Why Generation Y fears the stock market

9:00 AM Fears, Generation, market, stock No Comments

| By J,J. Zhang, MarketWatch

For Millennials, financial security is a fragile hope amid high educational debts, stagnant upward mobility and poor employment prospects.

One of the largest transfers of wealth between generations is starting to occur in the U.S. As baby boomers enter the retirement phase, the next generation of workers, Gen Y or the Millennials (those born in the 1980s and 1990s), are now entering the workforce and beginning their prime earnings phase.

According to research firm Iconoculture, Gen Y comprises over 76 million people with almost $900 billion in spending power. In contrast the baby boomers, also numbering 76 million, have $2.5 trillion in spending power.

However, for this new generation, it's a very different world than the one seen by their parents. The baby boomers saw the rise of the U.S. into the world's only superpower and all the accompanying economic growth and rewards that came with it.

They reaped the rewards of the chemical revolution, the golden age of manufacturing, the computer revolution, the information age, energy abundance and globalization. They also juiced growth via the use of debt which turned the U.S. into today's debtor nation.

In contrast, the future outlook for Gen Y is that of a nearly bankrupt nation, rising global competition from emerging countries, crumbling infrastructure and insolvent retirement and welfare programs, among other ills. For this generation, financial security is a fragile hope due to high educational debts, stagnant upward social mobility and poor employment prospects.

For Gen Y, it becomes even more important to start retirement planning early as government Social Security guarantees, employment security and wage-growth prospects will not be what their parents experienced.

However, this generation has also suffered through several financially traumatic experiences that have and are continuing to shape its investing views.

Baby boomers saw a relatively stable and strong growth period during the '50-'70s which influenced their long-term belief in market returns. In contrast, Gen Y adults experienced two major bubbles and recessions and high volatility, which have led to one lost decade already.

Indeed, the early vanguard of the Gen Y'ers joined the real world only to experience the dot-com crash. They subsequently started investing in their mid 20s only to find the housing bubble and the subsequent great recession. The first impression is the most important and so far it doesn't look promising.

This lack of tangible gains, roller-coaster volatility and recent scandals such as the bank bailouts, mortgage shenanigans, Ponzi schemes and scandals like Goldman's designed-to-fail securities have all made them cynical and distrusting of the stock market and investing in general.

This isn't hypothetical. In a recent MFS Survey, 40% of Gen Y agreed with the statement "I will never feel comfortable investing in the stock market." Among Gen Y investors, 54% feel overwhelmed by available choices and 47% tended to put off investment decisions.

Due to fear of risk, 30% said their primary investing objective is protecting principal and have allocated an average of 30% to cash, more than other age groups, and nearly equal to the 33% allocated to stocks. T. Rowe Price noted in 2010 that almost one in five self-directed participants age 25-35 had over 80% of plan assets in cash.

While protecting principal is no doubt important, excessive risk aversion does not lend well to long-term investing: after all, no pain, no gain. With 54% of Gen Y concerned about when they would be able to retire and 44% lowering their retirement expectations, they need to put aside their fears and tiptoe back into the markets.

Though these psychological traumas have already influenced Gen Y actions, luckily time and youth is on their side. With the first wave still in their early 30s, there's still plenty of time to start and let compound investing work for them.

The important first step is learning to let go of their fear of the market, or at least reduce it to a healthy level. Yes, the stock market can be a scary place sometimes, but there are precious few ways to generate returns significantly above inflation -- a necessity in a Social Security-less future.

Notably, high volatility and risk averseness have caused Gen Y to make more use of financial advisers and other experts. Especially for those concerned about market volatility and risk, seeking a financial adviser to help them tiptoe into investing is a good idea.

However, it's particularly important that one find a good and trustworthy adviser -- those with fiduciary duty is a must. While advisers do charge fees that can undermine returns, in this case it's still a net positive over the high cash many Gen Y'ers are holding.

And keep in mind; advisers are not a lifetime commitment. There's nothing wrong with learning from them and then striking out for yourself.

One trait of Millennials is their considerable sophistication in finding information and learning for themselves. The widespread availability of financial products and services such as ETFs, online discount brokerages, instant financial info like real time quotes and new tools such as computer-aided rebalancing have given then all the help needed to create a well-rounded and diversified portfolio ready for the long term.

Read More

Fears ease 7 ways to retirement

8:00 AM Fears, Retirement No Comments

| By David Ning, US News & world report

Many Americans are concerned that they will outlive their savings. Here are seven steps to make sure that you have enough money for retirement.

Transition from accumulating in the withdrawal term is hard for many pensioners, who enjoyed their assets have to watch grow for decades. Some people make excessive money. You can unnecessary thrift practice and miss the chance to enjoy what most should be free time of their life. Here is how the fear to overcome that you will outlive your retirement:

Get a single premium immediate pension (SEPIA). It is recommended that all insurance products are skeptical. But the guaranteed monthly income is received an immediate pension the best way, to just to reduce the fear of money. By accepting, you probably exceed a diversified investment portfolio, and not be able to leave this part of the assets for your heirs, you gain the peace of mind that a monthly check is delivered, as long as the insurer in business remains.

Track your expenses and income to a long-term trend to get. Collecting a story, about your issues to and compare it with the income that your portfolio generates. This will help to, how much money need you your spending to pay for a good picture you. Is your net value really oppose because you fear, or are only as too pessimistic?

Identify where you can cut if necessary. If your expenditure pattern know you can come with a plan, also to reduce costs, if market performance falls short of your expectations. Keep in mind that simple steps like cutting can your cable TV Bill wonders for your budget. No money in retirement is actually rare that pensioners who plan and track, because most people will start well, before exhausted their stock to zero adjust their spending.

Lead various retirement calculator to see your chances of success. Many retirement calculators, on historical returns and inflation numbers give you a good idea of where you stand. Some calculator to calculate your chances of money less than even.

Test, wait until 70 to get social security. Another way that significantly increase the chances of running, no money is that you retired does not, is delayed, collect your social security checks. By waiting until you turn 70, you get much more per month. Clearly, you could end up losing, because you die early. But avoid that money have just the primary concern a higher check every month after 70 is enabled, is worth is the wait.

Recognizing that money in retirement may not just disaster. Reducing your retirement may not so disastrous, think the reality as you nest egg. The United States is still one of the better countries in taking care of its seniors. With Medicare, Medicaid, social security, and a progressive tax system, the Government will give more and more by a hand if your pension is dwindling. Already many of your fellow retirees live only on social security and have a happy and satisfactory retirement continue to.

Recognize that retirement care are normal. You are not the first person who make no money, and will be not be the last. A moderate amount of fear is really good, because it helps to prevent excessive spending. It can be helpful to take care of money, as long as the fear is prevented does not enjoy a well-deserved retirement.

Retirement should be free from everyday life. Free do what you worry of money.

Read More

10 stocks to buy on euro fears

10:30 AM Fears, stocks No Comments

Another European debt crisis is on the horizon, and by summer a lot of good companies based there will be on sale. Here are 10 to consider.



On July 26, 2012, European Central Bank President Mario Draghi made his now famous promise to do "whatever it takes" to save the euro. That put an end to soaring yields on Spanish and Italian government debt that threatened the very existence of the euro.

And it set off a huge, sustained rally in European stocks and bonds that has only recent faltered.

I bring this up for two reasons:

? First, I think that Draghi's promise is going to be challenged and challenged hard -- with its very real flaws and limits exposed to scrutiny by the financial markets -- over the next few months.

? Second, this renewal of the eurozone debt crisis has the potential to take the shares of some very good European companies -- companies you'd like to own for the long term -- down to bargain levels again.

This column has two purposes: first, to run through the reasons i think we're about to see a new round in the euro debt crisis, and second, to give you a list of 10 European stocks that I'd snap up if their prices fall in a new round of the crisis.

Let me take you back to the scary days of July 2012. Yields on Spanish 10-year government bonds climbed to 7%, and then kept on climbing. Analysts and economists joined in daily hand-wringing, saying that at above 7%, the burden of debt on a struggling Spanish economy was unsustainable. Spain seemed headed to bankruptcy, a bailout, a departure from the eurozone or a combination of those.

Italy wasn't far behind. The yield on Italian 10-year government debt hadn't reached 7%, but, at 6.597%, it was clearly headed in that direction.

Jim Jubak

That raised the hand-wringing to another level: The eurozone probably didn't have the resources to bail out Spain or Italy. It certainly couldn't handle a bailout of both.

Draghi's speech stopped that discussion dead in its tracks. The "whatever it takes" promise had credibility, because it followed on the central bank's huge long-term refinancing operation that provided 1 trillion euros (roughly $1.3 trillion) in cheap money to European banks. That move had shown that Draghi would act, and act big. When the July promise was fleshed out with a new Outright Monetary Transactions pledge that said the European Central Bank was prepared to buy unlimited amounts of government bonds of maturities of three years or less of any country in bond-market distress, the promised support was enough to turn financial markets around.

The yield on 10-year Italian government bonds -- which had peaked at 6.597% before Draghi's speech -- had fallen to 4.129% by Jan. 25. The yield on 10-year Spanish government bonds -- which had peaked at 7.498% -- fell to 4.904% on Jan. 10.

European stock markets recovered, too. The American depositary receipts of Spain's biggest bank, Banco Santander (SAN), climbed from $4.89 on July 24, 2012, to $8.81 on Jan. 25. In Germany, shares of car giant Volkswagen rose from 118.75 euros on June 27 to 186.75 euros on Feb. 2. Even a French consumer stock such as dairy maker Danone (DANOY) got into the act, rising from $11.33 on July 25 to $14.28 on Feb. 19. (Prices for the U.S.-traded ADR for Volkswagen, VLKAY, rose from $28.27 to a peak near $48 on the same dates.)

Recently, though, some of the gloss has come off those gains. As of March 1, the yield on the Italian 10-year bond had climbed to 4.79% from 4.129% on Jan. 25. The yield on the 10-year Spanish bond had increased from 4.904% on Jan. 10 to 5.10%. Banco Santander ADRs are down 14.9% from their January high as of March 1. And shares of Danone are 3.7% lower than their February high.

What happened?

The Italian election resulted in a hung parliament, with Democratic Party leader Pier Luigi Bersani's coalition winning a majority in the lower house but with no party or coalition winning a majority in the upper house. As the days have ticked by since the Feb. 24-25 election, the chance that anybody will be able to put together a government has dwindled. That leaves Italy adrift for at least a month -- longer if the country needs new elections.Projections from the World Bank and the International Monetary Fund have said that economies throughout the eurozone will continue to slow and that the growth projections used by Spain, Portugal and France to put together their deficit-reduction plans are now not only optimistic but also unrealistic. Countries that missed their budget deficit targets in 2012 now look likely to miss them again in this year.The political reaction to the Italian election has served as a vivid reminder that European leaders are locked into a strategy of austerity, austerity and more austerity. That's especially problematic now because Italian voters rejected more austerity (and a good bit of past austerity, too) in the recent election, and because as economic projections go from bleak to bleaker, austerity seems more and more like a failed policy. If, because of their own internal politics -- including a Sept. 22 election in Germany -- leaders of Germany and the Netherlands remain locked into a position favoring austerity, then financial markets are about to see a replay of the Greek crisis. But this time, there are more chips on the table.A budget crisis and the need for a bailout in Cyprus have again raised the specter of a country being forced to leave the euro.And, finally, the Italian crisis has led some in the financial markets to read the fine print in Draghi's promise of unlimited bond buying. The European Central Bank promise had a big condition: A country had to make a formal request for a ECB bond-buying program to the European Stability Mechanism and agree to the conditions -- budget cuts, tax increases and economic reforms -- set by the eurozone's bailout fund. Italy currently can't meet those conditions because it doesn't have a government that can agree to anything. Spain has refused to make a formal application to the European Stability Mechanism because it doesn't want to give up control over its finances as Greece has had to do. With bond yields falling on Draghi's promise, Spain has felt comfortable doing nothing. In recent weeks, markets have again begun to wonder how long that's a viable position for the government of Prime Minister Mariano Rajoy.
Where now?

Investors will get some clues from Draghi's news conference after Thursday's meeting of the European Central Bank's governing council. I doubt the central bank will do anything, which makes what Draghi says and how markets react to his words especially important.

We're witnessing a major test of the ability of rhetoric to control the eurozone debt crisis.

And then it's up to the financial markets to react to events -- the talks on a Cyprus bailout and the likelihood of continued chaos in Italy -- to decide how quickly we move back into a real crisis condition.

Italian 10-year yields have climbed by 0.67 percentage point from Jan. 25 to March 1. But considering that we're looking at a country with no real chance of putting together a government for at least two months, that move in bonds has so far been very muted. The fall in the euro against the U.S. dollar -- 4.6% from Feb. 1 to March 1 -- has been more pronounced, which leads me to think that bond market yields will continue to move higher (which means bond prices will move lower).

But I don't expect those moves to be smooth. Investors have competing financial crises in Tokyo and Washington to watch. The pound sterling is sinking as markets become increasingly convinced that London wants a weaker pound to help its economy. And I expect that Draghi's rhetoric hasn't yet lost all its power.

By July, I think we could see the euro debt crisis again in full flower -- driven by bad first-quarter economic reports and another round of midyear downgrades to economic projections from the International Monetary Fund, the World Bank and the Organisation for Economic Co-operation and Development.

If that timetable is right, I'd expect to see bargains on the stocks of great European companies in July and perhaps sooner as this crisis leads the market down in fits and starts.

Read More

Stocks tumble amid fears over Greece

7:54 AM Fears, Greece, stocks, tumble No Comments

John Moore / Getty Images

Traders work the floor of the New York Stock Exchange.

By msnbc.com news services

Stocks tumbled Friday as the most recent flare-up in Greek negotiations for a financial bailout package put the S&P 500 on track to snap a three-day winning streak.

The Dow Jones industrial average was lately down over 100 points.

Workers in Greece went on strike to oppose fiscal reform measures requested by the European Union and International Monetary Fund, as Greek Finance Minister Evangelos Venizelos said the nation needs to reach a decision within days on accepting the terms of a bailout.

Stocks rose modestly on Thursday to push the S&P up 7.5 percent for the year after an apparent deal was reached between Greek parties on reforms, leaving equities primed for a pullback.

"They want some binding resolution that some subsequent Greek government is going to be committed to enforcing, and I can understand the reticence of EU officials for wanting this," said Phil Orlando, chief equity market strategist, at Federated Investors, in New York.

"Given the fact we've got a seven-percent rally in six weeks and a twenty-five percent rally in four months, it's perfectly reasonable that we should have a little bit of pause here."

European shares fell as the request for further cuts in Greece put the deal in jeopardy.

Adding to the dour tone, China's imports fell in January, the most since the depths of the financial crisis, raising concerns demand may be wilting more than previously thought, even accounting for shutdowns over the Lunar New Year.

Data from the U.S. Commerce Department showed the monthly trade gap for December swelled to $48.8 billion as goods imports climbed to the highest level since July 2008.

Shares of professional networking service LinkedIn surged after it reported full-year results that beat expectations.

Chinese e-commerce group Alibaba plans to take private its Hong Kong-listed unit, two sources familiar with the matter said, as part of a complex deal that would strengthen founder Jack Ma's control and give key stakeholder Yahoo cash and a direct stake in one of Alibaba's operating businesses.

Shares of Arch Coal dropped after it posted fourth-quarter results that missed analysts' expectations and said its 2012 volumes will fall by more than 5 million.

As earnings season moves into its final weeks, 339 companies in the S&P 500 have reported results through Thursday morning, with 63 percent topping analyst expectations, according to Thomson Reuters data, tracking below recent quarters through this stage of the earnings season.

Reuters contributed to this report.

Read More

Geithner seeks to calm fears on Europe

10:11 PM Europe, Fears, Geithner, seeks No Comments

AppId is over the quota
AppId is over the quota

CNBC's Steve Liesman discusses some of the key things that Secretary Timothy Geithner will address, including the Fed's plan to buy more securities and economic concerns, such as jobs.

By John W. Schoen, Senior Producer

Amid fresh signs that Europe's financial crisis is spreading, Treasury Secretary Tim Geithner on Wednesday sought to calm fears that political leaders there may not be able to contain the global fallout.

"There is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market. There is not a chance," Geithner told a CNBC investor conference in New York city.

Geithner's remarks came hours after bond rating agency Moody's cut its ratings on two French banks, Societe Generale and Credit Agricole, because of their exposure to Greek debt. The leaders of Greece, France and Germany were scheduled meet again later Wednesday to head off a Greek bond default.

"They are absolutely committed and they have the financial capacity, the economic capacity, to do what it takes to hold this thing together," said Geithner, who was the head of the New York Federal Reserve at the height of the 2008-09 financial crisis and helped craft a plan to prop up major Wall Street banks and stabilize the financial system.

Geithner is headed to a meeting with EU finance ministers Friday to urge them to speed up changes to their bailout fund.

The Treasury Secretary also defended the Obama administration's proposal to fund a $450 billion economic stimulus package in part by raising taxes on the wealthy.

"Nobody likes to see taxes change — their taxes go up. There are no options on the table that are going to be attractive to everybody," Geithner said. "We have to make judgments about how we live within our means."

Read More

Fears grow as Japan parts supply, power is missing

2:42 AM Fears, Japan, missing, parts, power, supply No Comments

MADRID/PARIS - from Apple Inc.'s new iPad, Chevrolet the global manufacturing supply chain and the impact of the earthquake pick-ups, concern is spreading down in Japan's last week.

Plant turnarounds of Japan after the earthquake, tsunami and nuclear crisis threaten supplies of everything from semiconductors, auto parts for manufacturers around the world.

Even where operate factories in Japan, power outages, shortage of fuel and raw materials and ruptured logistics mean that products and parts face get delays to customers.

Buy! I dare you miracle whip is the latest in a group of brands with a focus on its negative. Life Inc.: You can not escape March Madness ConsumerMan: new website for safety complaints

Honda Motor Co, said on Friday, it had expanded halt production in Japan, where it's more than one-fifth of the cars for another three days to next Wednesday.

And in a sign that European manufacturers are also starting feel the squeeze, automaker Renault and Opel warned, she would have to reduce production.

Opel, the European arm of General Motors, a 24-hour production stop for next Monday called and an eight-hour stop Spain, due to the lack of an electronic item, which had come not from Japan next Friday at the plant in Zaragoza. Trade unions say that about 2,400 cars will not be during the suspension.

Renault said it would output at the plant in Busan, South Korea, 15 to 20 percent after interruptions in Japanese provides that concern mainly the Renault owned Samsung SM7. The factory produces usually 20 000 vehicles per month.

A Renault spokesman said "Production per cent, according to 3000 of less cars, should be around 15 to 20". "We hope that a solution be found quickly."

Japan's grip on the global electronics supply chain caused concern. The world's third largest economy exported 7.2 trillion yen ($ 91.3 billion) worth of electronic parts in the last year according to Mirae asset securities.

"Should the crisis Japan be extended, I expect a lack of electronic parts in the second quarter," James song said analyst at Daewoo securities, realizing Japan provides 57% of the worldwide wafer, used in mobile phones, cameras and other electronic devices to the chips.

Apple can IOS bottlenecks of the key parts for his newly released 2, according to research firm IHS iSuppli face.

Some parts of the new version of the popular iPad Tablet PC be music and video on the device from Japan, including the battery and flash memory to store used.

Toshiba Corp., one of the companies that the NAND flash memory in the iPad 2, IHS used iSuppli's research produced just close a flash memory device in Japan and warned that there could be difficulties getting raw materials.

Memory chip industry Tracker DRAMeXchange said that there was a panic increase in NAND flash spot prices and a 5 to 15 percent increase in the contract had seen average sales price. It said the earthquake expected worldwide NAND flash to reduce supply by up to 4 percent in the second quarter of the amount of available memory.

Goldman Sachs warned potential bottlenecks in the delivery of silicon wafers, conductive film in LCD circuits used and resin for connecting chips with Boards--products of Japanese companies such as Shin-ETSU and divisions of Sony, Hitachi, and Mitsubishi.

In France, the head of a small electronics firm, which aims, with Apple Tablet market compete by cheap devices for emerging markets, warned against a domino effect on China.

"We have can be some of our Chinese partners in the country exposed to direct suppliers in Japan but," said ARCHOS Chief Executive Henri Crohas.

Japan's top automakers such as Toyota Motor Co., and Nissan Motor Co fighting issue in the midst of a shortage of parts, work, and makes to restart.

GM said it temporarily a pickup truck plant in Louisiana, would idle, where it builds models, due to parts of the Chevrolet Colorado and GMC Canyon.

"As all global automakers, we are the events in Japan still closely to determine which lead the effects," GM said in a statement on Thursday.

North American Edition is likely be affected, unless again their plants revive and send parts for 10 days, Wolfe racial & co analyst Tim Denoyer said Japanese suppliers in a note.

Japanese company Jamco which makes galleys for the long-awaited Boeing 787 Dreamliner, said face could it delays due to the tight gasoline supply.

Airline industry body IATA said Japan produced 3 to 4 percent of the global jet fuel supply and part of this capacity was warned lost. "This restriction to supply could lead higher jet fuel prices," he said.

Lufthansa Cargo, moving, electronics, liquid crystals for flat-screen displays and Pharma from Japan, said that it be forced perhaps some cancel flights next week.

"The booking situation from Germany is good and Japan, it is always still pretty well," said a spokesman. "But it is slowly getting that production in Japan is."

Denmark's Novo Nordisk, the world's largest insulin manufacturer, has suffered disturbance in the Koriyama plant, where only 10 percent of the normal 100-member staff still on site. Novo said it continues to insulin of Koriyama send and distribution centers were well equipped.

GlaxoSmithKline said its drug factory in Imaichi smaller losses suffered had and was expecting that it soon resume action, but the company. In the same area, the situation at a plant in Utsunomiya was Switzerland Roche evaluation, which had suspended production and would examine problems of supply chain. It said that was not affected by serious damage.

Copyright 2011 Thomson Reuters.

Read More