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CORRECTED-Generation Yikes: Why young savers are avoiding stocks - Reuters
(Corrects to remove final two paragraphs because of questions about the source's reliability)
By Chris Taylor
Jan 18 (Reuters) - Ask any money manager about people who don't invest in stocks, and the answer is probably a little condescending. They just don't understand the market; they're not thinking about the long-term; they're unsophisticated, preferring to stick their money under a mattress.
But Diane Casaretti is no rube. She's a successful marketing rep in Stamford, Connecticut, and in her career has worked with many Wall Street banks and brokerage houses. But she's made a conscious, rational decision: Stocks just aren't for her.
"My parents always invested their money in the stock market, and all my friends' families did too," says the 26-year-old. "When the whole thing came crashing down with the financial crisis, that's when I said, 'No way am I comfortable with this.' To me it just doesn't seem logical, that you could save all that money and then potentially lose it all down the road."
It's a refrain that you're hearing more and more these days - and not from risk-averse seniors, as you might expect, but from those just starting out in their working and investing lives. Even with decades to go until retirement, and plenty of time to rebound from market collapses, many young Americans don't trust the stock market with their savings.
Take a recent Investing Sentiment Survey by Boston-based money managers MFS Investment Management. The poll discovered that 29 percent of people say they will never be comfortable investing in stocks - a shocking number in and of itself. But among Generation Y investors under 31, that number spikes to 52 percent.
If that sentiment holds, it means that a large chunk of an entire generation of investors could be shunning equities for years to come. And that's not exactly a tailwind for the Dow. "Those numbers are surprising to us, but you can't really blame them," says William Finnegan, MFS' senior managing director. "Younger folks are essentially saying that the market is a very scary place - and as a result, a lot of their money is just being held in cash."
Like Diane Casaretti, whose savings are sitting in a bank account earning around 1 percent. She's so freaked out by the wild market ride of the last few years that she never even set up her 401(k), with its promise of a company match.
That jibes with the MFS survey, which asked investors which asset classes they would deem an "excellent or very good place to invest." The only area on the rise: Safe harbors like bank CDs, savings accounts and money markets. As for stocks, from February to October of last year, that number was sliced in half: Only 18 percent of Americans now see equities as a very good place to put their money.
Judging from fund flows, that dire sentiment is having very real effects on asset allocation. Retail investors pulled almost $37 billion from stock funds in 2010, and more than $101 billion over the first 11 months of 2011, according to the Investment Company Institute.
In such numbers we may be witnessing the deep psychological damage the recession has wrought, MFS' Finnegan notes. "It's much like during the Great Depression, when the people who came through that became very conservative," he says. "It looks as though the new wave of younger investors is very conservative, and only comfortable with bank products. I don't think that changes in the short-term."
Of course, retirement prospects for Generation Y don't look very glamorous when their savings aren't even keeping up with inflation. Keeping savings in cash at a young age isn't going to help fund luxurious retirements. But given the power of compounding, an early aversion to stocks could prove especially harmful. According to data from Baltimore-based fund shop T. Rowe Price, if one saver puts away $500 a month from ages 21 to 30 and enjoys a 7 percent annual return, she will end up with almost a million bucks at age 65. That handily beats another saver who waits for that level of return until age 31 yet contributes all the way to 65, despite putting up $150,000 more than the first investor.
There is one bright spot for equities: The 401(k) plan. Despite the profound gloominess expressed in sentiment surveys, mutual-fund giant Vanguard Group notes that investors in its retirement accounts actually boosted their stock allocation in 2010, to 70 percent - up 2 percent over the previous year. That's in part thanks to industry trends like auto-enrollment, designed to hike plan participation rates. New investors are sometimes automatically slotted into target-date funds, which feature high doses of equities for younger investors.
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The author is a Reuters contributor. The opinions expressed are his own.
(Editing by Jilian Mincer and Beth Pinsker Gladstone)
In small business remarks, Obama targets property rights, too - FOX News
We’re seeing more and more of the real Barack Obama, as Election Day draws closer–more of the angry radical lurking behind the mask of Hope and Change.
Certainly his remarks Friday in Roanoke, Virginia, “If you’ve got a business, you didn’t build that. Somebody else made that happen”-- are the most chilling words ever uttered by a sitting president.
They represent a declaration of war not just on American business, which Obama already wants to hit with higher taxes come January, but the entire concept of private property. They’ve put every business and property owner on notice, that the fruits of your business are not yours but ours, and “someone else” -- meaning government and those it purports to represent and speak for-- is free to appropriate them by any means necessary.
This administration covertly began its war on property rights in 2009 when it seized control of General Motors and put the government and unions in charge, shoving aside legitimate credit-holders. But now the mask is completely off and we can see Obama firmly in a line of radical thought going back to Jean-Jacques Rousseau, the first modern thinker to claim that private property was the source of all our ills, Karl Marx, and Pierre-Joseph Proudhon, who declared “Property is Theft.”
That kind of thinking flies in the face of a tradition older than the Founding Fathers and defined by John Locke, that anything in nature with which I mingle my labor is rightfully mine–including the capital I invest to make the fruits of that property grow. For most small business owners, that capital is often their own personal labor, as any farmer, owner of a hair salon, dry cleaning parlor, car dealership, or video game software company, can tell you. Yet even if that company becomes as big as Apple or Starbucks, it still carries the seed of that original mingling of nature and labor. Its success is still the property of its owner or owners, and no one else’s.
Now Obama wants to sweeps that fundamental principle aside. “If you’ve been successful,” he told his Roanoke listeners, “you didn’t get there on your own.” That’s because (goes the argument) your property depends on roads and bridges and police and fire departments (even though you paid for them in taxes), and the labor of your employees (even though you pay their wages, not the government). So what you own, the president and others like him are saying, becomes in effect a public holding subject to rules of “fairness” and the “common good.”
This doesn’t just gut the concept of private property; it opens the door to social chaos.
Because if the government, or anyone else, feels that I’ve taken more than my fair share of that public holding, then they can help themselves–either through taxation (a power which, thanks to the ObamaCare Supreme Court decision, now looks virtually unlimited) or other, more violent means.
In short, Occupy Wall Street has just found a new commander in chief, and his name is Barack Obama.
As for America’s business owners, they need to get a new president in November -- before what was said in Roanoke becomes more than just words.
Historian is the author of the just released "Freedom's Forge: How American Business Produced Victory in World War II" (Random House May 2012) and the Pulitzer Prize finalist book "Gandhi and Churchill: The Epic Rivalry That Destroyed an Empire and Forged Our Age" (Bantam, 2008).
Success lights up night of business celebration - This is Gloucestershire
DAZZLING success stories lit up the Diamond Jubilee Stroud Life Business Awards as they celebrated the very best of the Five Valleys and Severn Vale.
Nominees, guests and VIPs filled a marquee at the Old Lodge on Minchinhampton Common in the blue riband event of the business year, held in association with WSP Solicitors.
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Stroud Life editor Jason Chare opens the awards gala night.
The gala dinner was opened by Stroud Life editor Jason Chare before he handed over as BBC sports presenter Jill Douglas as the MC for the evening.
Special guests included the Lord Lieutenant of Gloucestershire Dame Janet Trotter, former Winter Olympic ski jumper Eddie 'the Eagle' Edwards and Stroud MP Neil Carmichael.
The Diamond Jubilee Business of the Year was RDS Technology and MD Richard Danby said the award was for all 85 staff at the Minchinhampton-based instrument maker.
"It's about the people in the company," he said. "It's very much for them.
"Winning an award like this is something we will tell our customers in the UK and all over the world about."
Sandra Barton and Carol Barker from of BarBar Nursery won both the Businessperson of the Year and Small Business of the Year titles. Sandra said: "We are delighted and so are our staff. It's great recognition that we are doing something good."
Ben Ward from World Jungle, which won the Contribution to the Community Award for its work as a social enterprise building bridges in communities through the arts, said: "We are absolutely thrilled and delighted. This is really valuable to us in being able to create more projects."
Clare Janik from live-in care agency Corinium Care, which won the Customer Care and Service Award, was delighted. She said: "It's a great event and to be part of something successful like this is very special."
Wendy Thomson, whose fledgling eco cleaning business won the Environmental Business Award, was ecstatic. "I have to say thank you to the Stroud Businesswomen's Network," she said. "They've really supported me – it's onwards and upwards."
Oscar, Bafta and Emmy Award nominee, Arturi Films' David Pearson said recognition close to home was important. It was named Communicator of the Year.
"Not everyone knows who we are but we do a lot of work locally in helping people understand the film industry," he said.
Animal feed supplement experts Calinnova won the Award for Innovation. It supplies a feed which helps combat attention deficit disorder in horses. Office team leader Charlotte Doheny said: "It means a lot because the company has been going for 18 years and started off doing supplements for birds and grew. We're all very proud."
Fay Martin is courting interest from big high street names with her Fay's Studio greetings cards and giftbags. It was named Young Business of the Year. "It means a lot because I have built it up," said Fay. "I've had a lot of support and it's good to get recognition for doing something I've worked so hard for."
Young Businessperson of the Year Lucy Bourne from Expressware was delighted at the recognition the award brings. She said: "It's a local award and there are some great people to work with in this area – I don't intend to stop."
Dave Merrett of Family Business of the Year EC Merrett said: "I'm proud, especially as we are a family business."
Chris Pockett, head of communications at Apprentice Development Award winning Renishaw, said: "It is a great honour for us to be recognised for the work we have done over many years to develop the next generation of skilled engineers."
More pictures, Pages 8-11
U.S. Stocks Gain With Treasuries, Commodities; Euro Falls - Bloomberg
U.S. stocks rose for a second day amid better-than-estimated earnings and a jump in housing starts. Treasuries climbed while the dollar fell against most peers and natural gas led commodities to a sixth straight gain.
The Standard & Poor’s 500 Index added 0.7 percent to 1,372.78 at 4 p.m. in New York and the Stoxx Europe 600 Index closed up 1.1 percent. Ten-year Treasury yields dropped one basis point to 1.49 percent. German two-year notes rose after the nation sold 4.17 billion euros ($5.1 billion) of the securities with a negative yield for the first time, and the government’s five-year rate declined to the lowest ever. The euro halted a three-day advance to trade 0.1 percent lower.
Intel Corp. climbed 3.3 percent to pace the advance in technology companies and Honeywell International Inc. (HON) surged 6.7 percent to help lead industrial shares up after profits topped analyst estimates. U.S. housing starts jumped 6.9 percent to the highest level since 2008. Federal Reserve Chairman Ben S. Bernanke testified to Congress for a second day on the state of the economy, telling lawmakers in the House that monetary policy has helped growth and the job market.
“Earnings have been a mixed bag so far but given the healthy state of corporate America with cash on the balance sheets and valuations undemanding, we can weather this environment in terms of share prices,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said in a telephone interview. “Looking at the markets, all I can see in them is the Bernanke bid.”
Bernanke Watch
Stocks rallied yesterday, sending the S&P 500 up 0.7 percent, after Bernanke told the Senate Banking Committee that policy makers are studying options for further easing that may include additional asset purchases. Bernanke today said central bankers are capable of removing record stimulus from the financial system and raising interest rates when needed to avoid triggering inflation.
“It will be a similar pattern to what we’ve seen in previous episodes where the Fed cut rates, provided support for the recovery, and when the recovery reached a point of takeoff where it could support itself on its own, then the Fed pulled back, took away the punch bowl,” Bernanke told the House Financial Service Committee as part of his semi-annual testimony to Congress.
The Fed said the economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions, according to the central bank’s Beige Book business survey today, which is based on reports from its 12 district banks.
Market Leaders
Technology shares surged 1.9 percent as a group and industrial companies added 1.7 percent to lead gains among the 10 main industries in the S&P 500. Intel’s earnings of 54 cents a share topped the average analyst estimate of 52 cents. The company said revenue will increase 3 percent to 5 percent in 2012, lower than an earlier prediction for growth in the high single-digit percentages.
Intel had the biggest gain in the Dow Jones Industrial Average, followed by gains of more than 2 percent in Cisco Systems Inc., Microsoft Corp., International Business Machines Corp. and Hewlett-Packard Co.
‘Not Disastrous’
“Intel lowered guidance but it was not unexpected and not disastrous,” Michael James, a managing director of equity trading at Wedbush Securities Inc. in Los Angeles, said in an e- mail. “Pessimism (INTC) was pretty high and we’re now seeing people both covering and getting long some names. Intel’s leading the the technology group higher.”
EMC Corp. surged 9.4 percent after the software company said Pat Gelsinger will succeed Paul Maritz as chief executive officer of VMware Inc. Maritz will return to EMC, which owns 79 percent of VMware, as chief strategist. VMWare jumped 12 percent.
Honeywell rallied 6.7 percent after the maker of flight controls and thermostats reported better-than-estimated results driven by sales in its aerospace unit. Amphenol Corp., a maker of fiber-optic cables, and W.W. Grainger Inc., a distributor of building maintenance supplies, surged more than 11 percent for the biggest gains in the S&P 500 after releasing improved earnings forecasts.
Earnings Season
The S&P 500 has climbed for two straight days after slumping in seven of the previous eight sessions. The index is down more than 3 percent from a four-year high in April amid concern the economic recovery was slowing while investors braced for what is projected to be the first drop in quarterly earnings in almost three years.
Earnings have exceeded analyst estimates at 72 percent of the 68 companies in the S&P 500 that have reported results so far, according to data compiled by Bloomberg. Profits have slumped 3.3 percent for the group and the entire index is projected to report a 2.1 percent decrease in earnings.
Credit Suisse Group AG (CSGN) cut its year-end forecast for the S&P 500 to 1,425 from 1,440, citing the potential of a U.S. recession induced by so-called fiscal cliff. Andrew Garthwaite, global equity strategist, said he sees a 10 percent chance of the economy contracting should lawmakers do nothing to prevent about $607 billion of tax increases and spending cuts from kicking in at the end of the year.
The dollar weakened against 10 of 16 major peers, losing more than 0.3 percent versus the Japanese yen, Swedish krona and Australian dollar. The U.S. currency was little changed at $1.2284 per euro.
Commodities Gain
Natural gas surged as much as 8 percent, leading gains in 22 of 24 commodities tracked by the S&P GSCI Index, amid predictions of a smaller-than-normal increase in stockpiles. Cattle futures and hogs gained more than 2 percent on speculation that the declining U.S. herd size caused by rising feed costs will lead to a shortage of supplies.
Wheat rose for a sixth straight session on forecasts that dry weather will persist for the next week, further cutting the condition of U.S. crops.
Among European stocks, Credit Suisse jumped 4.5 percent after it announced measures to cut costs and boost capital by 8.7 billion Swiss francs ($8.9 billion). Puma SE tumbled 4.8 percent after Europe’s second-largest sporting-goods maker cut forecasts for sales and profit in 2012.
Analysts are cutting European profit forecasts at the fastest rate since 2009 as the region heads for a recession and growth in China slows for a sixth quarter.
European Yields
U.K. five-year note yields fell six basis points to 0.49 percent after Bank of England minutes indicated policy makers may reconsider the case for an interest-rate cut.
Germany’s two-year note yield dropped one basis points to minus 0.06 percent, while Finnish two-year yields fell below zero for the first time. Spain’s 10-year bond yield rose 14 basis points to 6.96 percent as the securities dropped for a fifth day.
The MSCI Emerging Markets Index declined 0.2 percent, halting a three-day gain. China’s Shanghai Composite Index rose 0.4 percent. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong dropped 0.9 percent. South Korea’s Kospi index slid 1.5 percent while Taiwan’s Taiex Index and the Philippine Stock Exchange Index lost more than 1 percent.
Chinese Premier Wen Jiabao said the nation’s labor situation will become more “severe,” stoking bets he’ll announce measures to spur growth as the State Council meets.
“There are expectations for more measures to boost the economy at the State Council meeting so investors are using that as a reason to buy,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.
To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
European Futures, Copper Advance; Asian Stocks Decline With Oil
Carla Gottgens/Bloomberg
Copper gained.
Copper gained. Photographer: Carla Gottgens/Bloomberg
July 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke offers his views on the U.S. economy, outlook for monetary policy and investigations into the London interbank offered rate, or Libor. Bernanke, testifying before the Senate Banking Committee in Washington, said progress in reducing unemployment is likely to be "frustratingly slow" and repeated that the central bank is ready to take further action to boost the recovery. This report also contains comments from Republican U.S. Senators Bob Corker of Tennessee and David Vitter of Louisiana. (Source: Bloomberg)
U.S. Federal Reserve Chairman Ben S. Bernanke
Andrew Harrer/Bloomberg
U.S. Federal Reserve Chairman Ben S. Bernanke.
U.S. Federal Reserve Chairman Ben S. Bernanke. Photographer: Andrew Harrer/Bloomberg
U.S. Stocks Gain With Treasuries, Commodities; Euro Halts Rally
Daniel Acker/Bloomberg
Natural gas surged 6.2 percent, leading gains in 22 of 24 commodities tracked by the S&P GSCI Index, amid predictions of a smaller-than-normal increase in stockpiles.
Natural gas surged 6.2 percent, leading gains in 22 of 24 commodities tracked by the S&P GSCI Index, amid predictions of a smaller-than-normal increase in stockpiles. Photographer: Daniel Acker/Bloomberg
Yapta Taps Business Travel Veteran as New CEO - Xconomy
Curt Woodward7/18/12Follow @curtwoodward
Airline price-tracking startup Yapta has found its new CEO: James Filsinger, a travel industry veteran who will be in charge of growing the Seattle company’s footprint in the big-bucks market for business services.
Filsinger comes to Yapta after a short stint running EZYield.com, which helped hotels sell their rooms online by giving managers a single place to post rooms to online travel sites like Expedia and Orbitz.
Filsinger
EZYield.com was sold to TravelClick last November, which is just what Filsinger was brought on board to do—and even quicker than planned.
Yapta found him as part of its search for a permanent CEO to replace co-founder Tom Romary, who left the company late last year.
Filsinger has been in the travel business for about 16 years, the majority of that in the business-to-business market. A big chunk of that time was spent at Sabre Holdings, a major travel tech company (not to be confused with its fictional cousin).
That resume says an awful lot about the new business-to-business direction for Yapta, which had been more of a consumer business during its previous five years of life.
Yapta.com allows travelers to monitor plane tickets and hotel rooms as the price changes over time. Yapta also will alert a traveler if an airfare drops enough after they buy to trigger a refund or credit that airlines sometimes offer.
The company was able to apply that price-tracking expertise to develop FareIQ, a new service that plugs into the software used to manage corporate travel spending. Once it’s in place, companies can watch ever-changing prices to reap credits or refunds if airfares drop on tickets they’ve already lined up for employee travel.
Yapta has been testing the new FareIQ service with some pilot customers, and Filsinger says the results are proving out the company’s hopes that it could save companies around 5 percent on travel spending—a significant chunk of change on annual budgets that can reach the $100 million range at big enterprises. Airline tickets that were eligible for re-booking at a lower fare showed an average savings of more than $500 in the beta test, Filsinger says.
“If you look at the amount of money that is spent through corporations to travel management providers, it’s astounding,” he says. “And while many travel management companies do a good job of making sure that they’re getting the best rates … we bring in the opportunity to save real, hard dollars.”
That doesn’t mean the Yapta.com consumer business is going away. Just as interim CEO Ken Myer told me in May, the plan is to keep the consumer side operating, where Yapta earns money from advertising, referral fees, and some partnerships.
But it’s clear that the business market is the future for Yapta. It shouldn’t be too much of a surprise, I guess, following last year’s $5 million investment from Concur, the Redmond-based provider of corporate travel software. Yapta also is backed by venture investors, including Voyager Capital, Bay Partners, First Round Capital, and Swiftsure Capital.
Concur has been inking quite a few acquisitions and partnerships in recent years to expand its global footprint and product offerings, including a big purchase last year of TripIt, a San Francisco-based virtual travel assistant service.
If Yapta’s foray into corporate travel software is a success, you could easily see it getting snapped up by a bigger software provider that wants to capture the company’s price-tracking expertise for itself. Or, if the market’s rich enough, it could continue to grow on its own.
Filsinger agreed with my assessment of those options, and wouldn’t bite when given the opportunity to compare this gig with the EZYield.com job, in which he was brought onboard to steer the company to an acquisition.
Fair enough—there’s plenty of work left ahead of Yapta to develop its business-software identity. In fact, today is Filsinger’s third day on the job, after moving up to Seattle from Orlando, FL (he’s actually a native of Richland, WA and a Washington State University alum).
“I think the barriers to entry for our particular type of product and solution are fairly high,” Filsinger says. “We have a very strong leg up because we’ve been on the consumer side of things for several years now and we’ve seen a good, valid proof of savings from our pilot customers.”
“It’s a great little company that is positioned for a great deal of success,” he says.
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