89%. The Nasdaq, by comparison has risen 48%.

Roy’s new price targets are $23 for Seagate (from $25) and $48 for Western Digital (from $55).

In today’s trading:

• Seagate is down 3.3%, or 63 cents to $18.45.
• Western Digital is down 1.8%, or 73 cents, to $40.36.

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Let's See If Walter Energy's Growth Is for Real

Walter Energy (NYSE: WLT  ) carries $278.4 million of goodwill and other intangibles on its balance sheet. Sometimes goodwill, especially when it's excessive, can foreshadow problems down the road. Could this be the case with Walter Energy?

Before we answer that, let's look at what could go wrong.

AOL blows up
In early 2002, AOL Time Warner was trading for $66.27 per share.

It had $209 billion of assets on its balance sheet, and $128 billion of that was in the form of goodwill and other intangible assets. Goodwill is simply the difference between the price paid for a company during an acquisition and the net assets of the acquired company. The $128 billion of goodwill in this case was created when AOL and Time Warner merged in 2000.

The problem with inflating your net assets with goodwill is that it can -- being intangible after all -- go away if the acquisition or merger doesn't create the amount of value that was expected. That's what happened in AOL Time Warner's case. It had to write off most of the goodwill over the next few months, and one year later that line item had shrunk to $37 billion. Investors punished the stock along the way, sending it down to $27.04 -- or nearly a 60% loss.

In his fine book It's Earnings That Count, Hewitt Heiserman explains the AOL situation and how two simple metrics can help minimize your risk of owning a company that may blow up like this. Let's see how Walter Energy holds up using his two metrics.

Intangible assets ratio
This ratio shows us the percentage of total assets made up by goodwill and other intangibles. Heiserman says he views anything over 20% as worrisome, "because management might be overpaying for the acquisition or acquisitions that gave rise to the goodwill."

Walter Energy has an intangible assets ratio of 4%.

This is well below Heiserman's threshold, and a sign ! that any growth you see with the company is probably organic. But we're not through; let's also take a look at tangible book value.

Tangible book value
Tangible book value is simply what remains after subtracting goodwill and other intangibles from shareholders' equity (also known as book value). If this is not a positive value, Heiserman advises you to avoid the company because it may "lack the balance sheet muscle to protect [itself] in a recession or from better-financed competitors."

Walter Energy's tangible book value is $1.8 billion, so no yellow flags here.

Foolish bottom line
To recap, here are Walter Energy's numbers, as well as a bonus look at a few other companies in its industry:

Company	Intangible Assets Ratio	Tangible Book Value (millions)
Walter Energy	4%	$1,829
CONSOL Energy (NYSE: CNX  )	0%	$3,427
Cliffs Natural Resources (NYSE: CLF  )	10%	$4,336
Mechel OAO (NYSE: MTL  )	5%	$3,808

Data provided by S&P Capital IQ.

Walter Energy appears to be in good shape in terms of the intangible assets ratio and tangible book value. You can never base an entire investment thesis on one or two metrics, but there are no yellow flags here. If any companies you're researching do fail one of these checks, make sure you understand the! busines s model and management's objectives. I'll help you keep a close eye on these ratios over the next few quarters by updating them soon after each earnings report.

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LinkedIn Sets an IPO Price Range, but a Boost Is Likely

LinkedIn threw investors a bone on Monday,releasing the initial pricing range for its long-awaited IPO. The popular social networking firm, which gears itself toward business-related schmoozing and résumé-posting users opened the game with a pricing range of $32 to $35 a share. That would raise the company and its private investors around $273 million, assuming it launches at the high end of its initial pricing range and sticks with its current plan to float roughly 7.8 million shares in the offering.

However, Paul Bard, vice president and an IPO expert with Renaissance Capital, says investors will likely see LinkedIn raise both the number of its shares offered and increase the pricing range before its IPO debuts. LinkedIn currently has its IPO tentatively slated for May 18.

"I'm sure this deal will be heavily oversubscribed, so it won't be surprising to see its offering increased" Bard says. "This is an IPO that every growth [fund] manager will want to own. It's one of those must own stocks."

The Beginning of the Next Wave

Investors are salivating over social networking stocks. Just last week, Renren (RENN), a Chinese social networking giant, kicked off its IPO priced at $14 a share. Renren's shares rocketed as much as 71% to $24 a share on that first day of trading, before coming back to Earth to close at $18.01.

Renren's market cap is currently north of $4 billion and LinkedIn's valuation isn't too far behind. Based on its outstanding shares and the high end of its IPO pricing range, LinkedIn is currently valued at approximately $3.3 billion. Facebook, by comparison, has an estimated value of $50 billion, based on a recent investment involving Goldman Sachs (GS).

"LinkedIn will be one of the most exciting! IPOs we have seen in some time and there will be a tremendous amount of enthusiasm for this company," Bard said. "It'll be the beginning of the next wave of Internet IPOs we'll be seeing over the next 12 to 18 months."

Since the start of the year, there have been 55 IPOs that have hit the market, excluding special purpose acquisition company deals. Of this group, technology IPOs accounted for 32.7% -- the largest slice of the pie -- according to Renaissance Capital's IPO data.

And while the average first day pop of an IPO stock has risen slightly to 11% this year, the market is far from returning to the go-go days 1999, near the height of the Internet bubble, when IPO's averaged nose-bleeder gains of 72% on their first days of trading.

Bard said institutional investors are probably keeping LinkedIn's investment bankers hopping, inasmuch as the social networking company is pushing to launch its IPO nine days after setting its initial pricing range. Typically, companies will usually wait at least two weeks from that point before floating an IPO, Bard noted.

"By the end of this week, we'll probably see a good indication if they're planning to bump up the pricing range," says Bard.

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Good News For Dell? Microsoft See Vista Driving PC Sales

According to Reuters, Mr. Ballmer of Microsoft (MSFT) sees the new Vista OS driving an "up tick" in PC sales.

Any news that PC sales could move North might be a relief for Dell (DELL). The big PC company has already begun selling machines with Vista installed.

Hewlett-Packard (HPQ) has recently extended its lead in the US PC market, leaving Dell in second place. But, any increase in overall PC sales should be seen as helping Dell. As its sales have faltered, it stock price has dropped from a 52-week high of over $32 to under $24.

Perhaps Vista can help Dell back on its feet.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

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Alcoa, JPMorgan, Bank of America: Dow Winners (Update 1)

The Dow Jones Industrial Average finished 2012's first trading session sharply higher on Tuesday as strong economic data gave the bulls some room to run in the new year.

The blue-chip index rose roughly 180 points, or 1.5%, to finish at 12,397. At its peak for the session, the Dow ran as high as 12,479, a gain of more than 280 points.

Twenty-six of the Dow's 30 components rose on Tuesday with aluminum producer Alcoa(AA) posting the largest percentage increase, advancing 6.7% to $9.23. The Dow's big banks were also strong with Bank of America(BAC), adding 4.3% to $5.80; and JPMorgan Chase(JPM), rising 5.2% to $34.98.

Traditionally the first Dow component to report its quarterly results, Alcoa is scheduled to deliver its fiscal fourth-quarter numbers on Jan. 9. The average estimate of analysts polled by Thomson Reuters is for a profit of 2 cents a share for the December-ended period on revenue of $5.79 billion.

Bank of America shares were able to rally despite a research report from Keefe, Bruyette & Woods that said the bank could have a "material miss" in its fourth-quarter results because of its mortgage-related legal exposure.

The bank is scheduled to report its fourth-quarter results on Jan. 19 and KBW expects Bank of America to post a loss of 3 cents a share for the three-month period. The average estimate of analysts polled by Thomson Reuters is for earnings of 18 cents a share in the December quarter on revenue of $23.67 billion.

Caterpillar was another strong performer within the Dow, gaining 3.7% to $93.98.

The heavy machinery manufacturer expects 10% growth in China's construction market, according to Reuters.

Shares of Cisco rose 3.4% to close at $18.63 after JPMorgan upgraded the stock to overweight from neutral. The firm has a 12-month price target of $21 on the stock.

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Avon, Express Scripts: After-Hours Trading

Shares of Avon Products(AVP) rose in late trades after the New York City-based beauty products seller said it's looking for a new chief executive officer.

Current CEO Andrea Jung is being named executive chairman as part of the company's decision to separate the chairman and CEO roles, and Avon plans to conduct an external search for a new CEO.

"I believe the time is right to separate the Chairman and CEO roles and I look forward to continuing to serve Avon as Chairman as we address the company's growing scale and opportunities," said Jung, who has been Avon's CEO since 1999.

The stock was last quoted at $17.13, up 4.2%, on volume of more than 170,000, according to Nasdaq.com. Based on Tuesday's regular session close at $16.14, the shares are down more than 40% so far in 2011.

Jung is going to work with the board to find her replacement and will continue to serve in dual roles until her successor is found.

The majority of Wall Street is in wait-and-see mode on Avon with 10 of the 16 analysts covering the shares at hold, and the remainder split between strong buy (4) and buy (2).

Express scripts

Express scripts(ESRX) sold off in extended action after the pharmacy benefits management company said in a regulatory filing that it's involved in a dispute with customer WellPoint(WLP) that could wind up in litigation between the two parties.

"The dispute, raised by WellPoint, relates to the contractual interpretation of certain terms in the PBM agreement and certain operational matters associated with Express scripts' performance thereunder," Express script! s said i n a Form 8-K filing with the Securities and Exchange Commission. "Although WellPoint has raised the possibility of litigation to resolve these matters, the parties have been seeking to settle these matters through discussions, and Express scripts believes that the parties will be able to resolve these matters satisfactorily."

Shares of Express scripts were last quoted at $43.15, down 4.5%, on late volume of nearly 800,0000. Year-to-date, the stock is down nearly 15%.

Express scripts said in its filing that it doesn't expect the resolution of the dispute with WellPoint to have a material adverse impact on its business but added "there can be no assurance in this regard."

--

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Reserve Primary Fund Starts $1 Billion Distribution

The Reserve Management Company said that it began distributing on October 2 about $1 billion, or 22% of the Reserve Primary Fund's remaining asset value, to fund shareholders, marking the fifth such distribution to shareholders since the Primary Fund broke the buck on September 16, 2008. Reserve President Bruce Bent said in a statement that "We continue to work as quickly as possible to finalize the liquidation of the Fund while treating all shareholders equitably. Thank you for your patience."

The distribution will leave about $3.5 billion in the Reserve Fund, which includes the Fund's worthless Lehman Brothers securities that forced it to break the buck, which in turn is blamed by many for the financial crisis that came to a head just a year ago.

The company said that once this latest distribution is made, about 92% of the Fund's assets as of September 15, 2008, will have been returned to the Fund's shareholders.

Europeans Raid Gold Bin; ‘King Dollar’ Kudlow Exclaims Gold New Reserve Currency

By Dominique de Kevelioc, de Bailleul
Beacon Contributing Writer

Gold‘s relentless march to new highs denominated in the world’s major currencies of the Euro, Yen, Sterling and, now, the Dollar cannot be glossed over by puppet guests paraded on CNBC armed with their "barbarous relic" and "gold bubble" scripts. Even bag-man great-pretender gold-bug patsy of Wall Street, Dennis Gartman, can’t talk his way out of this 12-alarm event.

Gartman always appears to regret the rise in the gold price, or how reluctant he is to "bet" against the Dollar by holding gold. Just YouTube Dennis Gartman and listen for the carefully crafted backhanded bullish spew regarding the yellow metal, undoubtedly practiced in front of a mirror before he’s on cue to recite his lines. In return, good little Dennis is rewarded with repeated appearances on CNBC and exposure to what he sells, a newsletter, the Gartman Letter. Someone swears after each CNBC appearance the weak-chinned Gartman leaves a polished apple on GE’s Jeff Immelt’s desk. Sorry Dennis, no one likes a double agent.

The search for the truth in this propaganda war against sound-money principles is elusive unless you know the various animals of the Kingdom.

The realization of Europeans and former lovers of the Euro that it, too, is slated for the fiat currency graveyard has lifted gold to new highs in a bunch of important currencies. As the Dollar gold price approached new highs during the Thursday’s market meltdown, even Larry "King Dollar" Kudlow had to admit gold’s strong rise against the ol’ reliable Dollar and the safety trade it once represented signals an ominous turn of events. "Gold, the world’s new reserve currency," exclaimed Kudlow.

"Clearly, gold has become the only reserve currency not backed by debt," said James DiGeorgia, publisher of GoldandEnergyAdvisor.com. DiGeorga expects Dollar gold to reach $1,500 by year-end.

Trichet and the ECB caved in ! over the past weekend to a policy of printing euros, becoming the latest contestant on the Price is Too High–the Euro, that is. Europeans bought gold in such large quantities, many bullion dealers and retailers were caught off guard and couldn’t meet panic demand for the newly found "money." For example, online precious metals dealer, Kronwitter-Munzen, is no longer taking orders, leaving a message on its site that reads:

"Dear customers, due to the enormous number of orders we can take at the moment no new orders via the Internet, email or fax."

The sound money advocates were heard all week chiding Jean-Claude Trichet and the EC for giving up on the Euro. Famed investor and ex-partner of George Soros at the Quantum Fund, Jim Rogers, said the ECB is playing copycat to the Fed’s Dollar debauching operation, a miserable mistake echoed last weekend by Bundesbank central banker Axel Weber, who said, Trichet’s policy change to purchase government bonds now "poses significant stability risks." Rogers said the move by the ECB to instruct Euro zone banks to buy sovereign debt is just "another nail in the coffin" for the Euro.

As of 9:11 Thursday morning in New York, the Euro still can’t get up from the mat, trading at 1.259 against the Dollar.

"Managing" currencies has always been a political tool, but Rogers and other astute investors make gobs of money during times of political turmoil. Rogers expects a complete breakdown of the Euro and "won’t sell" his gold.

"It's a political currency and nobody is minding the economics behind the necessities to have a strong currency," Rogers said. "I'm afraid it's going to dissolve. They're throwing more money at the problem and it's going to make things worse down the road."

Demand for gold has just turned mega-global almost overnight. It appears cooky tinfoil-hat wearing analysts predicting $5,000 gold sometime this decade may not be that crazy after all.

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What's Eddie Lampert Up to This Quarter?

Let's be clear: You can make a lot of money following the moves of great investors. They have teams of analysts, endless resources, long experience, and great track records. Luckily, if they manage over $100 million, they must report their holdings every three months! Thus, we can see the ebbs and flows of their portfolio throughout the year -- buys, sells, and holds. Why ignore a potential gold mine of stock ideas?

Today's review
Today we'll focus on Edward Lampert. Mr. Lampert runs ESL Partners, based in Greenwich, Conn., which reported assets under management of $9.1 billion at the end of the third quarter. Unlike most hedge fund investors, Lampert is known for taking large positions and holding them for long periods. (Kinda like that Buffett guy!)

Lampert's unusual approach has led him into long-term holdings of AutoZone (NYSE: AZO  ) , AutoNation (NYSE: AN  ) , and Sears Holdings (Nasdaq: SHLD  ) , each of which he's held for many years. In the case of Sears Holdings, Eddie has been chairman since merging Kmart with the old Sears Roebuck in 2005.

With that in mind, let's take a look at what Eddie Lampert was up to last quarter.

Top 10 Holdings

$550

As of June 30, 2011	Shares Held (in millions)	Value* (in millions)
Sears Holdings	48.2	$3,442
AutoZone	9.5	$2,789
AutoNation	62.2	$2,278
Gap (NYSE: GPS  )	30.4
Capital One Financial	6.3	$323
CIT	5.4	$238
Wells Fargo	4.6	$130
Cisco	7.5	$118
Seagate Technology	7.2	$116
Genworth Financial	10.9	$112

Source: 13F-HR Filings for RBS Partners. *Based on stock price at filing date.

?

As of Sept. 30, 2011	Shares Held (in millions)	Value* (in millions)
AutoZone	8.9	$2,849
Sears Holdings	48.2	$2,771
AutoNation	61.8	$2,027
Gap	36.3	$589
Capital One Financial	5.9	$235
CIT	5.8	$175
Cisco	7.5	$117
Wells Fargo	4.6	$112
Seagate Technology	9.7	$100
Big Lots	1.9	$?65

Source: 13F-HR Filings for RBS Partners. *Based on stock price at filing date.

Taking a closer look: Gap
One of Lampert's newer holdings that he continues to grow! is Gap. Most Americans are well-versed in Gap's apparel: Since the late 1980s, Gap has defined the "Classic American Style" -- one now followed by retailers ranging from J.Crew to American Eagle (NYSE: AEO  ) and Abercrombie & Fitch (NYSE: ANF  ) , who add their own twists.

However, Gap's stunning growth in both sales and market capitalization during the '90s came to a halt in the '00s. In part, this is due to simple financial gravity -- the idea that "trees don't grow to the sky." In part, one could say that Gap has not been the superb merchandiser it once was with Mickey Drexler at the helm (he's now the chief of private-equity owned J.Crew). While these explain the stagnation in sales growth, they don't suffice as reasons for Gap's shrinkage in stock market value.

As it turns out, Gap's stock was very high entering the '00s, and the pendulum has now swung in the other direction. Gap earned $877 million in the year ending Feb. 2001 on over 850 million shares outstanding, creating a stratospheric P/E multiple at its then-$45 share price.

With $1.2 billion in fiscal 2011 earnings and around 500 million shares left outstanding, Gap's current P/E is around 10, and it carries a mere 4 EV/EBITDA multiple. In addition, the company has been repurchasing shares at a lightning pace: From Sept. 2, 2010, to Aug. 30, 2011, the company reduced its shares outstanding by 17%!

Conclusion
Keep in mind that size is the enemy of returns. Successful investing brings the money manager more assets, and before you know it, the billions limit the universe of investable stocks. If you've got Lampert's $9 billion-plus under management, buying the kind of $100 million market-cap stock that I and the Motley Fool Special Ops team prefer doesn't move the needle on your returns.

But while smaller stocks are more likely to be mispriced, any size company ca! n offer value and catalysts. Opportunistic value means just that: Go where the opportunity is. Gap is a perfect example. And given Eddie Lampert's track record, Gap's low valuation, and its rapid �C red-hot! -- share buybacks, investors should think hard about giving Gap a spot in their portfolio.

Fool on!

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A 'Prudent' Trio In Commodities

by John Buckingham, editor The Prudent Speculator

We follow a broadly diversified strategy, seeking stocks for their long-term appreciation potential.? We buy only those stocks we find undervalued along several lines relative to their own trading history, those of their peers or that of the market in general.

Here's three such stocks in various commodity sectors: Archer Daniels Midland (ADM), BHP Billiton Ltd. (BHP) and Marathon Petroleum (MPC).

Archer Daniels Midland is a global leader in the distribution, processing and merchandising of agricultural products and commodities.

We are positive on ADM as we feel confident that the longer-term global secular growth trends in agriculture are intact.

We like that ADM's product line is diversified and that it continues to expand its global origination and transportation network. We are also fond of its 16% stake in Wilmar, Asia's largest agricultural processor.

ADM shares are cheap relative to 5- and 10-year average multiples. Shares offer a current dividend yield of 2.3%.

BHP Billiton Ltd., an Australian miner, is one of the world's largest with diverse businesses ranging from base metals and aluminum to diamonds and coal.

Concerns about the U.S. economy, the Eurozone debt crisis and a Chinese manufacturing slowdown have driven commodity volatility over the past six months, yet prices have not collapsed.

We remain optimistic on the long-term demand for BHP's stable of commodities as global economies recover and industrialization continues in China, India and other emerging markets. The balance sheet is strong and the shares carry a 2.7% yield.

Marathon Petroleum is one of the largest independent refining firms in the U.S. with its six domestic refineries having through- put capacity of 1.1 million barrels per day.

It also operates over 5,000 retail gasoline sites a! nd a log istics network that stores and transports crude products.

We like the diversified earnings mix that helps mitigate refining volatility and we think the shares are attractively valued, especially after recent weakness. The yield of 3.0% is also nice.
{$end}

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Seth Klarman Named Investment Guru of the Year 2011

Renowned hedge fund manager Seth Klarman was named the Investment Guru of the Year 2011 by GuruFocus readers. He got 38.2% of the total votes casted.

Since 2005, GuruFocus.com names its Investment Guru of the Year every year. The process involves two steps. In the first step GuruFocus.com asks users to nominate their choices of Investment Guru of the Year. The top 5-6 nominees will be put into a poll, and GuruFocus users will be able to vote for their Investment Guru of the year. The Guru who gets the most of the vote will be named Investment Guru of the Year.

Investment Guru of the Year 2010: David Tepper
Investment Guru of the Year 2009: Bruce Berkowitz
Investment Guru of the Year 2008: PremWatsa
Investment Guru of the Year 2007: KenHeebner
Investment Guru of the Year 2006: WarrenBuffett
Investment Guru of the Year 2005: DavidDreman

Long term value investor Don Yacktman has been nominated again for the candidacy. He got 19% of the votes. His mutual fund has delivered steady outstanding performances to shareholders.

Hedge fund manager Kyle Bass got 17% of the votes.

These are the detailed results:



Congratulations, Mr. Klarman!

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Email Confidential: Secrets for Finding Any Manager¡¯s Email Address

If you��re not getting the service you want, maybe you��re asking the wrong person.

Consider what happened to Kara Jones when she was having trouble with a JetBlue Airways ticket recently. Two weeks after sending an email through its website, she still had no response from the airline. So she started searching for the email address of a customer-service manager. Within a few minutes she found one.

��I re-sent the?email?�C and bam!�� she says. ��I got a phone call about two hours later from them.��

Knowing the right person can mean the difference between being ignored and getting the service you deserve. It��s a sad fact that some emails never reach a company, while others are lost or are ignored.

Don��t let that happen to you. Here are the steps to finding the right name and email address.

Do a smart search online.

Major companies usually list the names of their executives on their websites. In your favorite search engine, just type ��site:companyname.com��, ��email�� and ��customer service manager�� or ��vice president.�� You can add the term ��customer service�� if you pull up too many results. That could reveal the name an email address of the right person to contact. (The ��site:�� modifier ensures you��re just searching the company website.)

Make an informed guess.

You may not find a working email address, but it��s not hard to guess it. You should assume managers won��t carelessly post their email address online (although you��d be surprised). That doesn��t mean they don��t have an email address.

A former employee at Tiffany offers the following example: Let��s say you have a problem with that silver bracelet you bought for your better half. Let��s also assume that emails to the company are being ignored, which she assures me is unlikely.

Searching for emails at the ��@tiffany.com�� domain would reveal that all emails either follow the convention firstname.lastname@tiff! any.com or firstname_lastname@tiffany.com. Finding the CEOs name is easy �C just look up a list of its corporate executives online. I won��t keep you in suspense: it��s Michael Kowalski. Then try a few of the conventions, remembering that they sometimes also use a middle initial.

The correct email address could be michaeljkowalski@tiffany.com or michael_kowalski@tiffany.com or michael.kowalski@tiffany.com — or some other variation.

��So now I know the CEO��s name, I will send him an e-mail trying a few of these,�� says the ex-employee.

Ask for help.

If you��re looking for some expert assistance at finding the right contact without having to hire a private investigator, check out Amazon��s Mechanical Turk (https://www.mturk.com/). It lets your post the equivalent of a ��want�� ad for information, and an army of researchers is at your command.

Verify the email address.

There��s a way to tell if the emails you��ve collected will work. A site called Free Email Verifier allows you to check an address. I recently had to update the name of a customer service contact at an airline after a previous manager left. The company wouldn��t give me the name of the new manager, because they knew I would post his name and email address on my customer service wiki.

I found his name through an online search, made an educated guess about his email address, and used Free Email Verifier to make sure it was accurate.

If you get a bounceback or two, don��t worry. Keep trying. Sending an email is free, and eventually you��ll guess the correct address and connect with a manager who can help you.

Remember, these managers don��t have the right to keep their emails private. They are there to serve you, and if the email you sent to the company is being ignored, they need to hear from you.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twit! ter and Facebook or send him your questions by email.

 

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Carlyle Group Said to Be in Talks to Buy Highland¡¯s European Loan Business

Carlyle Group LP, the Washington-based private-equity firm, is in talks to buy Highland CapitalManagement LP��s unit that manages $3 billion in collateralizedloan obligations in Europe, according to two people withknowledge of the matter.

The companies haven��t come to an agreement and may notreach a deal, said the people, who declined to be identifiedbecause the sale isn��t public. Highland first put the portfolio,which includes five CLOs, up for sale earlier this year.

Carlyle is joining buyout firms such as Blackstone Group LP (BX)in leading an expansion into the European CLO market bypurchasing existing investments as the ability to raise newfunds remains challenging. There have been $11 billion of CLOsbacked by widely syndicated loans issued in the U.S. this year,while only one 858 million euros ($1.1 billion) fund was raisedin Europe, according to data compiled by Bloomberg.

Carlyle has been buying loan funds in the U.S. Last monthit said it bought Churchill Financial LLC to increase itslending business.

Earlier this year Carlyle acquired a $500 million CLO fromWells Fargo & Co.��s Foothill Group Inc. unit. It previouslybought CLOs overseen by Mizuho Alternative Investments LLC��sU.S. loan management business Mountain Capital Advisors andpurchased loans and other credits from Stanfield CapitalPartners LLC, Bloomberg data show.

CLOs are a type of collateralized debt obligation that poolhigh-yield, high-risk loans and slice them into securities ofvarying risk and return.

Blackstone��s European CLO

Natixis SA is advising Dallas-based Highland on the sale.Stefan Prelog, an outside spokesman for Highland, and RandallWhitestone, a Carlyle spokesman, declined to comment.

GSO Capital Partners LP, the debt unit of Blackstone,became the largest manager of CLOs in Europe after acquiringDublin-based Harbourmaster Capital Management Ltd. in earlyOctober, tripling its European loans under management to 11.5billion euros.

Highland would join ! Aladdin Capital Holdings LLC andResource America Inc., in selling their European CLOs as manyU.S. investors exit the European market.

Pramerica Investment Management Ltd., Prudential FixedIncome��s U.K.-based asset management business, took over a CLOmanaged by an Aladdin Capital subsidiary, according to a Jan. 10news release. Resource America said its subsidiary ResourceEurope Management Ltd., sold a CLO to an affiliate ofIntermediate Capital Group Plc, according to a Dec. 22 newsrelease. New York-based investment manager Octagon CreditInvestors LLC also sold its European CLO this year.

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Lawsuit Loans

Lawsuit Loans which are also known as pre settlement cash advances allow a financially strapped plaintiff to access a portion of their future legal settlement to pay todays necessary living expenses. Personal Injury and worker compensation lawsuits can take years to resolve and large insurance companies have the financial strength to legally delay the process which can financial ruin an injured claimant who is looking for a fair settlement offer.

Companies like Global Financial offer cash advances against all types of Personal Injury & Worker Compensation claims. It works like this: Global Financial will review the merits of an applicants legal claim and determine the chance & size of a financial recovery. They then offer the claimant a small percentage of the total value of their claim in return for an assignment of a portion of the potential future proceeds in the claim. If there is no financial recovery from the claim then the funding company receives nothing. This makes lawsuit loans very risky and actually a venture capital investment rather than an actual loan as the names suggests.

The fees charge by lawsuit loan companies can vary dramatically but it is usually best to stick with the larger companies as they work on larger volumes and lower pricing. Usually a funding company will charge either a monthly fee or a flat fee depending on the risk associate with the claim.

It is my personal opinion that a claimant should ask themselves one question before applying for a cash advance against their pending claim. Will the advance that I receive pay immediate and necessary living expense? If the answer is yes then you should accept a cash advance and continue with your legal claim. If the answer is no then it might be wise to hold off and wait before applying for a lawsuit loan or cash advance against your pending claim. In addition, a lawsuit loan may be a very important tool when the defendants insurance carrier decides to make a low ball offer for settlement in the! claim. You can then use a lawsuit loan as a financial tool to say no to the low ball offer and have the financial strength to wait for a higher and fairer settlement.

Lawsuit Loans have been trademarked by Global Financial as 'Lawsuit Insurance' because they offer insurance like protection to plaintiffs in the event that their claim is unsuccessful. If a plaintiff takes a cash advance against their pending legal claim and their claim is unsuccessful then they get to keep the money that was advanced to them. Thus the cash advance guarantees that their claim will be financially successful either by way of the cash advance or by way of settlement or judgment.

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Target, Costco Seen Posting Strong December Sales Growth

Analysts’ same-store sales estimates indicate that discounters are expected to post some of the strongest numbers among retailers for December.

Overall, the 22 retailers that report monthly numbers are expected to post 4.2% same-store sales growth, against a 3.1% increase last Deecember. Discount stores (there are only 3 that report monthly numbers) are expected to show 6% same-store sales growth, on top of 3.4% growth last year.

Among the big discounters, Target (TGT) is expected to post 4% growth, on top of 0.9% growth last year, and Costco (COST) is expected to post 8% growth on top of 6% growth last year.

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Consumer confidence shoots higher again

NEW YORK (CNNMoney) -- Consumer confidence shot higher for the second month in a row in December, according to a survey from The Conference Board.

The research firm's overall confidence index, released Tuesday, jumped 9.3 points to 64.5. The increase follows a 14.3-point rise in November.

"After two months of considerable gains, the index is now back to levels seen last spring," said Lynn Franco, director of the group's research center. "Consumers are more optimistic that business conditions, employment prospects and their financial situations will continue to get better."

Still, Franco cautioned that it's too soon to tell if the year-end optimism is simply a rebound from declines earlier this year or a sustainable shift in attitudes.

The jump of almost 24 points since October is the biggest two-month increase since March 1991, when consumer confidence got a shot in the arm from the quick U.S. victory in the first Gulf War. But the recent increases follow sharp declines that occurred from July through October as both economists and the general public became worried that the U.S. was at risk of falling into a new recession.

"When we get to our low point in October, that was probably overdoing it," said Tim Quinlan, economist with Wells Fargo Securities, who said that reading was below the levels of the 2001 and 1990 recessions. "I don't think things were that bad then. I don't know that things are that great now, but it does signal that consumers were feeling better going into the holidays, which is a key time for retailers."

Helping to lift confidence is the fact that since mid October stocks have rallied, gas prices have fallen and the labor market improved with both better hiring and a decrease in the number of layoffs.

While the survey found that only 6.7% of consumers believe jobs are now plentiful, that's nearly double the 3.6% who felt that way in October. Those who believe the job picture will be better six month! s from n ow rose to 13.3% from 10.8%.

Most importantly for consumer spending, those who expect their own income to increase in the next six months rose to 17.1%, outpacing the 14.4% who expect their income to fall. This is the first time since April that the percentage of people who expect their income to improve topped those who expect it to drop.  

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1 Dividend to Buy and 1 Dividend to Sell

The following video is part of our "Motley Fool Conversations" series, in which Austin Smith, consumer-goods editor and analyst, and Andrew Tonner, technology editor and analyst, discuss topics around the investing world.

In today's edition, they continue their series of looking at one dividend stock to buy and one to sell in 2012. Austin is giving Garmin a thumbs-down because of its recent dividend cut, competition from smartphones, and lack of entrance into the automotive sector. Andrew thinks China Mobile is a compelling buy. Its subscriber base is twice the U.S. population, it has a massive amount of cash, and it continues to put up steady growth figures.

If you're interested in Garmin or China Mobile on your quest for high-yielders, The Motley Fool has compiled a special free report outlining our 11 favorite dependable dividend-paying stocks. It's called "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can access your complimentary copy today at no cost! Just click here to discover the winners we've picked.

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Oh! Oh! Oh! Beware of These 3 Holiday Scams

The holidays are high season for scam artists. That��s because consumers like you are at your most vulnerable when you’re seeking gifts for your loved ones. (It��s the most wonderful time of the year, isn��t it?)

There are two kinds of scams, as I identify in my new book Scammed: How to Save Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals:

• ��Lowercase�� scams, which are obvious rip-offs, like giving money to a nonexistent charity.
• ��Uppercase�� scams, which are perpetuated by real businesses with a product. But, they attempt to defraud you by doing things like mislabeling a product as being ��on sale�� when, in fact, it��s been marked up.

Make no mistake, it��s open season on shoppers, and both kinds of scams are all around you. One recent survey estimated that the average American household spends $1,700 on holiday shopping. Some businesses earn a bulk of their revenue between Black Monday and New Year��s Day, while others spring up around that time?(only to?disappear afterwards).

Everyone �C including the scam artists �C are out in full force. Here are three common lowercase scams to look for. Next week, I��ll take a look at the uppercase scams.

Bogus Bell Ringers (and other Holiday Come-Ons)

While a vast majority of the bell ringers that stand in front of the department store are legit, it��s still worth paying attention to them. Are they with the Salvation Army, which sponsors the Red Kettle Christmas Campaign – i.e.-? the real deal? If not, you might want to take your money elsewhere, or just make your donation online. In one story that made the rounds a few years ago, thieves stole several bell-ringer jackets and officials feared they could pose as bogus bell-ringers. Be aware before making a donation. Just because some guy is dressed in a Santa suit doesn��t make him authentic.

The Gas Can Scam

This is a favorite! confide nce scam during the holidays, because it��s relatively easy to pull off in the parking lot of a busy mall. Here��s how it works: The scammer approaches you with a gas can and a tall tale about having run out of fuel. He��s desperate to get home to his family. Could you ��lend�� him just a few dollars? I��ve personally been approach by one of these scam artists during the holidays, a time when a lot of folks are feeling charitable. You��re better off phoning mall security, which is in a far better position to help a stranded motorist �C and much less likely to fall for a fraud.

Holiday Dot-Cons

Christmas is a time for online shenanigans, according to George Delta and Jeffrey Matsuura��s book, Law of the Internet. The level of fraud encountered by U.S. online retailers is estimated to be hundreds of millions of dollars each season, they note. In one cybercrime enforcement sweep, federal authorities charged approximately 135 people with various forms of Internet fraud, affecting 89,000 victims and inflicting about $176 million in damage. A few years ago in England, more than 1,200 sites were shut down during the holidays offering everything from designer goods to counterfeit jewelry. How to avoid them? Buy from someone you know and trust, and always, always pay with a credit card.

This is by no means an exhaustive list of the perilous ��lowercase�� scams that lurk while you do your holiday shopping. But these are likely to affect consumers like you the most.

Give to a reputable charity, patronize businesses you trust and don��t believe everything a stranger tells you. I guarantee your holidays will be a lot happier if you do.

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DrStockPick.com Stock Report! 7/31/09, SBGI, PC, CLSN, TSYS, CAT, AZN

DrStockPick.com Stock Report!

Friday July 31, 2009

Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) was notified by Cunningham Broadcasting Corporation that Cunningham’s lenders under its $33.5 million term loan facility, which became due on July 31, 2009, have provided them an extension to October 30, 2009. The extension requires that Cunningham make $200,000 principal payments on its term loans as of the first business day of each of August, September and October, with the balance due and payable on October 30, 2009. During this time, the lenders and Cunningham will work towards a resolution on how to satisfy the debt maturity. Sinclair operates six television stations on behalf of Cunningham pursuant to local marketing agreements.

Panasonic Corporation (NYSE: PC) today announced its support of the Solar Electric Vehicle Team at the Massachusetts Institute of Technology (MIT SEVT), in their participation of the Global Green Challenge (GGC), to be held in October 2009 in Australia. Under the sponsorship agreement, Panasonic is providing the MIT SEVT team with its high-capacity (2.9 Ah), lithium-ion batteries to be used in the team’s vehicle. Panasonic will have the right for its logo to appear on the body of the vehicle.

Celsion Corporation (NASDAQ:CLSN), a biotechnology drug development company that is leveraging its heat sensitive liposomal technology platform to encapsulate and deliver high concentrations of proven chemotherapeutics, today announced that it would hold a conference call to discuss second quarter 2009 results at 11:00 a.m. Eastern Time on Wednesday, August 5, 2009. To participate in the call, interested parti! es may d ial 1-800-289-0462 or 1-913-312-1415 (International) and use Conference ID: 5488524 to register ten minutes before the call is scheduled to begin. The call will also be broadcast live on the internet at http://www.celsion.com

TeleCommunication Systems, Inc.? (NASDAQ: TSYS), a leading provider of mission critical wireless communications, announced it has filed two patent infringement lawsuits in the U.S. District Court for the Eastern District of Virginia against Sybase 365 Inc., a wholly owned subsidiary of Sybase (NYSE: SY). TCS seeks an injunction against Sybase 365 from further infringement in each case, as well as monetary damages.

Caterpillar Inc. (NYSE: CAT) announced today that due to the global recession and to better align its global capacity with expected demand levels, Caterpillar Africa Pty. Ltd. will close its Boksburg, South Africa, manufacturing facility. The decision follows consultations with the unions and non-unionized employees that took place over the past two months. The consultations were done in full compliance with South African labor legislation and have concluded.

AstraZeneca (NYSE: AZN) today announced that the 2009 US AGAINST ATHERO tour is in the San Francisco Bay Area from August 1-9 for the National Senior Games, the largest multisport event in the world for people over 50 years of age, to help educate attendees about atherosclerosis (”athero” for short) — the progressive buildup of plaque in the arteries and a leading cause of coronary heart disease (CHD). CHD is the number one cause of death in the United States.

Source: E-Gate System from Alphatrade.com

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Are You Missing Something Easy at Rockwell Automation?

Margins matter. The more Rockwell Automation (NYSE: ROK  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, comparisons to sector peers and competitors, and any trend that may tell me how strong Rockwell Automation's competitive position could be.

Here's the current margin snapshot for Rockwell Automation and some of its sector and industry peers and direct competitors.

Company	TTM Gross Margin	TTM Operating Margin	TTM Net Margin
Rockwell Automation	39.8%	15.5%	11.6%
Emerson Electric (NYSE: EMR  )	39.5%	17.5%	10.2%
Eaton (NYSE: ETN  )	30.0%	10.2%	8.1%
Woodward (Nasdaq: WWD  )	30.0%	12.6%	7.7%

Source: S&P Capital IQ. TTM = trailing 12 months.

Unfortunately, that table doesn't tell us much about where Rockwell Automation has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for ! its prod ucts. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter. You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for Rockwell Automation over the past few years.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here's how the stats break down:

• Over the past five years, gross margin peaked at 42.3% and averaged 40%. Operating margin peaked at 17.2% and averaged 14.1%. Net margin peaked at 29.7% and averaged 13.2%.
• TTM gross margin is 39.8%, 20 basis points worse than the five-year average. TTM operating margin is 15.5%, ! 140 basi s points better than the five-year average. TTM net margin is 11.6%, 160 basis points worse than the five-year average.

With recent TTM operating margins exceeding historical averages, Rockwell Automation looks like it is doing fine.

If you take the time to read past the headlines and crack a filing now and then, you're probably ahead of 95% of the market's individual investors. To stay ahead, learn more about how I use analysis like this to help me uncover the best returns in the stock market. Got an opinion on the margins at Rockwell Automation? Let us know in the comments below.

• Add Rockwell Automation to My Watchlist.
• Add Emerson Electric to My Watchlist.
• Add Eaton to My Watchlist.
• Add Woodward to My Watchlist.

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