3 Money Mistakes That Will Come Back to Haunt You

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Jupiterimages It was an all-you-can-eat buffet, costing around $12.95, as Mim King recalls. About 10 years ago, King, a professional organizer and money manager in St. Paul, Minn., learned that one of her clients had gone to a restaurant, and he was determined to eat all he could. "He stayed beyond what most people would consider a reasonable time, simply in order to eat," King says. Before the day was over, his family took him to the hospital to get his stomach pumped. King never learned the cost of the hospital bill, but she is betting that it far exceeded her client's meal. Everyone makes money mistakes, but if there's a theme connecting many of them, it's that if we stopped and thought about it, we'd realize what we're doing isn't going to end well. While King's client didn't predict he'd wind up in a hospital, if he had thought through his plan beforehand, he might have left after, say, the third or certainly the fourth helping. In that spirit, here are a few common money management mistakes -- and why these decisions are likely to haunt you. Going to Graduate School Without Thinking It Through Why it will come back to haunt you: Graduate school isn't cheap. Price tags are all over the map, ranging from a relatively low $21,000 a year for business school at Brigham Young University's Marriott School of Management to $63,200 a year at Harvard Business School. The last thing you need is to graduate and realize you really aren't cut out for your new career. The consequences: That realization is not uncommon. Shane Fischer, a criminal defense attorney in Winter Park, Fla., says he sees it all the time. He knows many lawyers who hate what they do "but went to law school because they hadn't 'found themselves' at 22. They racked up $100,000 to $200,000 in debt before their 25th birthday. Unless they hit the lottery or get lucky with a big case, their student loan debt will be an albatross around their neck for the rest of their careers, as they will never make enough money to bounce back from the debt as well as the lost income from taking additional years off to go to school." Which may not be so bad if you love what you do. But if you hate it, the decision will plague you, quite possibly for the rest of your life. Taking Out an Expensive Loan You Can't Afford Why it will come back to haunt you: Maybe you'll be able to pay it back, but if you're honest with yourself, you probably won't. After all, the reason the high-interest loan you're considering is so expensive is that you had trouble paying back the previous loans you've taken out. How is this one going to be any different? The consequences: Desperate times, as they say, call for desperate measures. But some loans are so punishing that desperate consumers would be better off taking whatever lumps are coming to them. While some credit cards have exorbitant interest rates, and payday loans are well-known as an expensive way to borrow money, among the worst of the worst are car title loans. The Center for Responsible Lending reported earlier this year that approximately 7,730 lenders give out $1.6 billion in car title loans every year, and to get that money, consumers spend $3.5 billion a year in interest. It's a form of predatory lending that is illegal in about half the states, which says a lot. Here's how it works: A typical borrower receives cash equal to 26 percent of the car's value and pays 300 percent APR. If consumers don't pay back what they borrow, they lose the car. Because most people are determined not to let that happen, they renew the loan -- paying back only the monthly interest and renewing the loan for another 30 days. Consumers who borrow $950 typically take eight months before paying back the loan and spend more than $2,140 in interest. Failing to Save for Retirement Why it will come back to haunt you: The reasons are obvious: Nobody wants to find out what happens when you have to choose between buying food or medicine. The consequences: If you're making this mistake now, you're not alone. A new Wells Fargo (WFC) study, which surveyed 1,000 middle-class Americans from their 20s into their 70s, reports that 37 percent of people don't expect to ever retire, and they plan to work until they're too sick to do anything else -- or die -- whichever comes first. Two years ago, Ken Bodnar, then 55, was pretty sure his future was going to involve being "the most educated greeter that Walmart would ever have." Bodnar surely means no offense to minimum-wage earners, but from a salary standpoint, it would have been a step down. He had just lost his job as the chief technology officer at a prepaid debit card and money transfer company in Nassau, Bahamas, a position he had been offered two years earlier when he was toiling in a cubicle in Ottawa, Ontario. It was 2011, and Bodnar was an unemployed expat supporting his 24-year-old daughter. He had nothing saved for retirement. As it turned out, Bodnar was able to save himself from being a cautionary tale. For the next two years, he worked in a series of odd jobs, proving his worth to employers and bringing in what money he could. Bodnar eventually landed at SelectBidder.com, a wholesale inventory website for the auto industry, where he is currently the chief technology officer. And, yes, he is finally saving for retirement and has a healthy amount of money already stashed away. He also no longer has any debt, which he abhors and suggests everyone in their mid-50s and beyond start hammering away at if they haven't already. "Debt puts you further behind the eight ball than you really need to be," says Bodnar, who is able to put a lot toward retirement partly due to scaling back his expenses. "I live frugally, and it doesn't kill me."

Three Scenarios for Gold

We see three potential scenarios for gold; to invest without having these scenarios in mind is simply foolish, says resource specialist Larry Edelson in Money and Markets.

First, it's bottoming. I can't tell you precisely when, or at what price, but I have every reason to believe that gold is now in the timeframe for a bottom, and a major bottom at that.

In fact, it may have already bottomed at $1,178 back in late June. That is possible. Or it may dip back to near $1,178 one last time, soon, or even after a big rally. Or it may just explode higher here and now.

It is impossible for me to say with any certainty. For anyone to say, actually. All I can tell you is, again, that all of my models indicate that gold is very near, or already may have seen, an important bottom.

Second, trying to time the exact day, or even the exact week, and the exact price, would simply be foolish. That said, let me give you the three scenarios I see for gold.

If it seems like I am talking out of both sides of my mouth, let me assure you that I am not. I am merely giving you the three most likely scenarios for gold going forward, scenarios you will need to keep in mind to get properly positioned, so you can minimize risk and maximize potential profits.

Scenario #1:

Gold's low at $1,178 in late June was the major bottom. In this scenario, gold must now confirm it by moving and closing above $1,449.50 on a Friday weekly basis, followed by a weekly close above $1,605.50.

So far, gold has taken out important short-term resistance at the $1,338 level. That does indeed imply a further rally, with the next important level of resistance at the $1,400 level, followed by $1,449.50.

This is now becoming the highest probability projection. But still, as in life, nothing is certain, so we must keep an open mind toward the next scenario.

Scenario #2:

Gold continues to rally, as high as $1,605.50, but fails to close above $1,449.50, or $1,605.50 on a weekly closing basis.

Gold then trades back down, even as low as the $1,265 level in early 2014, and then begins another move higher, one that eventually gives us the buy signals we need to confirm the end of the bear market and the beginning of the next leg up. The $1,178 June 2013 low holds, but gold swings wildly before taking off for good.

Scenario #3:

Gold continues to rally, as high as $1,605.50, but fails to close above $1,449.50, or $1,605.50 on a weekly closing basis, and then collapses into a major new low in 2014.

Whereas a new low below $1,178 was the highest probability before, it is now the lowest probability scenario. But we simply cannot throw it out the window.

In this scenario, we see a decent rally in the weeks ahead, but it fails to issue major confirming buy signals, and instead, trades lower, as in Scenario #2 above.

But instead of holding major support at the $1,265 level early next year, gold crashes right through the June 2013 low at $1,178 and makes a new low down at major system support at the $1,035 to $1,050 levels.

Now, I fully realize you might not like anything I just told you, that you think I'm hedging my gold forecast, or talking out of both sides of my mouth. Or that you like Scenario #1, the most bullish, and you don't like, or agree, with the other two scenarios.

That's okay. I am not trying to win a popularity contest. I am not here to tell you what you want to hear. My job is to tell you what I see ahead, based on my tried-and-true models and indicators, and without any bias.

I always call them like I see them, and precisely the way I would put my own money on the line, which brings me to the question, "What should you do now in gold? In silver? In mining shares?"

As you can tell from the above three scenarios, we are likely to see gold now rally into year-end and as high as $1,605.50 or even higher.

That sounds really exciting, right? Heck, if that kind of rally were to materialize, it would be gold's best performance in almost three years.

But unless gold closes above $1,449.50 and $1,605.50 on a Friday closing basis, then the gold rally would be for naught, it would be nothing but a bear market rally. And if you loaded up too much on gold, it would backfire on you.

So instead, now is merely the time to begin to test the waters. You don't go all in, you don't over commit, you don't become impatient, and you don't get overly emotional.

You map out your strategy based on all the evidence and data you have, and then you focus most of your energy on controlling the unknowns, your risk. That's how the most successful investors and traders make the most money, by controlling, and indeed, insuring against, the unknowns.

For gold, that means long-term investors can start buying gold again lightly, committing at this time, no more than 5% of your funds available for investing in gold, being fully aware that we do not have full confirmation yet that the low has been made. Testing the waters with up to a 5% position will help limit your risk.

For traders, you trade leverage positions, but hedge your bets with limited risk, inverse ETFs with options, or even spread your futures strategy both long and short.

Basically, you put yourself in a position to profit from a rally from a bottom in gold if we have already gotten it, yet you take out some insurance in case you're wrong.

As for silver, this may or may not surprise you, but I would continue to steer clear of the metal. There is a chance silver has not bottomed yet, even if gold has. Hard to believe, I know, but that is what my models are telling me.

For mining shares, my models tell me they have not yet bottomed. Again, hard to believe, but most mining-share ETFs have taken out that important cyclical low they made back on August 6. That means lower lows are possible.

So, like silver, it is indeed possible that mining shares may still move lower, even if gold has already bottomed and even if gold stages a decent rally.

Hard to believe, yes, but that's what my models are telling me, and I never deviate from what they say. They have proven themselves over and over, time and time again. So, for now, mining shares are not yet primed for major investment.

Right now, I urge patience and emotional discipline. Those are always the two most important elements of successful trading and investing, especially near major market turning points.

Major market turning points offer tremendous opportunities for profit, but they are also the most dangerous. The markets never take any prisoners, so you want to make sure, through patience and emotional discipline, that you're not going to be one of its victims.

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Nasdaq Addition Seen Boosting VimpelCom: Russia Overnight

VimpelCom Ltd. (VIP), Russia's third-biggest mobile carrier, is poised for the biggest monthly gain since August 2012 on prospects its inclusion in the Nasdaq benchmark index will bolster demand for the shares.

American depositary receipts of VimpelCom have rallied 21 percent to $14.22 in October. The shares added 1.1 percent yesterday. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in New York fell for a third day, led by OAO GMK Norilsk Nickel (NILSY), which settled at the narrowest premium to the Moscow-listed shares in four days. RTS stock index futures decreased 0.1 percent to 148,570 in U.S. hours.

VimpelCom, which moved its listing to the Nasdaq Stock Market from the New York Stock Exchange, last month, replaced Dell Inc. (DELL) on the Nasdaq-100 yesterday. Exchange-traded funds and other products linked to the Nasdaq-100 managed about $53.3 billion at the end of the second quarter, according to data compiled by Nasdaq. The average daily share volume this year in VimpelCom rose to 1.6 million from 1.2 million after the stock joined the exchange on Sept. 10.

"Transfer to the Nasdaq has proved to be a very successful step for VimpelCom," Ilya Piterskiy, an equity strategist at VTB Capital in Moscow, said by phone yesterday. "People who manage tens of billions of dollars and didn't even have VimpelCom on their radars will now have to add the stock to their portfolios."

$200 Million

Best Cheap Companies To Own In Right Now

VimpelCom will probably attract about $200 million inflows from funds that trade the Nasdaq-100 Index, Piterskiy said yesterday. VTB has a buy rating on the stock. VimpelCom, owned by Russian billionaire Mikhail Fridman and Telenor ASA (TEL), has rallied 45 percent this year.

The company, based in Amsterdam, will report on Nov. 6 that third-quarter revenue grew for the first time in three quarters, increasing 0.7 percent to $5.8 billion, according to the mean estimate of three analysts surveyed by Bloomberg. VimpelCom posted a 2 percent drop in second-quarter earnings as sales rose in Russia and other former Soviet countries, while revenue fell in Italy.

The company, which got 40 percent of sales from Russia in the second quarter, is working to reduce $28.6 billion of debt resulting from the acquisition of telecommunications assets in Italy and Algeria.

The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, dropped 0.4 percent to $29.56, paring its October gain to 4.9 percent. The RTS Volatility Index, which measures expected swings in the index futures, added 4 percent to 23.48 in U.S. hours.

CTC, Rostelecom

The Bloomberg Russia-US gauge slipped 0.4 percent to 104.16, paring its advance this month to 7.7 percent. CTC Media Inc. (CTCM), the Nasdaq-listed Russian television company, rallied 2.6 percent to $12.86, the highest level since April 25. The stock has climbed 22 percent this month, making it the best performer on the Bloomberg-Russia gauge. VimpelCom is the second-biggest gainer on the index this month, followed by OAO Rostelecom (ROSYY), which has increased 17 percent after two months of declines.

Norilsk, the world's biggest producer of nickel and palladium, said its board of directors recommended paying an interim dividend of 220.7 rubles per share for the period of January through September 2013. Shares purchased by Nov.1 will be eligible for the payment, the company said in a statement yesterday. Its ADRs fell 2 percent to $15.73 yesterday.

The S&P GSCI (SPGSCI) gauge of 24 commodities fell 0.3 percent to 627.67 yesterday, while West Texas Intermediate crude dropped for the first time in four days on estimates that U.S. inventories reached a four-month high. Raw materials, including oil, metals and natural gas, accounted for about 83 percent of Russia's export revenue in 2011.

Crude for December delivery slipped 0.6 percent to $97.60 a barrel on the New York Mercantile Exchange today. Prices have decreased 4.6 percent this month, poised to extend last month's 4.9 percent decline. Brent oil for December settlement fell 0.3 percent to $108.60 a barrel on the London-based ICE Futures Europe exchange.

United Co. Rusal, a Moscow-based aluminum producer, rose 0.8 percent to HK$2.39 in Hong Kong trading as of 10:43 a.m. local time. The MSCI Asia Pacific Index climbed 0.6 percent.

Take Five with Chris Alderson of T. Rowe Price International

Domestic equities have been the place to be since the financial crisis ended almost five years ago, but with head winds starting to mount in the United States, investors may be better off on the other side of the Atlantic, said Chris Alderson, president of T. Rowe Price International.

European equities have begun to get hot again recently as the region shows signs of emerging from its year-and-a-half-long recession.

Investors put $5 billion into European equity funds for the one-week period ended Oct. 24, the most ever for a single week, according to Bank of America Merrill Lynch.

Mr. Alderson discussed what is behind the excitement over Europe and which areas internationally look “overblown.”

InvestmentNews: What is driving the increased interest in European equities?

Mr. Alderson: The economics are getting a lot better. The tail risk is off the table. Maybe most importantly, they're a lot cheaper than stocks here in the U.S. European companies' margins are still depressed from the recession, but they're starting to improve and that will drive higher earnings. In the U.S., margins are already at peak levels.

Best Gold Companies To Buy Right Now

InvestmentNews: In which areas of the eurozone are you seeing the most opportunities?

Mr. Alderson: We've recently moved our focus from luxury exporters, such as Gucci (GUCG) and Ferrari (FERI), to more domestic stocks in Spain and Italy. We've seen significant improvement in those economies. International small-caps could pick up, too. They haven't had anywhere near the rally small-caps have had in the States.

InvestmentNews: What international asset class are you most worried about?

Mr. Alderson: Frontier markets are overblown at the moment. At the beginning of the year, if you told me emerging markets would be down 10% and frontier markets would be up 30%, I'd have thought you were crazy. Over the medium and long term, I think they're a good place to be, but they've been driven up by money coming into frontier markets funds.

InvestmentNews: Are you seeing signs of a turnaround in emerging markets?

Mr. Alderson: They're cheap, but they're not out of the woods yet. They're trading at a significant discount to developed markets. But as interest rates normalize, that's going to put more pressure on the local economies, and growth is declining rapidly.

InvestmentNews: One of the most popular international trades this year has been buying Japanese stocks and hedging out the yen. How do you see that playing out o! ver the rest of the year?

Mr. Alderson: It has been a very well-flagged trade, but it's stopped working. There was all that talk of the yen going to 150, but it's back down below 100. I still think it will go to 110, 115 eventually. [Japanese Prime Minister] Shinzō Abe is determined to get inflation back into the system. They still need more structural change, though. That's going to be challenging.

Top Blue Chip Companies To Invest In Right Now

There was big news out of the market for dividend and income investors last week. Two of the bluest blue chips, Microsoft (MSFT) and McDonald's (MCD), both announced big dividend increases.

Microsoft pleased the Street with a 22% increase to its dividend, climbing to $1.12 annually that equates to a current yield of 3.4%. Microsoft also announced another $40 billion share buyback program to replace its existing $40 billion authorization that is set to expire on Sep 30. McDonalds announced a dividend increase of its own, raising its payout by 5% to 81 cents per share, lifting its current yield to 3.3%.

But that got me thinking: Which companies from the S&P 500 are the most shareholder friendly, with the biggest dividend increases in the last 5 years? Here is a list of the top 5 companies from the last 5 years with the biggest dividend increases.

Top Blue Chip Companies To Invest In Right Now: International Business Machines Corporation(IBM)

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. Its Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology-based support services. The company?s Global Business Services segment offers consulting and systems integration, and application management services. Its Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, business analytics and intelligence, performance management, and predictive analytics; Tivoli software for identity management, data security, storage management, and datacenter automation; Lotus software for collaboration, messaging, and so cial networking; rational software to support software development for IT and embedded systems; business intelligence software, which provides querying and forecasting tools; SPSS predictive analytics software to predict outcomes and act on that insight; and operating systems software. Its Systems and Technology segment provides computing and storage solutions, including servers, disk and tape storage systems and software, point-of-sale retail systems, and microelectronics. The company?s Global Financing segment provides lease and loan financing to end users and internal clients; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing services. It serves financial services, public, industrial, distribution, communications, and general business sectors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. IBM was founded in 1910 and is based in Armonk, New York.

Advisors' Opinion:

• [By Dan Caplinger]

  The Bernanke-inspired rally lifted all 30 of the Dow's stocks, but a few of them had limited gains of less than half a percent. IBM (NYSE: IBM  ) was the biggest laggard, rising just a quarter-percent. The tech giant likely didn't suffer any ill effects from yesterday's announcement that PC demand had continued to slide during the first quarter, as it has transitioned away from hardware production toward higher-margin businesses like IT services. Yet, comments from UBS suggest that IBM could be vulnerable if macroeconomic conditions don't pick up worldwide in the near future, especially given the recent hit to emerging markets. Still, IBM's strong pursuit of high-reward areas, like cloud computing and Big Data, should help the company make the best of whatever conditions it faces, even if a recovery in global growth doesn't happen as quickly as some hope.

• [By Jon C. Ogg]

  International Business Machines Corp. (NYSE: IBM) is proving that it has very limited growth opportunities in new revenues. The only saving grace for the rest of us these days is that IBM is now no longer the largest DJIA stock since Visa Inc. (NYSE: V) is a DJIA stock.

• [By Wallace Witkowski]

  IBM (IBM) �shares fell 6% to $175.56 on heavy volume after the company reported adjusted third-quarter earnings of $3.99 a share . Analysts polled by FactSet estimated $3.96 a share on revenue of $24.79 billion. The consensus estimate for earnings had held steady since late July, while revenue estimates had come down slightly over the same period.

• [By Doug Ehrman]

  This week promises to be a big week in the technology sector. Some of the biggest and most influential companies are reporting. Tuesday will see Yahoo! (NASDAQ: YHOO  ) and Intel (NASDAQ: INTC  ) report earnings results, while Thursday is the big day with Nokia, Google (NASDAQ: GOOG  ) , IBM (NYSE: IBM  ) , and Microsoft (NASDAQ: MSFT  ) reporting. Many of these results will set the tone for the rest of the year in the sector and have far-reaching ramifications.

Top Blue Chip Companies To Invest In Right Now: Chevron Corporation(CVX)

Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.

Advisors' Opinion:

• [By Matt DiLallo]

  The Gulf aflame, again
  Earlier in the year, oil did catch fire in the Gulf after a Chevron (NYSE: CVX  ) -owned pipeline caught fire after being hit by a tugboat pushing an oil barge. Cleanup crews were quick to respond in deploying thousands of feet of containment booms and skimmers. However, the incident left a mile-long oil sheen in the Gulf, which isn't something any of us wanted to see in the Gulf again. Luckily, the incident didn't cause much harm or damage, though it did serve as a reminder of the risks we face in securing our energy future.

Hot Insurance Companies To Own For 2014: McDonald's Corporation(MCD)

McDonald?s Corporation, together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald?s restaurants that offer various food items, soft drinks, coffee, and other beverages. As of December 31, 2009, the company operated 32,478 restaurants in 117 countries, of which 26,216 were operated by franchisees; and 6,262 were operated by the company. McDonald?s Corporation was founded in 1948 and is based in Oak Brook, Illinois.

Advisors' Opinion:

• [By Dan Caplinger]

  McDonald's (NYSE: MCD  ) has fallen more than 1% on a downgrade from Janney Capital, which cut earnings expectations by half a percent and reduced same-store sales estimates for June and July. The fast-food giant has struggled to keep growth up despite headwinds in some international markets and increased competition within the U.S. market.

• [By Dividend Growth Investor]

  McDonald�� Corporation (MCD) franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. This dividend aristocrat has managed to raise distributions for 36 years in a row. Over the past decade, it has managed to reward shareholders with 28.40% in annual dividend raises on average. Currently, the stock trades at 17.40 times earnings, and yields 3.20%. Check my analysis of McDonald��.

• [By Rick Munarriz]

  Monday
  The first trading day of the week kicks off with McDonald's (NYSE: MCD  ) reporting quarterly results in the morning. After a decade of smooth and consistent store-level growth, monthly comps have been mixed since last October. The world's largest restaurant operator probably hopes that pushing up its Monopoly promotion to summer instead of autumn will help drive sales in the coming weeks, but we'll see what the Big Mac daddy is willing to share on Monday.

Top Blue Chip Companies To Invest In Right Now: Apple Inc.(AAPL)

Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Advisors' Opinion:

• [By Evan Niu, CFA]

  The "Un-carrier" is going all out with an aggressive marketing campaign, targeting iPhone users on other networks. T-Mobile is now accepting trade-ins for older iPhone models, which can help offset the down payment on a new iPhone 5 on its network. It turns out Apple (NASDAQ: AAPL  ) is now doing the same thing.

• [By Rick Munarriz]

  No one's mistaking the new store with Apple's (NASDAQ: AAPL  ) larger namesake retail hub in the same mall. Mr. Softy is just giving concert tickets -- a lot of concert tickets -- to catch the Gym Class Heroes performing in town later that night.

Top Blue Chip Companies To Invest In Right Now: Colgate-Palmolive Company(CL)

Colgate-Palmolive Company, together with its subsidiaries, manufactures and markets consumer products worldwide. It offers oral care products, including toothpaste, toothbrushes, and mouth rinses, as well as dental floss and pharmaceutical products for dentists and other oral health professionals; personal care products, such as liquid hand soap, shower gels, bar soaps, deodorants, antiperspirants, shampoos, and conditioners; and home care products comprising laundry and dishwashing detergents, fabric conditioners, household cleaners, bleaches, dishwashing liquids, and oil soaps. The company offers its oral, personal, and home care products under the Colgate Total, Colgate Max Fresh, Colgate 360 Advisors' Opinion:

• [By Dividends4Life]

  Memberships and Peers: KMB is a member of the S&P 500, a Dividend Aristocrat, a member of the Broad Dividend Achievers��Index and a Dividend Champion. The company's peer group includes: The company's peer group includes: Procter & Gamble Co. (PG) with a 3.1% yield, Colgate-Palmolive Co. (CL) with a 2.3% yield, and Clorox Corporation (CLX) with a 3.4% yield.

• [By Dividend Growth Investor]

  In a previous article, I outlined that it is getting more difficult to find quality dividend paying stocks to buy. Most of the usual suspects like Kimberly-Clark (KMB) or Colgate-Palmolive (CL) are very overvalued today, which prevents me from adding to my positions there. Other companies like Chevron (CVX) are attractively valued today, but unfortunately my portfolio is overweight in them. Currently I find the oil sector to be cheap and have some of the lowest P/E ratios in the market. However, I would hate to be concentrated in one sector which is exposed to the fluctuating prices in its commodity products.

Redbox Instant Ironing Out the Kinks

The Motley Fool is on the road in Seattle! Recently, we visited Coinstar -- now officially renamed Outerwall  (NASDAQ: OUTR  ) -- to speak with CFO-turned-CEO Scott Di Valerio about the 22-year-old company's well-known coin-cashing machines, as well as its more recent acquisition of Redbox, and future initiatives to expand into other aspects of the automated retail market.

With a trial version of Redbox Instant now publicly available, Coinstar is seeking feedback from consumers as it fine-tunes the streaming video offering. The full version of the interview can be watched here.

A full transcript follows the video.

The television landscape is changing quickly, with new entrants like Netflix and Amazon.com disrupting traditional networks. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!

Eric Bleeker: We've talked a bit about Redbox Instant. Not to push you too much on this, but how much more innovation do you expect we'll see on this? Just as one example, I know ABC, which is owned by Disney, has been in discussions with Verizon  (NYSE: VZ  ) Wireless about excluding the data rates for watching their television shows, as part of a deal there.

You are partners with Verizon Wireless. Are you expecting to be able to leverage some more strengths about Verizon? Right now it's got the unique model that you can get DVDs from your kiosks and be able to watch their library, but how close to the complete vision are we, I guess is what we're asking? How much more do you see coming forward?

Scott Di Valerio: Oh, we're in early days. Again, our partnership is with the Verizon Wireline business, and then we are going to be able to lever the Verizon Wireless out of the house as well. Really, what the JV is focused on today is making sure that the technology is set up to where every time that you turn it on, Redbox Instant, that the stream is good and that there's not buffering, those kinds of things; that we're merchandising the content in a good way.

That's, honestly, one of the things that we're working on from the surveys of our customers; that "Hey, I've got to be able to figure out what's in the kiosk, what's on the subscription, and what do I have to pay extra for, if I want to do a video on demand?" because you can do that, or purchase an electronic version of a movie as well, which you can do on Redbox Instant.

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We've really been working on making that a little simpler, a little more clear and intuitive from that perspective, so we're very early days.

Again, we have around 5,000 titles, plus what you get at the kiosk, which is a nice number, focused really on movies. I think as we move along and bring on more subscribers and bring on more CE device manufacturers into the hopper, what you'll see is an expansion of the product as well, over time if you look at the roadmap for Redbox Instant.

I think we're in very, very early days.

Eric: Very early days, all right.

Di Valerio: But it's a great business, and again as I talked about with [Fool analyst] Austin [Smith], it's not a business that we have to be the No. 1 or No. 2 streaming service. It's a great business and it's really not set up to try to be a streaming Netflix or an Amazon killer on the streaming.

It's really set up to provide customers with a great experience at a great value, that bring on a good number of customers, but, again, we can be three or four and be very, very successful at it when you match it up with the overall Redbox business.

Tech Trifecta: Amazon, Microsoft, Zynga Surge After Quarterly Results

Tech stocks are in vogue on Friday.

Shares of three high-profile tech companies — Amazon.com Inc.(AMZN), Microsoft Corp.(MSFT) and Zynga Inc.(ZNGA) — are surging on the heels of their respective quarterly results.

They’re also giving a boost to the Nasdaq Composite, which is up 0.3% at 3941. The tech-heavy index is up 30% this year and is outpacing both the Dow Jones Industrial Average and the S&P 500.

Here’s a breakdown of what’s driving the results and stock performance for Amazon, Microsoft and Zynga.

AMAZON

The online retailer once again continued its logic-defying run in the stock market by reporting another quarterly loss — its third this year — that was largely overlooked by Wall Street. Instead, investors fixated on Amazon’s 24% increase in revenue, which exceeded analysts’ expectations and bodes well for the company heading into the holiday season, the most important quarter of the year.

Analysts pointed to Amazon’s strong sales growth and the fact that Amazon touted it added “millions” of new paying Prime members over the past 90 days. Such a trend is “a positive indicator of long-term purchase volumes, as AMZN said its Prime customers have very strong retention and do more cross-shopping,” says Brian Nowak, an analyst at Susquehanna. “In effect, Amazon is adding more higher lifetime value customers…which will lead to larger market share and earnings power.”

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Share surged 10% to $365.30. The stock is up 46% this year.

MICROSOFT

Amid an environment of struggling enterprise sales, Microsoft bucked the trend. The software giant notched a double-digit percentage jump in both revenue and profit, driven by robust sales to businesses.

“Upside to results was in contrast to Street apprehensions for a possible miss and a more likely guide lower,” says Rick Sherlund, an analyst at Nomura Securities. “While still not a great quarter, it was a surprise to the Street and any upside is good news when the set-up is so cautious.”

Shares jumped 6.5% to $35.91. The stock is up 34% year-to-date and is hovering near its highest level of the year.

ZYNGA

The social-game maker’s third-quarter loss narrowed from a year earlier as expenses dropped significantly. Shares jumped as the results beat expectations.

But the underlying problems plaguing Zynga still remain. The company’s daily active users dropped to 30 million in the third quarter, down from 39 million a quarter earlier and 60 million a year ago. Bookings, or the actual value of virtual goods Zynga sells in games, tumbled 40% to $152.1 million.

Zynga has taken steps to address these issues. Earlier this year the company announced it would cut 18% of its staff and close some offices to help reduce expenses.

“Incrementally positive monetization trends emerged in Q3, including healthy advertising [average revenue per user] growth, but we prefer to take a wait-and-see approach as the company positions for a potential 2014 recovery,” says Michael Olson, an analyst at PiperJaffray.

Shares rose 13% and jumped above $4 for the first time this year. The stock still remains well below its $10 IPO price in December 2011.

Hot Safest Stocks To Watch For 2014

LONDON --�Remember the good old days when investors held banking shares for their safe dividend income? The financial crash shattered that. More recently, banking stocks have been a recovery play for those investors brave enough to bet that the eurozone crisis wouldn't blow up in their faces. It's been a remarkably successful bet.

But if you're hankering for a safer play on the banking sector and yearn for those reliable dividends, it's worth having a look at�HSBC� (LSE: HSBA  ) (NYSE: HBC  ) . After recent broker upgrades, its shares are on a prospective yield of 5%, with a 4.2% historic yield in the bag. That's well ahead of�Standard Chartered�and�Barclays,�the other two dividend-paying banks. And HSBC surely has the safest dividend in the sector.

Safety in numbers
It's not just that HSBC is the second largest company on the FTSE 100, with a market cap roughly equal to the other four banks put together. HSBC's global footprint underpins its safety. With over 6,000 offices in 80 countries, its worldwide reach provides a strong competitive advantage to capture international trade flows and service multinational corporations.

Hot Safest Stocks To Watch For 2014: Goldman Sachs Group Inc.(The)

The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.

Hot Safest Stocks To Watch For 2014: Fluor Corporation(FLR)

Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.

Advisors' Opinion:

• [By CRWE]

  Fluor Corporation�� (NYSE:FLR) Chairman and Chief Executive Officer, David Seaton, and Chief Financial Officer, Biggs Porter, will give a presentation to investors at the Credit Suisse 2012 Engineering & Construction Conference in New York on Thursday, June 7 at 9:00 a.m. Eastern Daylight Time.

Top Dividend Stocks To Invest In 2014: Under Armour Inc.(UA)

Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.

Advisors' Opinion:

• [By Johanna Bennett]

  Investors also�bid up shares of Under Armour (UA) to $80.31, a 1.5% rise. And athletic-gear retailer Finish Line (FINL) jumped 7.3% to $24.02 following their own earnings homerun.

• [By Rich Smith]

  On the plus side, though, one analyst is naming Under Armour (NYSE: UA  ) a winner. Let's start the week's final trading day off on a bright note and begin with that one:

• [By WALLSTCHEATSHEET.COM]

  Under Armour is without a doubt a long-term winner, but the stock market is too hot right now for any real conviction, especially since Under Armour is trading at 49 times earnings. Nike wouldn�� be the best safe haven in a bear market, but it would be safer than Under Armour. That said, for investors who are capable of withstanding a hit and willing to purchase more on the way down if the stock gets hit, Under Armour is a long-term OUTPERFORM. This should be a safe long-term approach since Under Armour is highly likely to grow in the coming decades. It�� certainly not going anywhere.

Hot Safest Stocks To Watch For 2014: Petroleo Brasileiro S.A.- Petrobras(PBR)

Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.

Advisors' Opinion:

• [By Tyler Crowe and Aimee Duffy]

  Brazil's oil production numbers are up, but the 3.8% jump in April over the previous month doesn't sound as pretty when compared to year-over-year production, which is still down 4.9%. With Petrobras (NYSE: PBR  ) bringing several of its aging offshore rigs back on line after maintenance, the renaissance of Brazil's oil business will not be found in its production numbers... not yet.

• [By Todd Shriber, ETF Professor]

  That may not be a direct bearish call on Petrobras (NYSE: PBR), Brazil's state-owned oil giant, but it was less than a year ago at the Ira Sohn Conference that Chanos called Petrobras and Vale (NYSE: VALE), the world's largest iron ore producer two of his favorite shorts.

Do Financial Advisors Follow Their Own Advice?

By Hal M. Bundrick

NEW YORK (MainStreet) � Ever wonder if financial advisors follow their own advice? They urge you to plan for the future, invest wisely and save for retirement. But turn the tables and you'll find over two thirds (67%) of these money pros don't have a succession plan in place for their very own business, according to research by Fidelity Institutional Wealth Services.

With the average age of financial advisors being 52, that's a problem.

"While there is no substitute for comprehensive succession planning, we recognize that for many [investment] firm leaders, this longer-term planning is a process that requires time," said David Canter, executive vice president and head of practice management and consulting at Fidelity Institutional Wealth Services. "Yet there's a need for advisors to put back-up measures in place immediately. We encourage advisors to establish business continuity plans � even before their succession plans � so they know their clients and their business are taken care of in case of an emergency." Depending on an advisor to manage your financial assets, and then finding out that there was no succession plan in place can leave clients in the lurch. Consumers and small business owners can take a tip from this advisor neglect and form a succession plan for their own family or business. Fidelity offers these tips: Limited Power of Attorney � This document outlines a temporary plan if something happens to you or your business, ensuring that it can continue to operate and generate revenue. Buy-Sell Agreement � Every small business should have a plan in place specifying who will take the reins if the owner is permanently disabled or passes away. A buy-sell agreement helps to define a businesses' valuation, payment of the purchase price and closing terms. Operating/Shareholders Agreement Review � Family businesses especially need agreements that include provisions addressing both the temporary and permanent unavailability of one or more partners or principals. "We have found that prudent business continuity planning creates a logical bridge to begin the dialogue on succession planning," said Brian Hamburger, president of MarketCounsel, a consulting firm for investment advisors. "Looking at the issue from a practical scenario, the unavailability or sudden loss of key personnel makes the issue real." Hamburger says effective succession planning is becoming even more critical to ensuring current business owners hand over control to others in a way that is least disruptive to their firm's operations, clients and long-term value. That's a good lesson for advisors, as well as all business owners. Fidelity offers six steps to help lead to a successful business transition: 1) value your firm 2) establish goals and determine timelines 3) assess potential buyers 4) evaluate different deal structure options 5) address governance issues 6) document your businesses' succession plan --Written by Hal M. Bundrick for MainStreet

Asian Stocks Erase Advance as Chinese Shares Tumble

Asian stocks erased gains and the regional benchmark index retreated from a five-month high after Chinese shares tumbled as the nation's money-market rates surged.

China Resources Land Ltd., the second-largest mainland developer traded in Hong Kong, slipped 2.2 percent. Japan Exchange Group Inc. sank 3.4 percent after the main bourse operator of the world's second-largest equity market didn't boost its full-year profit forecast as analysts had expected. Hyundai Merchant Marine Co. jumped 10 percent after South Korea's biggest shipping line by market value refinanced 280 billion won of debt ($265 million).

The MSCI Asia Pacific Index dropped 0.3 percent to 143.46 as of 2:03 p.m. in Tokyo, erasing gains of as much as 0.5 percent. The gauge had risen for four days and today briefly touched the highest level since June 2008 amid speculation the Federal Reserve will delay tapering economic stimulus. The Shanghai Composite Index (SHCOMP) headed for a three-week low as China's money market rates jumped the most since July.

"The market has had a good run since the U.S. government ended a shutdown last week," Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., said in a telephone interview. "It's not a surprise that we're seeing a bit of a correction. Chinese interest rates are an issue. There's a fear that the mini credit crunch we saw in June could return again. It's probably part of the broader efforts to slow down credit growth in China."

Bank Funding

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China's Shanghai Composite Index slipped 1.2 percent, heading for the lowest close since Sept. 30. The seven-day repurchase rate, a gauge of funding availability in the Chinese banking system, surged 42 basis points to 4 percent as of 10:04 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That was the biggest advance since July 29.

The People's Bank of China has suspended selling reverse-repurchase contracts since Oct. 17, leading to a net withdrawal of 44.5 billion yuan ($7.3 billion) from the financial system last week. The authority asked commercial banks to submit orders today for 28-day repurchase contracts, 91-day bills, and 14-day reverse repos planned for tomorrow, according to a trader at a primary dealer required to bid at the auctions.

Hong Kong's Hang Seng Index lost 0.1 percent. Japan's Topix Index (TPX) slid 1 percent, while Taiwan's Taiex index fell 0.4 percent. South Korea's Kospi index dropped 0.7 percent.

Australian Inflation

Australia's S&P/ASX 200 Index declined 0.3 percent, erasing gains of 0.5 percent. The nation's inflation accelerated in the third quarter from the previous three months, a report showed today. New Zealand's NZX 50 Index gained 0.9 percent, extending its advance to a record high.

The MSCI Asia Pacific Index climbed 3.8 percent this month through yesterday after U.S. lawmakers ended the government shutdown and raised the debt ceiling. The gauge yesterday traded at 13.8 times estimated earnings, compared with 15.9 for the Standard & Poor's 500 Index and 14.8 for the Stoxx Europe 600 Index.

The S&P 500 climbed 0.6 percent yesterday, a fourth day of record closing highs, on speculation slower growth in hiring will extend Federal Reserve stimulus. That pushed the U.S. equities benchmark to within a percentage point of the best yearly gain in a decade. Futures on the S&P 500 expiring in December fell 0.3 percent today.

Barclays Plc changed its estimate for the start of Fed tapering to March from December after data showed U.S. employers added 148,000 workers in September, missing the 180,000 increase projected in a Bloomberg survey of economists. The data's release was delayed due to the 16-day U.S. government shutdown.

Fed policy makers unexpectedly refrained in September from reducing their $85 billion in monthly bond purchases, saying they wanted more evidence of an economic recovery. Deutsche Bank AG expects quantitative easing to continue into the first quarter of next year, while Goldman Sachs Group Inc. economists said that while tapering in December "remains a possibility," March is the most likely date.

Here's how to treat non-performing investments

'I am following all key models suggested by the advisors, specialists while investing. Still I haven't seen the growth in my portfolio as it should be. There are some investments which are not performing. What to do with them?'.

These confusing thoughts often occur in investors mind. We often forget to get the answers for why a particular product or instrument is not working as favourable as we expect. Read on.

Never sell your stocks or mutual funds if not performing in the short term.

Do you sell your stocks or mutual funds in the short term for non-performance? Stop doing it now. Stock market normally performs like a circle, the things that goes down will come up at one time.

It is a good idea to wait for the market to recover and then sell it when it is hot. Do not sell your non performing stocks or mutual funds when the market is creating a panicky situation by crashing for temporary reasons.

Do you average out a stock or mutual fund which is not performing because its fundamentals have become weak?

No, never do this. At times investors get attached to the investment when it makes loss. They will not sell. They think that, they can make some more additional investments and average out the price, so that when the price goes up, they will be able to recover the losses faster.

This averaging out strategy holds well, as long as the stock or mutual fund is fundamentally strong. If the stock or the mutual fund becomes fundamentally weak, the chances of price recovery are very remote.

Therefore averaging our a non-performing stock or mutual fund will make you more losses for yourself. So you need to check before averaging out, the stock is fundamentally strong or weak.

Do not carry your non performing stocks for a longer duration.

Booking loss is better than carrying loss. I agree that it is not easy to recognize the non performing stocks as it degrade your decision making skill. My advice is to be realistic here. Never let your pride or fear to dominate the decisions.

Accept that your decision has become wrong. Accepting the wrong, shows that you are emotionally strong. Being emotionally strong is a required quality for any successful investor.

After accepting the wrong investment decision, take courageously the next step to sell the stock or mutual fund and book loss. Cutting losses is very important to be profitable in stocks or mutual funds.

Instead of waiting in the non-performing fund or stock for recovery, if you book loss and reinvest in some other better performing investments, the recovery will be faster.

How often do you monitor your portfolio?

You must set up a pattern or period to monitor the performance of each product that you have purchased. Continuous monitoring and periodic rebalancing of your portfolio will help a lot to grow your wealth.

How often do you make changes in your portfolio?

Have you been tossing off the products very often? Selling everything when the value goes down and buying more when the market is doing fine? If you are doing it very often, the chance of you owning lot of non performing products is not surprising. Look at the way the market works, analyse well and then take any decision.

The sad truth is that there is no defined strategy to forecast how the stocks will perform at any given point of time.

However, you can minimize the loss by following the simple tips given below.

• Research well before investing on any particular product

• Monitor the market performance keenly before taking important decisions

• Time it well whether to hold or sell the product

• Choose the appropriate method to calculate your finances

• Do not retain the loss making products for a longer time

• Time it well to monitor your portfolio

• Do not make changes to your portfolio very often, fix the period and do it

What should be the next step you must do with the non-performing instruments?

1) List down the non-performing instruments you have right now

2) Check the current market value and the history

3) If the value has gone down drastically, list out the reasons

4) If the reason is a temporary one, you may use averaging cost method to forecast how the product will work in the near future

5) If you find the reason as permanent one, sell the instrument. Even if you are facing a loss by selling it now, it will help to reduce the loss you may incur by holding it for more period

Least, but the most important thing you should do is to fix a period now to monitor and re-balance your portfolio.

The author is Ramalingam K, CFP CM is the Chief Financial Planner at holisticinvestment.in, a leading Financial Planning and Wealth Management company.

Did Microsoft Reveal Its Next Takeover Target in a Reddit AMA?

Reddit, the so-called "front-page of the Internet," is famous for hosting AMAs (ask me anything). Entertainers, authors, and actors -- even the President of the United States -- have used Reddit AMAs as a way to drum up publicity.

On Thursday, alongside the release of Windows 8.1, Microsoft (NASDAQ: MSFT  ) held its own Reddit AMA, where the company took questions on its Windows strategy.

Perhaps Microsoft's most notable response concerned digital books. Microsoft confirmed that yes, like Apple's (NASDAQ: AAPL  ) iBooks, it plans to incorporate digital book sales into the Windows ecosystem. Given that Microsoft already has a large investment in Barnes & Noble's (NYSE: BKS  ) NOOK division, the long-rumored acquisition could finally come to fruition.

Why digital book sales matter
To Microsoft, investing in digital books may seem superfluous; compared to Windows and Office, digital books are a tiny market, already well-served by a number of heavy-weight incumbents, most notably Amazon.

But bringing digital books to Windows 8 would help Microsoft tremendously, as the company aims to establish a Windows ecosystem. Microsoft's recent reorganization centers the company around "devices and services" -- a strategy similar to the one Apple has been employing for years.

Apple's ecosystem creates loyal buyers, and digital book sales are a big part of that. If a consumer buys a digital book from Apple, they are limited in how they can access it -- iBooks are only available on Apple's devices. Someone who has invested hundreds -- perhaps thousands -- of dollars on iBooks is stuck; if they abandon Apple for a competitor's product, they'll lose access to their digital library.

Barnes & Noble is a sinking ship
Apple's competitors, such as like Amazon and Barnes & Noble, make their digital books freely available on most platforms; nevertheless, Apple's iBooks has become big business, accounting for about 20% of the market. Given that Amazon has an estimated 50-60%, Apple's market share is not noticeably smaller than Barnes & Noble's.

While you have to give Barnes & Noble credit for attempting to transition with the times, the company's play on digital just hasn't worked out -- the NOOK business has cost Barnes & Noble shareholders millions in recent years; NOOK posted a $55 million EBITDA loss just last quarter.

Barnes & Noble's retail business is still making money, but not as much as before. Its retail operation generated $65 million of EBITDA last quarter, but that was about 15% less than the prior year. The company blamed the decline on the lack of mega hits -- 50 Shades of Grey and The Hunger Games were big sellers in 2012 -- but the growth of digital books, fueled by the widespread adoption of tablets, cannot be overlooked.

Barnes & Noble's founder, Leonard Riggio, had offered to buy the company's retail business outright earlier in the year, but perhaps after seeing the ongoing decline, changed his mind.

Microsoft's big bet on the NOOK
Despite the company's struggles, Barnes & Noble shares have been supported by the persistent hope that Microsoft could acquire the NOOK business. Last year, Microsoft invested $300 million into Barnes & Noble's NOOK, buying up a 17.6% stake. In May, Microsoft was rumored to be mulling a $1 billion bid for NOOK outright. Obviously, that hasn't come to pass, but I think it's still likely; the Reddit response only reaffirms the possibility.

Since Microsoft already owns part of NOOK, why not acquire the rest? Microsoft wouldn't need the NOOK hardware, but the NOOK's digital bookstore would be a welcome addition to Windows 8, giving Microsoft a competitor to Apple's iBooks.

At this point, $1 billion may be excessive -- Barnes & Noble's current market cap is only about $826 million -- but a large cash infusion, along with the loss of a money-losing division, should benefit Barnes & Noble shareholders. I'm not sure if a deal will get done -- Microsoft could accept the $300 million NOOK investment as a loss and develop its own, competing digital book store -- but it remains a strong possibility.

Barnes & Noble's future may look bleak, but this has a runway for growth
This incredible tech stock is growing twice as fast as Google and Facebook, and more than three times as fast as Amazon.com and Apple. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!

Lamborghini reveals $4.5 million roofless car

The paint color on this car is a custom-made shade called "Rosso Veneno," but buyers can choose any color they like.

NEW YORK (CNNMoney) Lamborghini has released photos of its latest multi-million supercar, the Veneno Roadster. The car is an open-roofed version of the Lamborghini Veneno coupe, which was unveiled at last year's Geneva Motor Show.

While the car is priced at $4.5 million -- $500,000 more than the Veneno coupe -- it will actually be easier to get, provided you can afford it. Lamborghini's plans to build the car were announced in August.

Gallery - Lamborghini Veneno up close

That's because Lamborghini will produce nine of these cars during 2014. Production of the coupe was capped at just four, one of which is being kept at the Lamborghini museum.

The Veneno Roadster is not a convertible. It has no roof at all, only a roll bar for crash safety. The all-wheel-drive car is powered by a 750 horsepower 6.5-liter V12 engine and can go from zero to 62 miles an hour in just 2.9 seconds, according to Lamborghini. The car's top speed is 221 miles per hour.

  Driving an ultra rare $4m Lamborghini

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The Roadster is made almost entirely from carbon fiber-reinforced polymers. Even soft interior materials are made from a woven carbon fiber fabric. Unike the Veneno coupe, which was available to the public only in three pre-determined color schemes, buyers will be able to choose their own paint colors for this car.

Is Alcatel-Lucent a Buy After Recent News?

With shares of Alcatel-Lucent (NYSE:ALU) trading around $3, is ALU an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Alcatel-Lucent is a France-based company that proposes solutions used by service providers, businesses, and governments worldwide to offer voice, data, and video services to their own customers. It is also engaged in mobile, fixed, Internet protocol, optics technologies, applications, and services. The company operates in three business segments: Networks; Software, Services and Solutions; and Enterprise. As consumers and businesses continue to connect at an increasing rate, communications companies like Alcatel-Lucent stand to see rising profits. However, the company must adapt to new technologies if it is to see a rising consumer base.

Alcatel-Lucent CEO Michel Combes has warned that the company is in trouble, having steadily incurred losses since Alcatel merged with Lucent in 2006. The French-American wireless company has missed key technological changes and announced it's cutting 10,000 jobs despite protests from the French government. "This company could disappear," Combes told Europe 1 radio, according to Reuters. Alcatel-Lucent saw 1,500 workers protest in Paris on Tuesday against the job cuts.

T = Technicals on the Stock Chart Are Strong

Alcatel-Lucent stock has been declining in the past several years. The stock is currently surging higher and trading slightly below yearly highs. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Alcatel-Lucent is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of Alcatel-Lucent options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Alcatel-Lucent Options	73.8%	86%	84%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
November Options	Flat	Average
December Options	Flat	Average

As of Wednesday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Alcatel-Lucent’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Alcatel-Lucent look like and, more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	Top 5 Performing Stocks To Own For 2014 2012 Q3
Earnings Growth (Y-O-Y)	-133.84%	-254.09%	-423.67%	-171.56%
Revenue Growth (Y-O-Y)	6.73%	-3.17%	0.94%	-7.32%
Earnings Reaction	3.25%	-1.42%	-7.55%	-9.9%

Alcatel-Lucent has seen decreasing earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have not been pleased with Alcatel-Lucent’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Alcatel-Lucent stock done relative to its peers – Cisco (NASDAQ:CSCO), Nokia (NYSE:NOK), and Ericsson (NASDAQ:ERIC) — and sector?

	Alcatel-Lucent	Cisco	Nokia	Ericsson	Sector
Year-to-Date Return	162.6%	17.33%	76.33%	28.61%	40.67%

Alcatel-Lucent has been a relative performance leader, year-to-date.

Conclusion

Alcatel-Lucent is a provider of mobile and communications solutions to growing businesses and consumers worldwide. A warning that the company may be in trouble may be a negative catalyst for the company. The stock has been surging higher in 2013 and is currently trading slightly below highs for the year. Over the last four quarters, earnings have been decreasing while revenues have been increasing, which has not pleased investors in the company. Relative to its peers and sector, Alcatel-Lucent has been a year-to-date performance leader. Look for Alcatel-Lucent to continue to OUTPERFORM.

Best Casino Companies To Watch In Right Now

In the following video, Fool contributor Matt Thalman discusses a few metrics indicating that Las Vegas is experiencing a growing number of tourists. On a monthly basis, the gambling mecca of the U.S. is seeing about 3.3 million visitors. Higher foot traffic allows the hotel operators to charge higher room rates, and the city is experiencing higher revenue gaming. The average daily rate for hotel rooms in Las Vegas is up 2.9% year to date, and gaming revenue has increased by 4.7% for the strip casinos.

While all the major casino operators will benefit from a recovering Las Vegas, this market probably won't produce any massive growth for the industry anytime soon. Double-digit growth rates will still probably only be seen in Macau, but since MGM Resorts (NYSE: MGM  ) and Caesars Entertainment (NASDAQ: CZR  ) control such a large portion of the hotel rooms and casino floor space in Las Vegas, news that the city is recovering should help.

The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Best Casino Companies To Watch In Right Now: MGM Resorts International(MGM)

MGM Resorts International, through its subsidiaries, primarily owns and operates casino resorts in the United States. The company?s resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club. As of December 31, 2010, the company owned and operated 15 properties located in Nevada, Mississippi, and Michigan; and has 50% investments in 4 other casino resorts in Nevada, Illinois, and Macau. In addition, MGM Resorts International has an agreement with the Mashantucket Pequot Tribal Nation, which owns and operates a casino resort in Connecticut, to carry the ?MGM Grand? brand name. The company was formerly known as MGM MIRAGE and changed its name to MGM Resorts International in June 2010. MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Rich Smith]

  Vikings became a huge success for A&E when it began airing in the U.S. in the month preceding GoT's Season 3 premiere on HBO. On Friday, Amazon.com (NASDAQ: AMZN  ) announced a deal in cooperation with MGM (NYSE: MGM  ) Television to bring the series to the U.K. and Germany via Amazon's local streaming subsidiary LOVEFiLM.

Best Casino Companies To Watch In Right Now: Boyd Gaming Corporation(BYD)

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.

Advisors' Opinion:

• [By Travis Hoium]

  Earnings from Boyd Gaming (NYSE: BYD  ) surprised investors last week, but there's still a lot of fundamental weakness for the company. Revenue is declining across the country as more supply is added to the market, and the only way to grow is through acquisitions. The Fool's Erin Miller sat down with Travis Hoium to see how to play the gaming market now.�

• [By Dan Caplinger]

  MGM has built a history of being the odd player out in many of the most lucrative opportunities in the gaming industry. In Macau, the company is stuck in the slower-growth area of the Asian gaming destination. In Las Vegas, the new CityCenter area in the mid-Strip has watered down MGM's opportunities and has created another potential barrier for patrons coming from the northern end of the Strip to its namesake MGM Grand property. And in New Jersey, where online gaming has boosted prospects for Caesars Entertainment (NASDAQ: CZR  ) and Boyd Gaming (NYSE: BYD  ) , MGM has no exposure.

Best High Tech Companies To Own In Right Now: Pinnacle Entertainment Inc.(PNK)

Pinnacle Entertainment, Inc. owns, develops, and operates casinos, and related hospitality and entertainment facilities in the United States. It operates casinos, such as L'Auberge du Lac in Lake Charles, Louisiana; River City Casino and Lumiere Place in St. Louis, Missouri; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; and Boomtown Reno in Reno, Nevada. The company also operates River Downs racetrack in southeast Cincinnati, Ohio. As of May 26, 2011, it operated seven casinos and one racetrack. The company was formerly known as Hollywood Park, Inc. and changed its name to Pinnacle Entertainment, Inc. in February 2000. Pinnacle Entertainment, Inc. was founded in 1935 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Sean Williams]

  Time to make the switch
  If I could name a sector that I'd certainly tread lightly around considering that consumers are tightening their wallets, it would be the casino sector. Casino companies rely on loose wallets and vacations to drive profits. This is why I feel it could be the time to say goodbye to casino and race track operator Pinnacle Entertainment (NYSE: PNK  ) near its 52-week high.

• [By Dan Radovsky]

  Pinnacle Entertainment (NYSE: PNK  ) has reached an agreement in principle with the Bureau of Competition of the Federal Trade Commission that would allow the company to complete its proposed acquisition of Ameristar Casinos (NASDAQ: ASCA  ) , Pinnacle announced today.

Best Casino Companies To Watch In Right Now: (XTRN)

Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.

Best Casino Companies To Watch In Right Now: Penn National Gaming Inc.(PENN)

Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.

Advisors' Opinion:

• [By Roberto Pedone]

   

  Penn National Gaming (PENN) is a diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties. This stock closed up 1.4% at $56.13 in Monday's trading session.

   

  Monday's Volume: 1.11 million
  
  Three-Month Average Volume: 824,334
  
  Volume % Change: 73%

   

   

  From a technical perspective, PENN jumped modestly higher here right above some near-term support at $54.71 with above-average volume. This move is quickly pushing shares of PENN within range of triggering a breakout trade. That trade will hit if PENN manages to take out some near-term overhead resistance at $57.44 to some past resistance at $58 with high volume.

   

  Traders should now look for long-biased trades in PENN as long as it's trending above Monday's low $55.65 or above more support at $54.71 and then once it sustains a move or close above those breakout levels with volume that this near or above 824,334 shares. If that breakout hits soon, then PENN will set up to re-test or possibly take out its 52-week high at $59.93. Any high-volume move above $59.93 will then give PENN a chance to hit $65.

   

Best Casino Companies To Watch In Right Now: Wynn Resorts Limited(WYNN)

Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wyn n Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.

Advisors' Opinion:

• [By Travis Hoium]

  The steady economic recovery in the U.S. has helped MGM Resorts (NYSE: MGM  ) , Las Vegas Sands (NYSE: LVS  ) , and Wynn Resorts (NASDAQ: WYNN  ) turn Las Vegas from a drag to a positive line on the income statement. But for each, Macau continues to be the most important.

4 Big Changes to 401(k)s, IRAs in Obama’s 2014 Budget

Set aside for a moment the fight in Washington over raising the debt limit. In his budget blueprint for 2014, President Obama has proposed a number of tax and other reforms that would mean big changes in how retirement is financed.

At some point after the crisis is resolved, the House and Senate are likely to take up the following proposals, all of which would have lasting effects on anyone saving for retirement.

1. Automatic Enrollment in IRAs

The president’s 2014 budget would require employers in business for at least two years that have more than 10 employees to offer an automatic IRA option to employees.

Contributions would be made to an IRA on a payroll-deduction basis. If an employer already offers a plan, it wouldn’t have to comply with this regulation, but if its current plan excludes certain segments of its employees from participating in the plan, the employer would have to begin to offer the automatic IRA to those excluded employees, according to an assessment by KPMG.

Obama included this provision in the 2014 budget because he wanted to turn the tide on a rising retirement crisis in the United States. According to a Treasury report, the number of U.S. workers participating in an employer-sponsored retirement plan has remained stagnant for decades at no more than about half the total workforce.

The administration has seen that automatic enrollment efforts can be very effective in raising the number of people participating in workplace retirement plans and believes that by forcing small companies to offer automatic enrollment in an IRA, the number of people saving for retirement will rise.

Under the proposal, employers could help their workers save without having to make contributions to the plan or having to comply with the Employee Retirement Income Security Act. All they would have to do is make their payroll systems available to transmit employee contributions to an employee’s IRA.

Employers with fewer than 100 employees that offer an automatic IRA could claim a temporary credit for expenses associated with the arrangement of up to $500 for the first year and $250 for the second year. They also could be entitled to an additional credit of $25 per enrolled employee, up to a maximum of $250 for six years.

If employers adopted a new qualified retirement, SEP or SIMPLE plan, they would receive a tax credit for their startup costs that would be doubled from the current maximum of $500 per year for three years to a maximum of $1,000 per year for three years. 2. Elimination of Stretch IRA

The Obama budget would eliminate the stretch IRA that allows beneficiaries to stretch the proceeds from an inherited retirement account over their lifetime. Instead, non-spouse beneficiaries of retirement plans and IRAs would have to take full distribution of their inheritance within five years of the account holder’s death.

The only exceptions would be disabled or chronically ill individuals, someone who is not more than 10 years younger than the participant, or an IRA owner or a child who has not reached the age of majority.  Those individuals would be allowed to take distributions from the deceased person’s retirement plans over the life or life expectancy of the beneficiary beginning in the year following the death of the participant.

If the beneficiary was a child at the time of the participant’s death, they would have to take a full distribution within five years of coming of age.

If beneficiaries are forced to take distribution of large sums of money early, they will be taxed at a higher rate than they would be if they could leave the funds in the participant’s account and take money out gradually. 3. A $3.4 Million Cap

The president’s proposed cap on retirement savings has garnered the most attention this year. The cap would raise about $9 billion for the federal government over the next 10 years by prohibiting taxpayers from taking advantage of the pre-tax deferral in their 401(k) or defined contribution pension plans after they cross a $3.4 million threshold.

According to the Employee Benefit Research Institute, only a small percentage of IRA and 401(k) investors would be affected by the cap. In 2011, only 0.06 percent of total IRA account holders had $3 million or more in their accounts, and only 0.0041 percent of 401(k) accounts had that much money in them at the end of 2012.

The $3.4 million cap would allow an account holder to generate an annuity of $205,000 a year.

Small-business owners would be the biggest losers in this proposal, according to Judy Miller, director of retirement policy at the American Society of Pension Professionals & Actuaries.

That’s because company-sponsored retirement plans are the only way small-business owners can generate tax-deferred savings.

Workers might be hurt, too, even those with nowhere near $3.4 million in their accounts.

Brian Graff, executive director and CEO of ASPPA, said he is concerned that “without any incentive to keep the plan, many small-business owners will now either shut down the plan or reduce contributions for workers. This means that small-business employees will now lose out not only on the opportunity to save at work but also on contributions the owner would have made on the employee’s behalf to pass nondiscrimination rules.”

4. Social Security COLA

The president also proposed changing the way inflation is measured to shrink cost-of-living adjustments for retirees receiving Social Security benefits. The use of a chained consumer price index for Social Security and other programs, like Supplemental Security Income and veterans pensions, would reduce government deficits by $230 billion over 10 years. A chained CPI is a lower measure of inflation, which would reduce Social Security and other benefits by $130 billion.

The AARP Public Policy Institute spoke out about the use of a chained CPI back in 2012, saying the proposed changes would have a detrimental effect on the economic wellbeing of older and disabled Americans and their family members who receive the benefits of Social Security.

On the surface, a chained CPI seems like a good idea. It would reduce the annual COLA by small amounts every year. The problem is, it would hit the oldest and most vulnerable beneficiaries the hardest.

Those in favor of a chained COLA believe that the inflation measure used for the current COLA overstates inflation because it doesn’t fully account for the way that people substitute different goods and services when prices change. They argue that future COLAs should be based on a more accurate measure of inflation, the chained consumer price index.

5 Best Penny Stocks To Own Right Now

AARP asserts that these cuts would have a catastrophic impact on older Americans who are the least able to absorb cuts to their benefits because they rely on Social Security for their income and have higher out-of-pocket medical expenses. They also have a higher poverty rate than younger Americans.

3 Biotech Companies for Young Investors

Take one look at the returns from biotech darlings Celgene, Biogen Idec, and Gilead Sciences over the past year. If that doesn't get you excited as an investor, then you had better check your pulse. The further back you go, the better it gets. Had you staked a position in the companies above 10 years ago, you would have captured returns of 1,626%, 610%, and 833%, respectively. These companies above may not be done growing, but with market caps ranging between $50 billion and $80 billion, it would be misguided to expect similar gains from them going forward.   

While we cannot travel back in time (yet) to make our present selves look like investing geniuses, we can attempt to learn from the past while searching for the next big biotech companies. Young investors who are not afraid to adopt a buy-and-hold mentality could benefit the most from finding the next gem. The eye-popping returns of biotech firms coupled with the compounding effect enjoyed by investors who get an early start can be a powerful combination. Here are three companies that could trounce the market in the next 10 years.

Building momentum
It may not seem too impressive on the surface, but Momenta Pharmaceuticals (NASDAQ: MNTA  ) has the makings of a game-changing biotech company. The company has developed a novel platform that greatly speeds the development and characterization of complex biological compounds. Unlike more traditional small molecules, therapeutic proteins are massive molecules whose exact chemical structure and makeup can vary from one production method to the other. Simple folds of subunits within the protein can drastically affect its efficacy and toxicity.

Momenta's platform swipes away uncertainty and risk from product development by making connections between a drug's chemical structure, manufacturing process, and mechanism of action. The approach has attracted the attention of Novartis and Baxter Pharmaceuticals, which are going all-in on the future of biosimilars, or generic biologics. Although the company's technology was proven successful at an early stage, its first generic drug quickly succumbed to a flood of competition. An astounding $180 million in profits on $283 million in revenue in 2011 fell a mind-numbing 97% as a result.  

Despite an early collapse, Momenta has a promising future ahead of it. A partnership with Baxter could produce up to six biosimilars -- the first of which could be up for regulatory approval by 2014. The company is also developing a novel oncology drug on its own, although it is still in phase 1 trials. It will remain a high-risk investment until it can generate more revenue. But if Momenta can diversify its revenue stream and build out its product portfolio, it should be able to capture the ridiculous profit margins of 2011.

Incite growth into your portfolio
Investors looking for the next high-growth biotech company should certainly spend time researching Incyte (NASDAQ: INCY  ) . The company sports a handful of the most promising JAK inhibitors, which are garnering high level interest throughout the pharmaceutical industry. The molecules have big potential in treating various cancers and inflammatory diseases such as rheumatoid arthritis and psoriasis.

Incyte and Novartis have teamed up to market Jakafi -- the company's first and only approved drug -- for myelofibrosis (a bone marrow cancer). The pair is also evaluating the novel compound in four additional cancer trials; one phase 3 and the balance in phase 2 development. Meanwhile, Eli Lilly has tapped Incyte's baricitinib for inflammatory diseases. The drug crushed its phase 2 trial for rheumatoid arthritis late last year and is wrapping up a phase 2 trial for psoriasis.

With a market cap of just $3 billion and plenty of positive developments, Incyte could be a good early candidate for the next big biotech company. Investors will have to practice extreme patience, though, since the next phase 3 data won't be published for several years. 

You call it cheating -- I call it looking ahead
Who said biotech investments are confined to health care and pharmaceuticals? Solazyme (NASDAQ: SZYM  ) has nothing to do with either, but forward-thinking investors won't let that stop them. The industrial biotechnology company is developing a novel renewable oils platform that could one day produce commercial quantities of in-spec chemicals for a variety of applications including cosmetics, flavors and fragrances, specialty chemicals, and fuels.

Solazyme is feverishly working on building its first production capacity in Brazil, the United States, and Europe. When the last of the three facilities is commissioned in early 2014, the company will own an annual nameplate oils capacity of 125,000 metric tons. With just 8,500 metric tons of capacity at the beginning of 2013, it is easy to see why investors are excited about the big increases in revenue coming their way.

Potential will likely push shares higher over the next year, although Solazyme still needs to commercialize all of it oils at industrial levels of production to become profitable. The company hasn't missed any major milestones to date, but it's clear that big challenges lie ahead. Despite the risks, Solazyme remains the best investment in industrial biotechnology.

Foolish bottom line
Will one of these companies become the next big biotech company? It is much too early to say, but young investors looking for great buy-and-hold opportunities should consider the innovative group. Each comes with more risks than more mature companies such as Celgene, Biogen, or Gilead, but that also makes the potential returns far greater. All three are on my watchlist and will be added to my portfolio in the next year. Will you be joining me? Let me know in the comments section below.

While you can certainly make huge gains in biotech prospects, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.