Bank Of America Sale Book For Los Angeles Clippers Fouls Out

I sure hope Steve Ballmer isn’t relying on the information in the Bank of America BAC +0.48% Merrill Lynch sale book on the Los Angeles Clippers for his $2 billion offer for the NBA team. Their book fouls out in my opinion (thank you, ESPN , for publishing the document).

For starters, the investment bank seems to have no understanding of the NBA’s collective bargaining agreement. The CBA stipulates that half of the increase in national television money must go to the players. Yet figures in the sale book show revenue from the league’s next broadcasting deal tripling to $90 million per team with no increase in player salaries? Huh?

Speaking of television, I wonder if real bankers put this document together or it was a bunch of interns. On the first page of the document it says the league’s tv deal is expected to increase by 200%, but later on the same page say the deal will double. Those who follow my work can attest to the fact that I am no genius. But last I checked, 100% would be a doubling of rights while 200% would be tripling in value.

Los Angeles Clippers, Washington Wizards

Los Angeles Clippers, Washington Wizards (Photo credit: Keith Allison)

Then there’s the Clippers local cable deal, which paid the team $25.8 million during the 2013-14 season but expires after the 2015-16 season. The Bank of America book says the Clippers could get $125 million a year for the next cable deal. Sports media rights experts have been telling me the team could get $75 million.

Moreover, sports bankers say that a previous version of the sale document put out by Bank of America had estimated the team’s cable deal would increase to $75 million. So almost overnight the Clippers local tv rights have increased 67% according to BOA.

No wonder the investment bank document has the Clippers operating income (in the sense of earnings before interest, taxes, depreciation and amortization) increasing to $119 million from $19 million. Call me skeptical.


Holy Burrito! Chipotle Crushes Earnings, Stock Soars To New High

Chipotle’s still hotter than hot sauce.

The fast casual restaurant that just won’t quit blew by analyst expectations for its second quarter earnings report on Monday. Chipotle registered sales of $1.05 billion and earnings per share of $3.50, beating Wall Street’s predictions of $990 million and $3.08, respectively.

Even better news for Chipotle: their same store sales just keep growing. They’re up over 17% from the same period last year. Chipotle also added 45 new locations, bringing the total count to 1,681.

The results show that Chipotle is successfully combating high food prices for beef, cheese, and avocado. The chain has been raising prices on its burritos to make up some of the gap, but customers clearly haven’t been discouraged.

“We’re pleased that we continued to drive excellent results in the second quarter, including one of our strongest sales comps as a public company. These extraordinary results are made possible by our special food culture, innovative people culture, and strong business model that are not only creating significant shareholder value, but also helping us realize our vision to change the way people think about and eat fast food,” Chipotle Chairman and CEO Steve Ells said in a statement.

Chipotle’s continued surge only highlights the growing gap between fast casual’s success and the struggles of traditional fast food chains. McDonald’s and Yum! (parent company of KFC, Pizza Hut, and Taco Bell) both sank during trading on Monday after they became mired in a food safety scandal in China.

Chipotle shares soared over 10% in after hours trading. The stock was already up 11% in 2014, but if the after hours surge holds, CMG shares will open on Tuesday morning at a record price over $640 a piec

The Best-Kept Secret in Retirement Plans

If there was a way of dramatically boosting returns with little effort on your part, wouldn’t you jump at it?

It’s no secret that by switching from managed mutual funds to passive index exchange-traded funds (ETFs) you could save a fortune on fees. That automatically translates into higher returns.

But did you know that the biggest mutual fund houses are in the midst of a fee-pricing war? Although this development rarely gets the coverage it deserves in the mainstream media, it’s a huge secret that almost no retirement plan sponsors are taking advantage of it. Here’s the latest, according to the trade publication Employee Benefit News:

“Having recently gained momentum in the investment world, exchange-traded funds (ETFs) carry a large amount of excitement. They commonly offer lower expense ratios and higher liquidity when compared to mutual funds while still providing diversification through broad exposure to all asset classes.

Although mutual funds have historically been the core investment vehicle associated with 401(k) plans, various financial companies are beginning to offer the option of 401(k) plans comprised solely of ETFs. The transition to ETF-based 401(k) plans will not occur overnight due to the established popularity of mutual funds, but ETFs are positioned to develop a strong presence with such plans in the coming years.”

What does this mean? Retirement plan sponsors are like rocks that you try to push uphill. They are slow to change, even though a move into ETFs will benefit all of their employees in the plan — immediately. The savings can be huge, according to EBN, which will build nest eggs at a faster rate:

“The average actively managed mutual fund charges an annual fee of 1.39%, while the average ETF charges just 0.21%. As 401(k) funds accumulate for several decades, the expense ratios have an immense impact on the total net returns of the portfolio.

Also, ETFs track steady indices instead of gambling on the stock choices of fund managers. Funds that are actively managed include management fees and often underperform the market, while ETFs can offer greater performance at a nominal cost to the investor.”

Many retirement plan trustees are aware of these facts, yet are lagging snails in acting upon this profitable information. Meanwhile, the biggest players in the ETF world are fighting a war over lowering ETF fees even more.

BlackRock (iShares) and the Vanguard Group are the Yankees and Boston Red Sox of ETFs and money management. They both want to grab more market share and have been slashing fund fees to get new customers. To date, they’ve been successful; individual and institutional investors love the idea of paying rock-bottom rates for fund management in the form of expense ratios.

The price war is getting crazy, but that’s a good thing for investors.

For example, BlackRock recently cut the expenses of its iShares Core High Dividend ETF (HDV)  from 0.40 percent annually to 0.12%. Imagine a car company cutting the price of one of its models by two-thirds. Do you think they’d sell more cars? Vanguard, which has always been cheap on expense ratios,  sports average ETF expenses of 0.14%, compared to 0.58% for the industry and 0.32% for BlackRock.

For investors, the math is looking pretty marvelous. At 0.14% annually, you’re paying $14 for every $10,000 invested, compared to $139 for an actively managed mutual fund. This is one reason why I invest with Vanguard and iShares in my retirement accounts.

How do you take advantage of these bargain-basement expenses? Tell your employer you want an ETF-based retirement plan, pronto. If not, you can set them up on your own directly through the fund companies or in an individual retirement account.

While I don’t know if these great prices will last — they probably will — don’t waste any time in taking advantage of them. Your money will compound much faster if you are paying less to have it managed for you.

See my new book on timeless lessons on building long-term wealth.

Hospitals See Troubles In Red States That Snubbed Obamacare’s Medicaid Deal

While record numbers of Americans sign up for the larger Medicaidhealth insurance program for the poor, financial issues are emerging for medical care providers in the two dozen states that didn’t go along with the expansion under the Affordable Care Act.

Reports out in the last week indicate the gap between those with health care coverage is widening between states that agreed to go along with the health law’s Medicaid expansion and those generally led by Republican legislatures and GOP governors that are balking at the expansion.

The moves against expansion are “beginning to hurt hospitals in states that opted out,” a report last week from Fitch Ratings said. The U.S. Department of Health and Human services has said Medicaid enrollment in the 26 states and the District of Columbia that agreed to go along with and implemented the expansion by the end of May “rose by 17 percent, while states that have not expanded reported only a 3 percent increase,” HHS said in an enrollment update for the Medicaid program.

“We expect providers in states that have chosen not to participate in expanded Medicaid eligibility to face increasing financial challenges in 2014 and beyond,” Fitch said in its July 16 report. “Nonprofit hospitals and healthcare systems in states that have expanded their Medicaid coverage under the Patient Protection and Affordable Care Act have begun to realize the benefit from increased insurance coverage.”

Already, the financial ratings agency said it has downgraded 10 health care entities so far this year and five of those were in states that have not gone along with the Medicaid expansion. Fitch didn’t specify the entities that have been hurt financially.

“Several of those downgrades were driven by operating performance declines related to funding and reimbursement pressures, which may have been lessened by Medicaid expansion,” the Fitch report said. “Conversely, of the nine upgrades since Jan. 1, eight were hospitals in states that have expanded Medicaid.”

The federal government traditionally picks up a little more than half of the cost of Medicaid. But funding under the health law is unlike past efforts to expand Medicaid in that the federal government will pick up the full tab for the first three years. The state gradually has to pick up some costs in 2017, but by 2020, the federal government is still picking up 90 percent or more of the Medicaid tab.

It’s an important issue for the health care industry. While the Fitch report examined nonprofit hospitals, for-profit hospitals, too, aren’t seeing growth in states where Medicaid hasn’t expanded.

Health plans, too, are seeing an uneven impact to their enrollment growth. An increasing number of state Medicaid programs are contracting with private health insurance companies like Aetna AET -0.78% (AET), Centene (CNC) Humana HUM -0.14%(HUM), Molina (MOH) and UnitedHealth Group UNH -1.1% (UNH).

“UnitedHealthcare is seeing significant and accelerating growth in Medicaid,” UnitedHealth president and chief executive officer Stephen Hemsley told analysts and investors last week on the company’s second quarter earnings call. “380,000 more people in the quarter and 635,000 through the first half of the year. Coming from expanded access to Medicaid in about half the states we serve, the launch of Florida’s planned Medicaid expansion, and core program growth from already established markets and programs.”

A report last week from the Robert Wood Johnson Foundation and the Urban Institute described the coverage difference as a “gulf in percentage of people without health insurance” that is growing larger between states that expanded Medicaid and those that did not.

As of June, the report said 60 percent of the nation’s uninsured residents live in states that did not expand Medicaid. That figure was up from 49.7 percent in September of last year.

Analysts expect that gap to only worsen. Unlike private coverage under the health law that is generally purchased during a specified open enrollment period, Americans can sign up for Medicaid at anytime.

“In states that expanded Medicaid, an estimated 71 percent of the uninsured likely qualify for some type of financial assistance for health insurance, compared with 44 percent of the uninsured in the states that did not expand Medicaid,” the Robert Wood Johnson Foundation and Urban Institute report said.

Wondering how Obamacare will affect your health care? The Forbes eBook Inside Obamacare: The Fix For America’s Ailing Health Care System answers that question and more. Available now at Amazon and Apple.

The Best Jobs For Work-Life Balance

Much discussed and rarely achieved in full, work-life balance is an elusive prize in modern professional culture. While it can depend greatly on the priorities and values of an individual and their manager, some jobs provide strong opportunities for those looking to combine a fulfilling career with a thriving personal life.

To determine some of the best jobs for work-life balance, Forbes worked with job and salary comparison site, which gathered employee feedback on work-life balance in various occupations over the past year. The list includes a broad range of professions–everything from law clerk to equity trader to game designer–indicating how many varied careers can provide a healthy relationship between work and home life.

“Work-life balance is not a situation anymore where you’re at work and then you’re at home, it’s more this balancing between the two,” said Lauren Griffin, senior vice president of Adecco Staffing U.S. “It’s a common trend, generationally–people all want the flexibility, but the reasons they want it might be different.””

Griffin said that while Millennial employees are more accustomed to being constantly connected to the office and will accommodate after-hours communication and requests, they also want the freedom to take a long lunch, employ flexible scheduling, or work during off-hours. Baby Boomers and members of Gen X, meanwhile, are more likely to require flexibility to deal with personal responsibilities associated with child rearing, or caring for an aging parent.


Topping the list of jobs that provide strong work-life balance is data scientist. According to IBM, “A data scientist represents an evolution from the business or data analyst role.” IBM notes that while the formal training in computer science and applications, modeling, statistics, analytics and math for these jobs is similar, “What sets the data scientist apart is strong business acumen, coupled with the ability to communicate findings to both business and IT leaders in a way that can influence how an organization approaches a business challenge.”

Stan Ahalt, director of the Renaissance Computing Institute at UNC Chapel Hill, said that the strong demand for data scientists, coupled with the anemic supply of these professionals currently available in talent pipelines, is likely creating a situation where companies will go above and beyond to attract the right talent.

“The demand for people who are able to analyze massive amounts of data and extract actionable decisions has really blossomed,” said Ahalt. “The people who are being hired are being highly sought-after, so I suspect they’re getting relatively good offers, and offers that include flexibility in their hours and locations simply because there are many more jobs than there are people.”

And while the usual in-demand tech and content jobs are strongly represented–SEO specialist and social media manager also crack the top five–the list is also diverse and representative of a broad spectrum of occupations, with part-time and seasonal jobs like lifeguard and substitute teacher holding spots, as well as corporate jobs and skilled trades.

So how do firefighter and equity trader end up on the same workplace quality roster? Griffin said that when it comes to work-life balance, it’s more about how a group of professionals are managed than the individual job itself.

In pictures: The 20 Best Jobs For Work-Life Balance

“The employer can say, ‘I’m Adecco, and we promote work-life balance,’ but that manager that you work for has to really believe in it and live it. If they’re not also encouraging their employees and modeling that behavior, it’s difficult for the employee to create it—that’s common across all professions.”

And for job-seekers or those planning a career change who want to prioritize work-life balance in their next role, Griffin said the most important step is identifying your greatest personal commitment so you can target a job that’s accommodating by nature, or an employer that will work with you to reach a solution.

“You need to define what’s non-negotiable for you,” said Griffin. “What’s that specific thing that you know you need some balance for, is it dropping your kids off, or taking your mother to a doctor’s appointment twice a month? What are those key points for you? Because then you can have a more open conversation with your employer.”

Follow me on Forbes and Twitter.

Johnson & Johnson Profit Jumps 13% As Hepatitis Drugs Shine

Johnson & Johnson handily beat Wall Street’s expectations with the release of its second quarter earnings results Tuesday morning: the world’s largest maker of healthcare products reported a 9% jump in revenue and a 13% boost in profit thanks to success in sales of household names like Tylenol and Motrin as well as newer drugs like Olysio, which is used to treat hepatitis C.

Johnson & Johnson recorded $19.5 billion in revenue for the second quarter of 2014, a 9.1% increase over the prior-year period and a figure that beats the $18.9 billion analyst consensus. Net income came in at $4.3 billion, up 12.9% compared to the year-ago quarter and resulting in earnings of $1.51 per share. Excluding special items — including a $400 million litigation expense — the company’s net earnings came in at $4.8 billion, or $1.66 per share, a figure that easily cleared the $1.66 per share Street estimate.

“Our strong second-quarter results reflect the continued success of our new product launches and the progress we have made in achieving our near-term priorities,” Alex Gorsky, Johnson & Johnson chairman and CEO, said in a statement Tuesday morning. “Significant advancements are being made in the treatment options and access to care for patients and customers around the world. Our diversified business model, focus on long-term growth drivers and talented colleagues position us well in this evolving and dynamic global health care market.”

As a whole, domestic sales increased 14.9% during the quarter, and international sales increased 4.4%, the company said. Positive contributors to Johnson & Johnson’s consumer segment — which, worldwide, saw sales increase 2.4% compared to this time in 2013 — included  pain relievers Tylenol and Motrin, skin care products Neutrogena and Aveno as well as sales of mouthwash Listerine. Worldwide pharmaceutical sales increased 21% to $8.5 billion, a boost that Johnson & Johnson partially attributed to Olysio and Sovarid, two new drugs being used to fight hepatitis C. Olysio was approved by the FDA just this past November.

Given these strong results, Johnson & Johnson said Tuesday that it is increasing its full-year earnings per share guidance from the prior range of $5.80 to $5.90 in full-year earnings per share to a new range of $5.85 to $5.92 per share, excluding special items.

Following the release of the earnings results, shares of Johnson & Johnson increased modestly in Tuesday’s pre-market trading session, gaining just 0.2% before the opening bell. Year-to-date, the stock is up more than 15%.


America’s Largest Shotgun Maker Shifts More Jobs to Texas

America’s largest shotgun manufacturer, O.F. Mossberg & Sons, Inc., decided not to expand in Connecticut. Sure it was founded there 1919 and still has its corporate headquarters in North Haven. But in 2013 Connecticut rushed through legislation to ban some of Mossberg’s popular products. As a result, Mossberg CEO, Iver Mossberg, says, “Investing in Texas was an easy decision. It’s a state that is not only committed to economic growth but also honors and respects the Second Amendment and the firearm freedoms it guarantees for our customers.”

Mossberg has instead expanded its Maverick Arms, Inc. facility in Eagle Pass, Texas, with 116,000 new square-feet of factory space. Mossberg is not a small gun manufacturer. According to records kept by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Mossberg made 475,364 guns in America in 2011. Of those guns, a total of 423,570 were shotguns made for sportsmen, for shotgun sports enthusiasts, for law-enforcement and for people who want a shotgun to protect their homes and families.

More than 90 percent of Mossberg’s guns are now made in Texas. Some of its Connecticut jobs are going there, too. Tom Taylor, O.F. Mossberg & Sons’ senior vice president, sales & marketing, tells me, “We’re moving all wood gun stock production to our Texas facility. More of our product lines—like our modern sporting rifles—might move to Texas in the future. Texas has been very good to us. Also, our gun sales have been so dynamic over the last number of years. We’ve outgrown our facilities. This major expansion will help us keep up with demand.”

Mossberg is America’s oldest family owned and operated firearms manufacturer. It’s also the largest pump-action shotgun manufacturer in the world. Texas Governor Rick Perry (R) has been aggressively coaxing them to bring even more jobs to Texas—Mossberg has been making guns there since 1989. Perry has been seducing them with the Texas Enterprise Fund (TEF), the state’s low taxes, simpler regulations and a skilled workforce.

Governor Rick Perry of Texas speaking at the R...

Governor Rick Perry of Texas speaking at the Republican Leadership Conference in New Orleans, Louisiana. Please attribute to Gage Skidmore if used elsewhere. (Photo credit: Wikipedia)

Governor Perry says, “This TEF investment in Maverick Arms will help create jobs and opportunity in Eagle Pass, while reaffirming Texas’ longstanding support of the Second Amendment.”

Contrast Governor Perry’s support with what Connecticut Governor Dan Malloy (D) said a few days after signing a massive gun-control bill in 2013 and it’s obvious which climate is more business friendly. On an appearance on CNN’s show “State of the Union,” Governor Malloy said, “What this is about is the ability of the gun industry to sell as many guns to as many people as possible—even if they are deranged, even if they are mentally ill, even if they have a criminal background. They don’t care. They want to sell guns.”

I’ve toured Mossberg’s facility in North Haven. I’ve interviewed its leadership and many of its engineers and its blue-collar workers running CNC machining, lathes and more. I’ve found them to be good, patriotic Americans who see guns as tools for self-defense, for hunting, for law enforcement, for those who love the shotgun sports and so on. All I can say is it is obvious Malloy hasn’t met those people working in his state and really doesn’t understand a large portion of America. If he’d toured those factories in his state and met with gun owners before signing legislation that uses the word “felony” 43 times, mostly as a threat to gun owners, he might have advocated and backed a law that could have done some good. He wouldn’t have had to look far for another point of view. The National Shooting Sports Foundation, the trade association that represents firearms manufacturers, is in Connecticut.

Actually, being from Connecticut, Malloy should have a better understanding of America’s gun makers and law-abiding gun owners. Connecticut, after all, isn’t just a “blue state” that happens to be 1/48th the size of Texas. Connecticut is where Samuel Colt set up shop in 1847. Colt’s revolvers have been credited with helping to win to the West, but less well known is the fact that historians also credit Colt’s factory with helping to advance manufacturing techniques in America, changes that helped stimulate America’s industrial revolution. Colt still has about 600 employees in the state.

Regardless of the facts, Governor Malloy signed the gun-control bill (Senate Bill 1160) into law on April 4, 2013. Four days later, President Barack Obama spoke at the University of Connecticut and said, “Connecticut has shown the way, and now is the time for Congress to do the same.” CBS CBS -0.45%reported that “Obama applauded the state legislature and Gov. Dan Malloy for passing ‘common sense’ bi-partisan legislation last week that calls for widespread restrictions on firearms.” The gun-control bill had been written behind closed doors and placed on legislators’ desks around 9 a.m. on April 3. At about 12:30 p.m. that same day the state Senate started debating the legislation as gun owners chanted outside, “Read the bill.” Maybe they’re all accomplished speed-readers and so did in fact read all the bill’s legal language, its gun bans, restrictions, and registration schemes. Whether they’d read it all or not, the Senate passed the bill 26-10 that same day. Hours later the House passed it 105-44. At noon the next day (April 5) Governor Malloy signed the bill.

That’s a harsh state climate for gun owners and firearms manufacturers. According to the National Shooting Sports Foundation (NSSF), in 2012 gun manufacturers and associated businesses in Connecticut generated about $1.75 billion in economic activity and employed over 7,300 people. Those numbers are now falling in Connecticut even as guns continue to sell.

Taylor says, “Our MVP rifle series have surpassed our expectations by ten times. We can barely keep up with demand for our Duck Commander Series shotguns and our Muddy Girl shotguns. We’re having another solid year and are proud that our products are made in America.”

Mossberg isn’t alone. After Malloy signed his gun ban and other gun-control measures in 2013, Mark Malkowski, president of Stag Arms in New Britain, Conn., told me, “Some companies have seen brand damage because they operate in a state consumers see as unfriendly. We have to take this into account. We have to consider all our options. Tomorrow, for example, I have a meeting on the schedule with officials from Texas. They and other states would like us to take our business to them.”

Another gun company, PTR firearms, left Bristol, Conn., with about 60 employees to South Carolina. Stag Arms, meanwhile, is still considering its options as Mossberg—like Beretta, Remington and many other gun makers—shift away from states that treat law-abiding gun owners like they’re the problem, not a part of the solution.

The 4 Biggest 401(k) Mistakes People Make

By Wayne Connors, Next Avenue Contributor

The 401(k) plan has long been one of the most useful and advantageous cornerstones of any investor’s retirement plan.

Taking advantage of it used to be as simple as parking your weekly contributions in the plan and watching as they — and your company’s matching contribution —  added up to a modest nest egg from which you could start drawing as soon as you retired.

Well, times have changed and so have some of the basic rules of 401(k) saving, which has led some investors to make costly mistakes with the plans.

These days, we change jobs more often, companies have shrunk or eliminated their 401(k) matches and fund sponsors have started charging hidden fees that can seriously cut into the savings potential of the plans.

(MORENew Rules to Avoid Outliving Your Money)

With these factors to consider, let’s take a look at the four biggest mistakes people make with their 401(k)s:

1. Leaving money invested in a former employer’s 401(k) plan rather than rolling it over into an IRA All 401(k)s have administrative fees and over the long term, continuing to unnecessarily pay these fees will significantly reduce your total return. By contrast, most IRAs don’t have significant administrative costs. This cost savings can add up to thousands of dollars.

Another reason to roll your 401(k) to an IRA when you leave your job is that most 401(k) plans don’t offer funds covering every asset class category. Consequently, investors in them are unable to build broadly diversified portfolios. An IRA gives you access to a wider range of investment funds. Proper diversification is important because it contributes to about 96% of your portfolio’s return.

Another reason to move your 401(k) assets into an IRA is that many 401(k)s mainly offer high-cost “actively managed” fund choices as opposed to low-cost “passively managed” index funds. But studies have shown that actively managed funds, in general, are not worth their additional cost and investors are better served by building a portfolio of less-expensive index funds.

(MOREDo You Know What’s Wrong With Your 401k?)

2. Investing “to” retirement with a 401(k) instead of investing “through” retirement Many 401(k) investors make the mistake of becoming too conservative too soon. By retirement, they’ve reduced their plan’s stock exposure to 20% when they should probably still have 40 to 60% in stocks to help carry them through retirement.

While reducing stock exposure as retirement nears may sound prudent, many 401(k) investors — and many target date funds in their plans — don’t consider that people will likely live at least another 20 to 25 years after they stop working full-time. So they’ll likely need growth in their portfolio to afford the lifestyle they’ve grown accustomed to over the years.

3. Timing the market instead of putting time in the market Many people make the mistake of moving their 401(k) plan investments out of stocks when the market has dropped. Big mistake.

According to DALBAR, a research firm in Boston, Mass., the average investor who has done this historically has achieved a much lower return than if he or she would had kept money in an S&P 500 index fund.

The most recent DALBAR study showed that for the last 20 years ending December 2013, the S&P 500 Index returned 9.22% annually, on average, while the average investor earned a return of 5.02% over the same period. This difference in performance is due to investors moving in and out of the market, which can add up to thousands of dollars.

4. Failing to rebalance their 401(k)s You might think of this mistake as the “Set it and forget it goof.” If the stock or bond market rises or falls dramatically, you could find yourself inadvertently with a bigger or smaller percentage of your portfolio in one of those asset classes than you wanted. Failing to rebalance your 401(k) plan is dangerous for two reasons.

First, although stocks generally outperform bonds over the long term, they can be much more volatile in the short term. So you don’t want to find yourself holding more of your 401(k) in stocks just before retirement than you planned, just because the market soared. Otherwise, you might see your portfolio collapse if the market tanks just as you need to start withdrawing money from the plan.

That’s one reason why it’s a good practice to rebalance your portfolio every year or two, gradually weaning your portfolio off stocks and increasing your exposure to the more stable bond funds.

The second reason failing to rebalance your 401(k) is dangerous is that a runup in the market would mean your gains will go right back into your stock funds. But smart retirement investors siphon off some of those gains and send them into more conservative assets.

Rebalancing also offers an additional benefit: when you do it, you’ll always be essentially “buying low and selling high.” Imagine that the stock portion of your 401(k) goes from 60% of the portfolio to 80%. When you rebalance, you will sell off the difference (selling high) and purchase what has underperformed (buying low).

What You Can and Can’t Control

In conclusion, investors can avoid these common mistakes by remembering to invest in what they can control (their asset allocation, diversification and investment costs) rather than to speculate on things they can’t control (the economy, the direction of the stock market and which mutual fund will perform the best this year).

Wayne Connors is the CEO and Founder of, whose goal is educating DIY investors on how to put together a successful retirement portfolio without having to lose so much of their savings to hidden adviser fees.

New iPhone 6 Leak Reveals Weak Battery. Apple Gambles On iOS 8

The exterior of the iPhone 6 has been leaked time and time again, but now we are starting to learn about the internals.

According to reports the new 4.7-inch and 5.5-inch iPhone 6 variants will receive just 1800mAh and 2500mAh batteries  respectively. Both are notable increases (15% and 60% respectively) from the 1560mAh battery found into the iPhone 5S, but in my opinion neither increase is big enough.

Why? Because of the headline feature of both iPhone 6 models: their larger screens.

Screen Drain
A phone’s display is still its biggest point of battery drain so making it significantly larger (17.5% and 37.5% respectively for the 4.7-inch and 5.5-inch models compared to the 4in iPhone 5S) consumes a lot more battery.

More than this, however, is the significant step up in pixels. It seems all but nailed on now that both iPhone 6 models will have 1704 x 960 native resolutions, more than double the pixels of the 1136 x 640 native resolution on the iPhone 5/5S. Consequently these handsets not only have to light bigger screens but drive far more pixels around them – something which takes a major toll with gaming in particular. With the average iPhone owner playing games for 14 hours a month on their phones this is potentially a big issue.


Rivals Are Bigger
Furthermore while these battery increases are big jumps for the iPhone range, they are still significantly below the capacities fitted to phones with similar screen sizes on other platforms.

4.7-inch smartphones
Nexus 4 – 2100 mAh
Samsung Galaxy S3 – 2100mAh
Motorola Moto X – 2200mAh
HTC One (M7) – 2300 mAh

5-inch smartphones
Nexus 5 – 2300mAh
Sony Xperia Z – 2330mAh
Samsung Galaxy S4 – 2600mAh
HTC One M8 – 2600mAh

5.2-inch smartphones
Samsung Galaxy S5 – 2800mAh
LG G2 – 3000mAh
Sony Xperia Z2 – 3200mAh

5.5-inch and 5.7-inch smartphones
LG G3 – 3000mAh
Galaxy Note 3 (5.7-inch display) – 3200mAh

Hardware To The Rescue
What we don’t know yet though is what Apple AAPL -0.2% has managed to achieve with its A8 chipset, the inevitable successor to the A7 chip found in the iPhone 5S. While phones have become faster with each generation over the last 12 months their faster chipsets have actually more than offset their performance increases with battery gains. TheGalaxy S5 lasts longer than the S4, the One M8 lasts longer than the One M7 and so on.

There are screen improvements too. LG claims the remarkable 2,560 x 1,440 pixel 5.5-inch display in its G3 uses no more power than the 1980 x 1080 pixel 5.2-inch display in the LG G2.

Apple also makes use of additional processors. Like the Motorola X the iPhone 5S has a dedicated motion processor to offload resource intensive activities and with Apple’s push into fitness only just getting started I’d expect more dedicated chips to be introduced to assist both iPhone 6 models.

iOS Efficiency
Finally Apple will inevitably point to the efficiency of iOS. Over the years this has been lauded over Android and though Android has received major improvements in 4.4 KitKat and further gains will be made by the recently announced ‘Project Volta’ in Android L, it is unlikely iOS has been standing still.


It’s Not Enough
And yet all this is unlikely to be enough. Both the iPhone 5 and 5S have been heavily criticised for their weak battery life (even Samsung ads now mock it) and we aren’t looking for the iPhone 6 models to maintain or incrementally improve their stamina, but to make significant steps forward like its most recent competitors. Especially with the switch to two-handed operation likely to alienate some long time iPhone users.

I simply can’t see that happening with this generation. Notably the 1800mAh battery in the 4.7-inch iPhone 6 is eye wateringly small  for a handset of that screen size while the 2500mAh battery in the 5.5-inch variant surely won’t hold a candle to the multi-day battery life expected of phablets like the Galaxy Note 3.

Given that all design leaks have shown both iPhone 6 models will be drastically thinner than their predecessors, I’m sure we would all have accepted something a little thicker in exchange for significantly better battery life.

Jobs Report: U.S. Economy Added 288K Jobs In June, Unemployment Dropped To 6.1%

The Bureau of Labor Statistics released a surprisingly strong jobs report Thursday morning.

Employers added 288,000 jobs in June, significantly more than the 215,000 economists were anticipating. The unemployment rate, which is drawn from a different survey of households, dropped from 6.3% to 6.1% the lowest rate since September 2008.

Immediately following the news the S&P 500, The Dow Jones Industrial Average and Nasdaq Composite were in the green, continuing positive trends seen leading up to the pre-bell release. The Dow crossed 17,000 for the first time ever seconds after the opening bell before settling around 17,050.

The May payroll number was revised up from plus 217,000 jobs to plus 224,000. April’s employment number was also revised from 282,000 jobs added to 304,000. Total employment gains those months were therefore 29,000 higher than BLS — a division of the Department of Labor — previously reported. Job growth averaged 272,000 for the last three months.

“This was a strong report any way you slice it,” wrote RBS U.S. Economist Omair Sharif in a note on the news. Sharif pointed out that the unemployment rate is “where the Fed thought we would be at year-end, and it’s only June.”

In a call following the results Mike Schenk, vice president of economics and statistics at the Credit Union National Association, said the strong headline numbers show a “bounce back effect.” Adding, “The first quarter numbers were not all that encouraging, especially in terms of the economic growth numbers. People seemed to be sitting on the sideline in terms of purchasing behavior. Clearly the consumer is back in the market place.”

Schenk also noted that CUNA’s monthly survey of credit unions showed the organizations loan portfolios increasing by 1.2% last month, the strongest growth since August 2005. “Consumers are engaged. They are not only buying more, but buying big ticket items so a lot of that pent up demand is being expressed.”

The labor force participation rate, however, was stagnant at 62.8% for the third month in a row. At 59% the employment-population ratio was little changed from the prior month. “Perhaps the only disappointment might be that average hourly earnings growth remains subdued,” wrote RBS’ Sharif. Hourly earnings gained just 0.2% in June, bringing the year-over-year rate to 2.0%. The workweek was steady at 34.5 hours.

Amidst a data set where most points were positive — and notably moving in the same direction — Tara Sinclair, economics professor atGeorge Washington University and economist at job search site, said she sees the stagnate wage growth and participation rate as closely related. “If employers see this shadow labor force out there, there is no pressure to raise wages.”

The sector with the most new jobs was business services with 67,000 jobs added, 14,000 more jobs than the industry’s 12 month average. Retail trade, food services/drinking places and healthcare added 40,000 jobs, 33,000 jobs and 21,000 jobs respectively. Employment was also up in the transportation, financial, manufacturing and wholesale trade industries. Employment was little changed in mining, construction, information and government.

Sinclair said that the diversity of jobs added is a signal of a more robust recovery than has been seen in recent months and even years. The diversity coincided with the wide range of job postings Indeed found across the web in May. Similar patterns in June posting may pay off in July as well.

Joseph Lake, U.S. analyst for The Economist Intelligence Unit, wrote in a note that before this year many economy watchers were calling this a “jobless recovery.” Year-to-date, however, Lake wrote, “the riddle has been reversed; companies are creating jobs at a rapid rate, while the economy is tanking.” Last week  the Bureau of Economic Analysis released its third estimate of real gross domestic product for the first quarter 2014. The release showed output in the U.S. declining at an annual rate of 2.9%.


“With the bumper job numbers, it is highly likely that the Fed will essentially disregard the dismal first quarter GDP figures at the next FOMC meeting,” Lake concluded. “The sharp contraction in the first quarter is unlikely to change the Fed’s view that the economy can cope with a reduction in its support.”