The Miracle of Compound Interest

I was reading an article today at Fool.com on how to become the millionaire next door. The article was basically a promotion of a newsletter called "Hidden Gems," but towards the end they offered several techniques for becoming a millionaire. One of their scenarios was geared at people just like us...Soon to graduate with little money to invest. Starting with $350 and making $350 monthly contributions invested in their "gems" earning 15.5% per year, in 25 years you will end up with approximately 1.25 million bucks.

Although this sounds good, I am a little skeptical of the 15.5% return lasting for 25 years. I decided to figure out how much it would be using 8% and 12% annual returns instead. With 8% you only end up with $335,000...Not a bad chunk of change but not nearly as impressive as a million. At 12% you would end up with almost $665,000, that more like it, but still maybe not high enough.

I decided maybe a 12% average return was realistic but I wanted more than $665k. I decided to raise the initial investment to $1,500 and the monthly payment to $400 and ended up with about $780,000. Not a bad nest egg to have before the age of 50.

I think the initial investment and monthly payments are reasonable assumptions...I could cough up $1,500, it might hurt a little now but its possible and assuming we get a job offering $30k a year ($2,500 a month) only 16% of our gross paycheck is being diverted toward that goal.

I don't know about you but I am ready to get started investing right now.

Airlines?

Is this a good time to get back into airlines' investment? Most of them have cut down on labor cost, and the air traffic becomes more and more intense. It has been over 3 years since 9/11 and majority of people are not afraid to flight again.
If airlines can curb down the cost of the enhanced security that they are reequired to provide now and also minimize fuel expenses, they can become a lucritive invetment once more. Because they were such when thew Twin Toweres still stood. Is the situation with the international terrorism favourable? Holiday season is coming up and more people will choose airlines to travel, but till we still hear about airlines going bankrupt, few people will invest in them.

Genius at work? Or just future additions to the "Why did they make a sequel to that?" list? The statement made by CEO-hopeful Robert Iger, current Disney President describing the plans to make numerous sequels based on recent and current Disney-Pixar blockbuster hits is a brazen move. Especially because no contract exists with Pixar to create the animations, although Disney does own the rights to the film library and all characters associated with the films. Still, looking back on sequels which either weren't made by the same group or didn't involve the same character actors, they did not fare too well. Disney may want to tread carefully into these waters, unless they're willing to sacrifice another blockbuster hit to make a quick buck, i.e. Aladdin 3. I rest my case.

IPO's Bounce Back

2004 has proven to be a great year for IPO's. Google immediately comes to mind, having doubled its shares only a couple months after it's introduction. As impressive as this increase is, Google was only ranked 19th among 2004 top IPO's. In 2004 there were 192 offerings raising about $39 billion. While this is great compared to the 221 that have been introduced in the past 3 years combined, it is far from being close to the 400 that were introduced in 1999. Particularly in the tech industry were the performances impressive. Tech IPO's averaged about 31% up from their introductory price. Eight of the top ten performing IPO's were tech stocks. Overall this is indicates that things are picking up. Kathy Smith from Renaissance Capitol stipulated that there could be as many as 250 IPO's next year, raising in total roughly $50 billion. She also said that another positive sign about this years increase in IPO's was that the stocks were well established, in contrast to the 1990 boom where the offerings were more speculative. Thus it appears that things are beginning to firm up in this area and will lead to a strong year in 2005.

Martha Stewart to return to TV next Fall

I thought it was weird to see that Martha Stewart is already set to host a new show in only 9 or 10 months, considering she's in jail. Her company had hired the TV producer of Surviver to help revive her show, although Martha herself couldn't even be involved as she is prohibited. It will be interesting to see what happens after she finishes serving her sentence...whether American will reject or embrace her. It might be hard to follow advice from someone who spent a year in prison.

Gourmet Christmas Trees

Times have changed since the 1970s and '80s when most people who celebrated Christmas set up some species of pine tree in their homes come December. Artificial trees have since improved in quality and selection, with some coming complete with LED lights and themed decorations. Sales of artificial trees have risen 31 percent since 2001 and in the past few years, about 70 percent of American homes with trees had fake Christmas trees on display.
Production has dropped in many areas and the Carolinas are producing most of the country's supply. In order to survive, small tree farms are developing unusual breeds to attract new customers. They are commonly called "gourmet" or "exotic" trees. Because the cost to produce these "gourmet" trees is more, the price for these trees is around $110. Even though the cost is double the cost of more traditional trees, they are always the first to go.
I think that it's irrational to pay that much for a tree that will die in a few weeks, but these trees could be considered a luxury item, as far a Christmas trees are concerned, and people who can afford to pay that amount will pay. This can also be explained by the "snob value effect", where satisfaction comes from knowing the price of a good.

Ground Control to Major Tom

Soon everyone will be able to phone Major Tom if the FCC decides to lift the ban on inflight cell phone usage. Major airlines are lobbying for a lift to the ban as a way to increase sales. They feel that the extra utility of inflight internet and cell phone will attract a larger market of customers. I think this is a great idea, although I am hesitant to think about what it would be like sitting inbetween two people chattering away on their cellphones. That is what they make headphones for. In the future you may be able to experience the friendly skies from the comfort of your home.

Hedge Funds manage their data better than they manage money

The New York Times online reported that most Hedge Funds, all though most show huge gains and little risk, are mostly lying in their actual data. They are consistently only waiting to report on huge gains, and then they "backfill" the old data where they lost money. Burton G. Malkiel, a professor of Economics and author of our wonderful textbook, commented on hedge funds saying that most only wait to report any data until they acutally have any sort of income.

Hedge funds are large funds that appeal mostly to clients. They began in the mid-1980s and have duobled in size since 1990, going from a 50 billion dollar fund to over a trillion dollars in investment. They pursue both short- and long-term funds and generally have substantially higher fees that average investment strategies.

Most hedge funds have a tendency to cease, with roughly 10% a year ending without further notice.

Born To Be Wild

As the Japanese sport bike makers begin to constrict the motorcycle market, Harley-Davidson has been forced to alter its practices and develop new ways to keep sales rising. In an almost catch 22 situation, Harley must change enough to capture the buying power of Generation Y, but must also not change enough to lose the loyalty and support of the very strong baby-boomers. Having produced a 37% annual return since its IPO in 1986, Harley has turned the free-spirited cruising pastime into a lifestyle once again. Thirty years ago, most bikers were thought of as beard bearing, rough and ready types but now, that average income of a Harley owner is $76,000. In any case, Honda has been increasingly constricting the global market while Harley makes effort not to lose its throne. Through Buell Motorcycles, Harleys sport bike subsidiary, the introduction of technologically advanced "sportfighter" bikes may prove to be a substantial answer to Harley's prayers. Many investors have planned on selling short, saying Harlye will soon lose its footing. In any case, Harley must acquire the loyalty and buying power of Generation Y to boost sales and keep the wheels rollin.

AOL cuts jobs as subscriptions fall

American On Line cut 7 percent of its northern Virginia work force yesterday. The cut comes as a result of falling subscriptions to the service. The 750 employees were all gathered in an auditorium and given the bad news at the same time. Can you image being the guy to fire 750 people at the same time? I would definatly take the bus on this day. It appears that AOL is going to need to find new ways to maintain the companies growth. Could we soon be paying to use our precious Instant Messenger? God, I hope not.

IBM Digs and Finds China

As IBM has been specializing in computer and technology services rather than sales of computers, it comes without surprise that they are selling their PC division. Lenovo, a Chinese corporation sealed the deal, valued around $1.75 dollars. This is certainly good news on the shareholders because the PC division has not been able to keep up with the rest of the company.

This way, IBM will be able to specialize in an area where it is doing well and not bother with making computers. It seems to be a smart move on both parts, as Lenovo will be able to expand in China an possibly into other countries in the future. Around 10,000 IBM workers will become Lenovo employees which will help IBM with international contacts. Overall, a good move and it will be interesting to see how things pan out.

American Eagle Profits from Sticking to What it Knows Best

As of the end of last year American Eagle Outfitters Inc. was in bad shape. The company had released an entire new line of clothing. This line was supposed to look more "sophisticated" and attract the stores older clientele. Unfortunately, all this line of clothes did was discourage customers and drastically lower sales. This year American Eagle has gone back to its normal line of casual clothes. As a result of this sales are booming and stock prices are up. What should other companies learn from American Eagle? I think that companies should realize that they cannot change the feel of their entire product line in on fell swoop. Sure, its important to try to expand your customer base and move into new markets; but, American Eagle made the mistake of doing it all at once. Other companies should learn from American Eagle's mistake and take things slowly when it comes to changing their product line.

A media transformation

With the retirement of Tom Brokaw, it seems to be the end of a era. It’s not just the ending of a distinguished career, but the death of an American tradition. For years people would come home from work and watch the nightly news to stay informed, but now there are so many more media options to choose from. There are now a plethora of cable news stations and the internet allows people to be plugged into the world news beat from practically any location. Americans no longer rely on just a handful of anchor men to deliver the news and it will be interesting to see how big of a roll Brokaw’s replacement plays in the American media machine.

Protecting Your Retirement

As discussed in class, Individual Retirement Accounts (IRA’s) are a great way to prepare for retirement. Most people begin small investments at a young age and by 50 or 60 years of age they finally realize they have a substantial amount of retirement income. This has been the traditional method of IRA savings but the Supreme Court is now considering how much retirement savings people can shield when they file bankruptcy. As always, abusing certain benefits can create changes that effect everyone working toward retirement. Currently bankruptcy laws protect pensions, 401(k)s, Social Security and other benefits tied to age, illness or disability. The issue today is how frequently people go into debt and figure they can just file bankruptcy and all is well. This individual lack of financial responsibility may generate changes in the allowable amount and which retirement accounts may be protected from creditor. I know many people will say that some times bad things happen and the person cannot help it. This is partly true with natural disasters and unexpected illnesses, but most of the bankruptcies are due to living outside of ones means.

I do not mean by any standard that you must nickel and dime everything you do. What I do stress is to understand that if you make 35 to 45 thousand annually you should not spend 40 to 50 thousand annually although credit card and retail companies want you to. I know this may sound very simple but emotions (and credit cards) usually get the best of us when we desire a particular item now. We discussed options about getting accustom to certain financial practices. With the increased population and more individual financial defaults many companies will have to charge everyone else a higher interest rate or give no credit at all to make up for the loses. This is why it is imperative to live well within your means and to set aside at least 3 months of emergency money in order to get through the rough spots. Also, by establishing an acceptable living standard within your available income, it will make it easier to maintain this level when you receive raises and promotions so that you will be following your plan for retirement and not someone else’s. By having this mentality and reserve you will not have to depend on a 22% interest credit card to get you over the hill and continue to pay that bill for the next 20 years.

The different IRA’s discussed in class is a great way to benefit from compounding interest and also tax free until you need the money at retirement. The two types are Traditional and Roth IRA’s. The Roth IRA is taxed today and withdrawn after 59.1/2 tax-free while the traditional is not taxed today but when you begin to withdraw money after 59.1/2. The traditional IRA can also reduce your yearly tax liability if you fall into certain categories. Roth IRA withdraw after 59.1/2 is tax-free and is highly recommended because you can get many years of compounding increases and pay no taxes on the growth. Both IRA’s can be withdrawn at anytime but there is a hefty penalty, which can consist of a 10% penalty plus taxes on the withdrawn amount. The IRA’s can be established just about anywhere, but first check to see what is offered before you start your IRA. Most mutual fund families have IRA availability but require different start up amounts. Some require the account to be started with either $1,000, $3,000 or some will start it as low as $50 as long as you establish an account for direct monthly investment. You can either go through your broker or call the mutual fund directly and they will send you the documents to start the account. The main issue here is to get it started as early as possible to benefit from the compounding effect.

The Supreme Courts review of certain bankruptcy cases will probably generate governmental changes in the long-term security of retirement accounts. Many individuals will have to change their haphazard attitude toward bankruptcies when their intended retirement is at stake. This is why it is very important to get accustom early to a certain acceptable living standard and maintain this throughout your career to ensure your plan is in play and not the governments plan.

"Peering" into the Lives of the Wealthy

Now there is a new way to get great investment advice only you have to already be wealthy to get it. A new way of trading advice is cropping up among the country's wealthy population called "peering". Groups are now being organized among the wealthy that allow them to talk to each other about anything from who has the best private jet service to how to introduce your kid to their inheritance. They also can go in on investments and get group discounts and suggest investments such as hedge funds. The new groups, like Tiger 31 or Met group charge a fee to join and then introduce the families to each other. The families like this because there is no "hard sell". They know that they are with like minds and thus do not have to worry about being taken advantage of. The members go through what is called a "portfolio defense" where they get up in front of the other members and show all of their private statements and balance sheet. The members then critique the presenter's decisions and offer up advice. The groups meet about 2 times a month. Sometimes they have a speaker and sometimes it is only the family members. Overall it is designed to insulate the wealthy from money grubbing fund managers and is catching on very quickly as the nation's wealthy population continues to grow.

$10,000 Martini?

I must say this is some advertising stunt, and an expensive one at that. One wonders what person would decide to actually order one, besides who says that diamond would be worth 10,000$. Perhaps their argument is the olive juice is. Either way it seems like one extreme gimmick, much like the Victoria's Secret millennium wonderbra that was studded with diamonds all over it and cost a whopping 10 million dollars.

The new hot Job

Auditing is usually thought of as one of the most cut and dry professions you can go into. However, with all the scandals over the past few years it seems to be becoming quite a hot topic. Many people misinterpret an auditor’s job of approving that the numbers on the financial statements are reasonable NOT necessarily correct. With Sarbanes-Oxley in effect there are much tighter controls on the books and on management to sign off on them. But what makes the profession so interesting are all the problems it has found itself in. We hear a lot about all of these frauds but to dig a little deeper, what is the common mistake that every company has made that has found themselves in this situation? CORRUPTION... yeah ok fine, that’s a little obvious. More importantly are the simple internal controls that have allowed these frauds to happen. I have always been told life is all about contacts, but being an auditor, the less contacts you have the less pressures you have of trying to cover things up for people. Too often auditors are the same ones creating the financial statements, or better yet the people who want to fraud committed are the ones writing the paycheck to the auditor, so it’s either the paycheck or the fraud. Whatever the reasons are the accounting profession is one of the fasting growing job markets and students seem to be taking a great interest in these positions.

A Little Advice on Fundamental Analysis

Despite the recent positive news about Kmart, its not so glamorous past is still in the news. Today three former executives and several representatives of major vendors, including Coca-Cola and Pepsi, were charged with accounting fraud for falsely inflating profits by $24 million in recent years.

Viewing this situation in light of our recently covered chapters, I think it is safe to say that regardless of how many ratios we use, how carefully we analyze a company's reported financial information, or what estimations we make about a company, we still must make guarded investment decisions.

As investors, if we choose to perform fundamental analysis, most of the judgments we make will come from information directly reported by the company itself. Despite the checks and balances outlined by the SEC, this information may not be as accurate as we assumed. For example, in the previously mentioned Kmart scandal, the company's own accountants were misled as to the assumptions they should make in reporting data. These accountants are most likely the ones who worked with the external auditor,allowing the false financial statements to slip through the cracks even more smoothly. Basically it was the blind leading the blind.

When our hard earned money is on the line, our research may need to dig a little deeper than what we would normally do for a passing grade on a project. Although the difference between an A and a B isn't very great, sometimes we know we could have had that A if only we had spent an hour or two more in the library. When it comes to our money, it could turn out to be more of a Pass/Fail situation. In the end, that extra hour or two of additional research may be what makes or breaks our investment piggy bank.

Day of the "Anchor Icon" is over

Tom Brokaw, an icon of the nightly news, has retired leaving a space to fill in American society. People use to come home, turn on the news and a trusty TV anchor man would be there to relay the day’s events. Today things have changed scientifically due to the ever growing number of news sources. People now have a variety of cable news channels, as well as the internet to use as their link to the world and no long have to rely on just the 4 major network news shows. It will be interesting to see if the replacements for Brokaw, Jennings and Rather, become American icons like their predecessors, or simply get absorbed by the ever growing American media machine.

No More Worries

With all the talk about the economy looking brighter but there being little job creation, college students everywhere are worried about their future. Some of this worrying can end with the recent release by the Collegiate Employment Research Institute. According to their survey, college grad hiring is going to increase by 20% this coming spring. An economics major was included in the most demanded majors according to the survey (I knew I majored in econ. for some reason). This report is reassuring but I will continue to be somewhat skeptical until I am able to find a job. The November employment report is due out this Friday so maybe we'll be able to see a hint of this forecast starting to come true.

S&P and Moody's = Extortion?

This article talks about how some companies have allegedly been strong-armed into paying the 3 major credit raters (S&P, Moody's, and Fitch Ratings) in return for favorable credit ratings. The most alarming part of the article was when Moody's began rating an insurance company's debt free of charge but then systematically lowered the rating over a year as the company resisted pressure to pay for ratings. Eventually, their bonds were rated as junk despite having very favorable ratings with S&P and Fitch Ratings.
The lack of governmental oversight over these raters and the absence of accountability is worrying some in the investment world. When it comes to economics, I am typically of the laissez-faire mentality. But this article makes me wonder now about the quality of the quality ratings. Another inconsistency in the defense of these raters is that they were unable to downgrade companies such as Enron and Worldcom before the scandals broke. In fact, the raters had plenty of inside data but still were unable to detect irregularities. Their defense is that it is not their job to detect fraud. Sorry, but that's pretty weak. What's the point of having credit ratings if they can't even figure out that a firm's finances are completely false?
In my opinion, this is a pretty good article. Give it a quick read.

Regifting: Poor Manners or Economic Sense?

According to many Ethics Experts, it is OK to regift any unwanted gifts you receive this holiday season. They also note that you should not feel guilty, and that actually you should feel good about yourself. The art of regifting makes economic sense, if done correctly. The correct way to regift is to take a gift that you deem unvaluable, or unusable and give it to someone who places more utility in that item. This is not saying that when Frank the Tank regifted a breadmaker to a small child in "Old School" made economic sense, because the child also had no use for a breadmaker. But if you find yourself with an unwanted gift this season, have no reservations about "regifting" it to someone with more want of the item.

$33 billion, not too shabby

Tomorrow Microsoft will dole a whopping one-time $32.6 billion dividend, or roughly $3 a share. This is some of the best news to come out of the Microsoft camp in recent history as its stock price has been sluggish, not closing above $30 on a stock split or one-time dividend adjusted scale for nearly three years. Many analysts have predicted a cyclical flow of the dividends back into the microsoft stock, which improves the cash flow by getting it out of equity and back into cash, further strengthening its asset base. While there are many proponents who believe this action will help Microsoft to continue to raise its stock price, others remain wary until Microsoft unveils its newest operating system, Longhorn. Still the upside for Microsoft looks good for the next few years as it aims to regain the dominance in the software industry it enjoyed in the days prior to its antitrust lawsuits. So is Microsoft a buy? I think so, but give the returns awhile to amass.

E-Bay: The Worlds Marketplace Just got Bigger

Today E-Bay, the world's marketplace, announced that it plans on launching E-Bay: Malayasia. "The localized website will allow Malayasian buyers and sellers to come together, build a local community, and bring even more e-commerce to an already growing industry. E-Bay reports that many Malayasian's already use the main site, and this will allow a much easier local community to form. The arrival of E-Bay in Malayasia will provide a boost for the e-commerce market in the country, which is already projected to increase from 1.1 Billion dollars a year to 3 Billion in just 3 years.

I find the success of such e-businesses, such as Amazon.com and E-Bay, great examples due to the failed attempts at most e-commerce in the 2000's. These company's, and others similar have obviously successful economic models which should be used in the future for e-companies.

Where is the Freedom?

The city of Philadelphia and Verizon Communcations have come to an agreement in which Verizion waives its right to stop the city from providing wireless internet for a fee. While Philadelphia is able to provide free or cheap wireless internet as a municipal service, it seems that other cities will be unable to do so starting in 2006. Any political subdivision from this date on will have to get permission from the local telephone company to provide telecommunications services for a fee.

I am surprised that Verizon waived its right to stop the city from offering this service. While they will be able to control other municipalities from acting similarly in the future, this is a very interesting loophole in the system. The reasoning for Philadelphia being so adamant about getting this done is the inability to spread internet access across the city. It is rare for the government to hinder business in the area, but I really wonder if this is justified. Granted, Verizon will not be hurt by losing some customers in one city; however, is wireless internet something that is something that all people should be entitled to? It will certainly help the city of Philadelphia and will attract more business to the area. The structure of the city will certainly change, and maybe it will create a better environment. I just don’t know how good it is for business overall.

Sexual Solution?

Up to 1.7 to 3 million surgically menopausal women in the US suffer from hypoactive sexual desire disorder, which is a lowered or absent sex drive characterized by a significant (50%) lack of serum testosterone due to estrogen treatments. This condition has no safe treatment; so, if one is created and approved, it could prove to be exciting in the world of investment. Procter and Gamble Pharmaceuticals Inc. are trying to make this a reality. They are currently undergoing approval by the FDA for a treatment they’ve created called Intrinsa. Intrinsa is a patch worn on the abdomen that allows for a treatment of testosterone to be absorbed through the skin.

It is unclear to the reviewers whether Intrinsa is beneficial or if it is safe in the long run, despite the drug’s completion of Phase II and III testing. Thus, the advisory panel of the FDA will determine whether more safety studies will be needed for the approval of Intrinsa to be released into the market. Interestingly enough, Procter and Gamble’s stock inched up $.61 today despite the ‘unclear’ review.

Patents Wearing Thin for Pfizer

Many of the patents which Pfizer holds on a number of their medications are expiring within the next three years. Though the CEO natuarally says that this will not hurt the company, I feel that Pfizer's stock is doomed to fall lower than it already has in the last few months. Perhaps I'm just bitter because Pfizer was my biggest loser in the stock competition. Despite this, I do believe that I'm right about the future of Pfizer. As their patents run out, generic companies will begin to produce similar drugs at lower costs. Pfizer plans to release a slew of new drugs to help counteract this. Though, the CEO declined to comment on the progress of the frontrunners of these drugs: torcetrapib, a cholesterol drug, and varenicline, a drug to fight tobacco addiction. On top of the pressures of expiring patents, Pfizer faces the risk that its painkilling drugs, Celebrex and Bextra, could have similar consequences, namely negative cardiovascular side effects, as Vioxx. Again, the CEO affirms that there are no problems with these drugs, but I'm not quite convinced.

I feel that Pfizer will not be able to step up to the challenges of these pressures. Pfizer's stock has been steadily falling since about May and will continue to fall as Pfizer battles with these new difficulties. I would recommend watching closely, or even selling any Pfizer stock that you own until these problems are sorted out.

Is 300 Horsepower Enough to Boost Ford's Sales?

I don’t know about you but I really anticipated the introduction of Ford Mustang this year. The 2005 model brought back the retro design of the most famous American muscle cars. It was interesting to see if Ford would be able to boost its sagging sales. Steep competition with mostly Japanese imports prevented American companies from claiming superiority on the domestic market.
In addition to Mustang, Ford introduced redesigned F-series earlier this year and Five Hundred sedan just recently. Despite all this, its sales dropped for the 9th consecutive month. November’s data indicate 4% decrease in comparison to last year. Car sales led the decline – 12.5% followed by trucks and SUV’s – 0.5%. New models sales where rather high: Mustangs – up 12% and Ford Five Hundred and Freestyle and the Mercury Montego were up 62 percent compared with October. The main reason for the decline in sales overall is poor performance of carry-over vehicles such as Ford Focus (I think it is time for that little car to go or be completely redesigned; very popular in Europe, it proved to be a poor competitor in the U.S.)
So, what car do Americans buy if not Fords? In pick-ups and SUV market Nissan dominates, it had with huge 68% increase in sales. Great looking Armada and Titan led the increase. Market for passenger car is all Toyota’s; it had 20% increase in sales from last year.
Is 12% increase in sales of new Mustangs high enough? I hardly think so, it is not bad, but I would expect it to be much higher, because the demand for that model is no doubt high. It is definitely high among young people, but they apparently cannot afford to buy it fresh from the lot. Demand can do only that much if the price is too high for the potential buyers. It does not mean that the price should be reduced, but rather that not all potential buyers cannot pay it. But this Mustang will definitely make a great resale vehicle.

Check out the pics:
http://www.edmunds.com/new/2005/ford/mustang/100464180/photogallery.html?pg_type=Coupe%2FHatchback&imgsrc=%2Fpictures%2FVEHICLE%2F2005%2FFord%2F100464180%2F20022128-T.jpg

Who says there is No Money In Blogging

Merriam-Webster reports that "blog"was the number one searched word on their website in 2004. It will make the 2005 version of the Merriam-Webster Collegiate Dictionary as a new entry.

Thinking about starting a blog, but want a little help? Consider hiring a blogger.

Dominion goes on a shopping spree

Dominion, which is one of the country's largest energy companies, announced yesterday that they intended to buy three power stations in the Northeast from USGen New England Inc. USGen, which is a subsidiary of National Energy and Gas Transmission, filed for Chapter 11 bankruptcy last year, at which time they decided to divest their power plants through an auction. Dominion's bid for the plants was the highest offer. Therefore, the company is scheduled to settle on the properties in 2005, which will include Brayton Point Station and Salem Harbor Station, both in Massachusetts and Manchester Street Station, which is in Rhode Island. Dominion already owns another nuclear power plant in Connecticut. These purchases will give the Richmond-based company a strong foothold in the Northeast and will allow them to further expand, however a monopoly over the Northeast energy source could occur, causing energy to become state regulated, much like in the case of Baltimore Gas and Electric in Maryland.

iPod

A recent article in the WSJ described the affects of Apple's iPod to the electronics market. While Apple has led the way to compact digital audio entertainment, other companies have started setting their sights on the king of the hill. Apple's stock has always grown at a decent rate, but recently their return has been growing at a rapid rate. With the stock price increasing and other companies pumping out products similar to the iPod, maybe selling short wouldn't be too bad of an idea. In any case, Apple continues to run the market but it is, of course not certain for how long. As the competition introduces similar products, the pricing battles will begin. Until then, Apple seems like a good investment.