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Show f The Salt Lake Tribune BUSINESS anara Sunday, December 24, 2000 The Motley Foo Insurance Liability How should I calculate how ance I need in various insurance policies? — AF, Nashua, N.H. Remember Shakespeare? Remember “As You Like It”? In Elizabethan days, Fools were the only people who could get away with telling the truth to the King or Queen. The Motley Fool tells the truth about OurMission: To Inform, to Amuse, and to Help You Make Money investing,athendhopes you'll laugh all way to the bank. A good rule of thumb is to ask es yourself how much you have to Lee lose ifyou are sued. Add up the value : i stasacensaesenenenasenssensoontnensonenenesoassnsevesentonessoronanen auditing independence might be com- : ofyorhos, yourbeng snd ee ee Our Friend theSEC fate eas a eas UEC CounterIntel-igence PepsiCo’s Play : Sgniicantfunxe your financial assets.defenseon more for the cost of legal wehtes’ cases,z your insurance company might provide a lawyer.) You want to be sure Unbeknownst to most individual investors across America, they have a ; Washington, i strong ally in D.C. The Securities and Exchange Commission ori So SBC hs bog ering companies to use “plain English” 3 in : statementsthey file. The SEC is specif- ladies peering through cause severe financial strain. If your the past few years to level the playing Ie ae eee threaded wires through that a lawsuit won't wipe you out or © Plain initiative. Believeit snnesi school in : Fresh out of engineering 1972, I toured a computer company’s __field for all investors. We have covered liabilit such as its “Fair Disclosure” regu- ee ee ——— FeeTa eo ct Howshould I evaluate my bank? oe ie : A : Here is one telling exercise. ditor independence. By requiring more disclosure, the SEC is addressing —DJ., Midland, Mich. eet % x A % that the potential conflicts ofinterest arise when the large auditing companies used bymost major firms also pro- them for the next few months before. FoTexample, itcan be troubling if you these out, make a point of keeping vide them with non-auditing services. percentofits current diluted share coming onto the market, and as I count. That is a lot ofbot- —_core memory was onits way out and semiconductor memory was the way —_to go. At the time, the only company making semiconductor memory for the general market was tiny outfit in Thekeyto the deal is Gatorade, possibly one. _ofthe most valuable beverage brands in the market. Overthe past dastardly. Though wedidn’t use its products at looked at that room I realized that tle caps. most vulnerable to manipulation by the ‘Norther Califomia called Intel ae eS geettape ncaaee Gather all your banking statements and records for the past three months.(If you have been tossing issue 315 million new shares to com- plete the transaction, more than 21 * Microcap fraud. The SEC has been Swing many people and organizations involved in fraud related to low-priced securities. Penny stocks, those trading for less than $5 or so per share, are tables. (Hooray!) ee material information with wvileged Wall Street insiders, but not Lot the public at large.) SEC etaffers aren't resting on their laurels, Ene aad tank $750 million in debt. Pepsi expects to make “core memo! Semiconductor memories werejust complex information presented in Ud pean veconcgnaenes ee: muchmore liability coverage ($1 million or more at lower premiums than individual policies such as homeowner’syrenter’s and automobile “ for about $12.8 billion in stock and tiny ferrite beads to Buage, active voice, no legal jargon, and eo Tiagbnwail be Umbrella policies generally offer microscopes while they 8y'4o-read” designs. Tt advocates WU gieeeertee hs some of the SEC’s triumphs before, insurance companyabout an ‘ © Decimalization. SEC Chairman - ; Soda and snack foods company PepsiCo recently put its purchasing ywer to use byby acquiring acquiring fellow power fellow food and beverage cor y Quaker factory and viewed a dozen (SEC) has been working diligently over ally looking for “clear, understand” total assets are substantial, ask your ” is This Thing Called © The Motley Fool? www.sltrib.com 20 years, the franchise's growth has sparkled. Gatorade generated just $97 my.company, I and my co-workers _million in annual sales when sour Levitt has explained: “The overfll benefits of decimal pric x watched and discussed Intel regularly. Still. it aed (IG COR. to be significant. Investors may benefit from lower transaction costs due to narrower spreads, and prices will be easier sider investing in Intel, even though had twoor three thousand dollars sitting in the bank in a noninterest-bear- _—_That is a compound annual growth _rate of nearly19 percentover 17 years. Very nice. efit pricingare likely >fil , derstand ‘tis timie for the US. it never occt me _picked it up in 1983 andi fical $1.8 billion in Quaker’ eae con- in img checking account. Had I invested year. Such a franchise has high value, not ing this exercise.) Grab commencingthis exercise. a invest in ABC Inc. and it employs XYZ Co.as its auditor and itsmanagement change.” Lea tie about wher te SECiisup in those early days, I would be retired and living in Tahiti now. — Dan even a thousand dollars in Intel back just from growth, but because es re aoe et you have been paying for the following expenses: ATM surcharges, “for- consulting firm. XYZ will probably eam a lot more for its consulting services than its auditing, and thus its to and how you can helpit at WWW.seC.gov. 5 Hicks, Byron, Minn. The Fool Responds: Thatis a great lesson. We should all apply our indus- Coca-Cola have tried in vain to sup__plantthe brand’s dominance with sports drinks oftheir own. According - try insights to our investing. to Quaker, Sees oe remainsinthe 80 sseepsecceesessececesaneseesssecseeese 1) tive an embarrassing lesson learnedthe hard way? Boil Name That overdraft fees, monthly maintenance oseMessin blesLop depositlother slips, call-center charges, debit-card fees, low- Cc balance penalties, per-check : ompany money order fees, traveler’s check fees and other bank fees. Once you are done,total everything and see how much ofyour moneyis going to your bank — compare that with theinterest it is paying you. There is a good chance that you will gasp in unhappy surprise.If so, consider making some ers, vacuum tube voltmeters,electrically heated cushions.| later became known for my magnetic tape, tape recorders, compact portable cassette players,televisions, camcorders and more.| am nearly a $70billion company today and am one of the world’s top consumer electronics firms. Who am |? changesin your behavior, or switching to a different bank or a credit union. That doesn’t mean it’s all roses for Pepsi. The company is paying a Motley Fool clo My Dumbest Investment. Got one that worked? Submit to My Smartest Investment. If we print yours, you'll win a Fool's cap! healthy premium for Quaker shares, and integrating the maker ofCap’n Crunch and oatmeal won't be easy. Still, this is one of the more interest- ing mergers we haveseenthis year. LAST WEEK’S TRIVIA ANSWER | delivered Pe ae era Exc BoatCa in 1952. Some of the names that have been in my hangar over the Stinson years include Canadair,, Cessna, Convair, Fort Worth, Gulfstream, and Vultee. My sogan i "Stenghon Your Your four Side,” and | ened in business aviation, crt| ayePre ae nS Dn por Wa? (Answer: General Know the answer?Send it to us with Foolish Trivia on the top and you'll beenteredinto a drawingfora nifty prize! Got a questionfor the Fool? Send it in — see Write to Us percent neighbor- Tos,making ee ee it down to 100 words (or less) and send it to The | cametolife in 1946 as Tokyo Tsushin Kogyo and got my current name in 1958. | started in a comer of a department store, where my founder paid his engineers out of his own pocket. In my early days,| fepaired radios and made items such as charges, retum-check/NSFfees, Gatorade has deep moats aroundits business. In recent years, Pepsi and Write to Us! Send questions for Ask the Fool, Dumbest (or Smartest) Investments (up to 100 words), and your Trivia entries to Fool@fool.com or via regular mailc/o this ienea The Motley Fool. Sorry, we can't provide individualfinancial advi eeccccscccccescsoccees eign” ATM fees, other ATM fees, ites markets to make this Quaker’s most recent nee eececeeceeceeceesesessesetesseceseaseacesesecsceeseeeeeneeeseeseeseenecsceeeeeees sense ee eee eee eees ‘© 2000 Tue Mor.ey Foou/Dist. BY UNIVERSAL PRESS SYNDIC/ Nowthat everybody andhis brother have madefinancial predictions for the New Year, I have decided to chime in with mine. With a coupleofdifferences: First, I freely admit that I have no idea howhigh or how low the stock market will go in 2001, or what Alan Greenspan and the Federal Reserve are going to do about interest rates. (Nobody else knows either, but that doesn’t stop a wholelotof otherfolks from guessing.) I will not, however, waste your time or mine with speculation. The seconddifference about my predictions is that I readily acknowledge thatyou,all the readers of this column collectively, and all investors and consumers in the United States have the power to make them wrong. I would be delighted if that happened. All you haveto do to prove me wrong is to act differently, or make it clear that you will not put up with or support certain actions or behaviors from others. Butto be honest with you,I tionally and intelligently will fret and waste an untold number of hours trying to guess what the stock marketwill do tomorrow, next week and next month,an endeavor that has been shown repeatedly to be futile if not downFight harmful in the pureutt ofa \vestment most insignificant port. The stations will bring in a parade ofself-anointed gurus and experts to speculate on the eternal question, “Whatshould investors do now?” even ifdoing nothing is almost always the best course of SAVINGS GAME ~ HUMBERTO CRUZ mostoftheir time and space to stories that suggest, incorrectly,that investors must constantly change their strategy in response to shortterm andlargely insignificant events. 4. Mutual-fund companies will focus their advertising campaigns on the funds with the best recent performance, and thousands of greedy andnaive investors will jumpon board regardless of suitability or risk. Manyif not most of these investors will buy the “hot” funds just aboutthe time they are aboutto cooloff. 5. Thousands of Americans, pri- marily the elderly,will lose a big portion oftheir life savings by buying investments they don’t understand. Many will act on “advice” and “tips” from people they don’t even know,including conartists touting “can't-lose” stocks anonymously on Internet sites and chat rooms, 6. As weget close to April 15, thousands of American taxpayers will sign up for refund anticipation loans,going into debtso they can get their hands on moneythey could havehadall along ifonly they had not had so much money unnecessarily withheld from their paychecks, or had not overpaid their estimated taxes, 7, Credit-card issuers and other lenders will tempt consumers with offers to skip payments and cash in “convenience checks,” disclosing only in the legally required fine print the huge interest charges consumers typically must pay for this privilege. And thousands ofAmericans will fall for Lp these pitches, sinking more deeply into debt. 8. American savers collectively will give up millions ofdollars in interest by unnecessarily keeping their moneyin low-yielding bank savings accounts when they could haveincreased their yield substantially just by shopping around in person,by phoneor online and by being willing to consider other investments,including government-backed certificates of deposit and U.S. savings bonds, and noninsured but extremely lowrisk money market mutual funds. 9. Millions ofAmerican workers will foolishly fail to take advantage of whatis arguably the best retirementsavings deal around: their 401(k) and similar employer-sponsored plans.Or if they do, they will fail to contribute the maximum allowed oratleast the amountnecessary to get the maximum matchfrom their employers. Ofthose who contribute, a significant numberwill simply split their money among the choices available without understanding what they are about and therefore will fail to build a portfo- lio suitable to their goals and risk tolerance. 10. Manyretirees will give up hundreds if not thousands ofdollars by making incorrect and often irrevocable decisions on withdrawals and beneficiary designations from retirementplans, often acting on incorrect advice given by employees offinancial-services . firms who have not been adequately trained — if they have trained at all — on the complexities ofour tax code, This, I am afraid, is what I think will happen‘in 2001. ButI promise thatI will do my best in this column next year to see thatit doesn't. Humberto Cruz lives in Coral Springs, Fla. Write him c/o Tribune Media Services, 435 N. Michigan Ave., Suite 1400, Chicago, IL 60611. Send email to HCruz5040 @aol.com. ¥ Digital Dreamers: Jobs ComeBefore Families @ Continued from E-1 » that she can pursue “fabulous”career opportunity it Flextronics International, a high-tech contract peranlies The company’s stock has split three times in 19 months. Clapp and her husband, Bill, have been married 31 years. Now, she sees him only on weekends.“We can survive this. Butit’s not the best wayto live,” she says. Valley observers say she’is one of hundreds who foot two housing bills—a home mortgage ina far-flung location and an, apartment near work — so they can putin longer hours. Complex Divorces: Thearea’s steep costofliving, wedded with the soaring value of couples’ assets, makes it tough to sens marriages. Many couples simplystayti “People can't afford to get divorced,” says Rolanda Pierre-Dixon,a family-affairs attorney in Santa Clara County’s district attorney'soffice. “We have couples who consider themselves divorced living in the same house, dating other people.” She adds that many don’t move because they need dual incomes to pay mortgages or because one partner is convinced the other will hit it big with stock ifhis or her Internet employer goes public. Bonnie Sorensen,a Palo Alto family-law attorney whois deluged with high-tech worker cases, is more blunt. “Some marriagesaredevoted to IPOs,” she says. To avoid untidy divorces, some take arguably extreme measures. Oracle CEO backto reality whenherstart-up foundered —as many, have, ay‘feel like I cranimed three years of experiences into oneyear,” she laments.She is pursuing a job with an established companyand is looking forward to a more sane work schedule. “I abandoned the payoff myth,”she says. No Other Way: For many high-tech hopefuls, there are few ways around thegrueling pace, The median homeprice in the valley hit a record one 000 in September, up 22 percent from a year ago. Fewer than one in three wage earners can afford that . price, according to the California Association ofRealtors. One-bedroom apartments push $2,000 a month. The Shaws havea 4,000-square-foot home in Utah’s picturesque Wasatch mountain range. But“to live in the valley, I would have to move myfamily into a oneroom apartment,” Shawn Shawsays. The exorbitant costs force thousands of people to live far from work and endure three- and four-hour commutes on choked highways.Since 1992, traffic delays on the Bay Area’s freeways have soared 75 per: cent, according to the “alifornia Department of Transportation. Workers are also willing to suck it up for several years for the payoff.“If [NetStream] goes public and | cash in, then I can teach skiing [in Utah},” Shaw says, “Myfamily would be financiallyset.’ Adds Clapp: “If I stay here five years and the companydoes well, | vould enjoyearly retirement.” , were postpoi were uprooted because “our best chances for success are in Silicon Valley,” says co-founder Beerud Sheth. forking Together, Still Apart: Tough travel schedules and family deprivation are nothing new to technology’s upper echelon. Excite At Home CEO George Bell works in Redwood though his Suspended workers devote ‘everthing © for isn’t surprising that many of them split once the pur; suitoftheirhigh-tech dreams end. These ) not knowing one another.” i E 10 Unfortunate Financial Predictionsfor 2001 \ ¥ |
