ITT Educational Services: How Big a Threat is the Consumer Financial Protection Bureau?

Last week, ITT Educational Services (ESI) filed an 8-K disclosing that it was being investigated by the Consumer Financial Protection Bureau to determine whether it broke any rules in how it marketed loans.

Reuters

The filing, however, hasn’t had much of an impact. Shares of ITT Educational Services have dropped just 3.4% this week but have gained 95% so far in 2013. Corinthian Colleges (COCO), on the other hand, has dropped 27% this year, while DeVry Education (DV) has gained 50% and Apollo Education (APOL) has advanced 30%.

So why don’t investors care about the announcement? First of all, investors have known this was coming. Second, no one believes it will result in a damaging fine. William Blair’s Timo Connor explains:

We view as unlikely a severely punitive settlement against ITT Education from the Consumer Financial Protection Bureau (CFPB) related to its continuing investigation of marketing practices on third-party student lending programs, and we believe the risk is a manageable one for ITT. We continue to like the company's competitive positioning in capacity-constrained, growing educational markets like drafting, electronics, IT, and nursing, and believe the stock will distance itself from legacy student loan issues in the coming years…

Connor‘s optimism also stems from previous penalties assessed by the CFPB: The median fine has been $3.9 million, or just 0.4% of ITT Educational Services market cap, Connor says.

Shares of ITT Educational Services have gained 1.8% to $33.87 today at 1:09 p.m., while Corinthian Colleges has risen 1.7% to $1.79, DeVry Education advanced 0.6% to $35.48 and Apollo Education has ticked down 0.1% to $27.17.

Mary Beth Franklin's CFP challenge: Exam tips from the pros

When I was in New York a few weeks ago to attend an InvestmentNews staff meeting, one of my colleagues referred to me as “the Dear Abby of Social Security.” I was flattered.

Like that legendary advice columnist, I have developed a rapport with my readers. Although I am usually the one answering questions, I recently turned to my readers for advice on how to best prepare for my upcoming certified financial planner exam on Nov. 15-16.

The response was overwhelming and gratifying.

Many readers sent notes of encouragement, good wishes and empathy for the arduous preparation process. I savored every one.

Several offered practical advice.

For example, Hal Guy, managing principal of Stone Castle Consulting, who is also a CFP review course instructor, cautioned me to “RTFQ.”

Translation: “Read the ffffffffull question,” Mr. Guy wrote in an e-mail.

While that may seem obvious, it's crucial advice. For example, one of the online test bank questions might ask: How many personal exemptions can a married couple with two young children claim on their federal tax return? My natural inclination is to answer four — one for each member of the taxpayer's household. But upon closer inspection, I realized the answer is two. Only a taxpayer and a spouse can claim a “personal” exemption. The two children each qualify for a “dependency” exemption. However, had the question asked how many total exemptions the taxpayer could claim, the answer would be four. RTFQ!

Wesley Yamamota, senior vice president, investments, with UBS Financial Services, took the time to send me a four-page document of random thoughts on CFP exam preparation.

“It's impossible to over prepare for this exam,” Mr. Yamamota wrote. “There are just no shortcuts. You have to work the stuff you don't know and not depend on the stuff you do know.” However, he added, “This whole process is highly doable — more than 70,000 people have passed.”

Most prep class programs recommend 175 to 250 hours of study. I think I'm tipping the scales at 250+ hours and still have a week to go.

In a recent column , I bemoaned my inexperience with crucial mathematical formulas used to calculate various investment returns. “The only Greek symbols I ever saw in college were on fraternity and sorority houses,” I wrote in that column on Sept. 29. “My last math course was in 1972 when I graduated from high school.”

In resp! onse, I received an encouraging note from James Coleman, who turned out to be my Dalton Review instructor in Washington D.C. a few weeks later. He promised to decode those Greek symbols and make the whole process more understandable — and he did.

Another instructor from a competing review course in Chicago offered to answer any of my questions, and sent me several pages of test-preparation tips. In a long phone conversation, he also helped me wrap my mind around how to use put and call options as a hedging device. Selling covered calls is a favorite pastime of one of my brothers-in-law, so I'll have a whole new topic of conversation for Thanksgiving!

Several readers in their late 50s — like me — sent encouraging notes about passing the exam on their first try. I guess some old dogs can learn new tricks. I hope I'm one of them.

I was also touched by their stories of changing careers at midlife, and even though they passed the grueling CFP exam, one still has to complete a college degree and another one needs to rack up several more years of work experience before they can use the coveted designation. That's dedication!

A few readers suggested bringing earplugs to the exam to avoid outside distractions and to practice using them before the test. Others recommended bringing two calculators in case one fails.

I added earplugs and extra batteries to my Staples shopping list, where I'll go to buy No. 2 pencils. In this digital age, the CFP exam is still a pencil-and-paper endeavor that requires filling in little circles on a Scantron. Luckily, I got some practice in this 20th-century test-taking method last week when I

Citigroup Maintains “Neutral” Rating, Raises PT on Illinois Tool Works (ITW)

Citigroup announced on Wednesday that it was maintaining a “Neutral” rating on the Glenview, IL-based industrial conglomerate, Illinois Tool Works (ITW), but went on to raise its price target for the company.

Deane Dray, an analyst with the firm, noted “Following its disclosure in February 2013 that it was reviewing strategic alternatives for its $2.4 bil Industrial Packaging business, ITW officially announced on Sept-24 that the sale process has begun. In an incremental positive, the company declared that all the dilution from the divestiture would be offset by buybacks and that additional balance sheet leverage will be used to fund the program.” Given the lagged benefit of the expected buyback, Citigroup raised its price target on the stock from $75 to $80 a share.

Illinois Tool Works shares traded lower on Wednesday, shedding 0.97% on the day. The stock is up 27% YTD.

Microsoft Will Purchase Nokia, Then What?

After the big announcement earlier this week, that Microsoft plans to purchase Nokia's phone device business, lots of questions regarding the future are left up in the air, but now MoneyShow's Jim Jubak, also of Jubak's Picks, addresses them.

News on Tuesday, September 3 that Microsoft (MSFT) will buy Nokia's (NOK) phone handset business (and non-exclusive, 10-year licenses to Nokia's patents) for $7.2 billion, sent shares of Nokia soaring-up 31.28% as of the New York close-and shares of Microsoft tumbling-down 4.55%. Shares of Microsoft dropped again-and shares of Nokia moved up again-on September 4.

I think two things are behind the size and direction of these moves.

First, by selling its money-losing phone device business, Nokia has removed the biggest worry about its continued existence-that it would run out of cash before it managed to turn around its phone business (if it could). In 2011, Nokia showed a $1.07 billion EBIT cash flow loss. In 2012, that rose to $2.3 billion. With the removal of that worry, Wall Street has been busy changing its ratings for Nokia from underperform to market perform. Target prices have climbed to $5 or even $6 a share.

Microsoft, on the other hand, has lots of cash, so running out of the green stuff isn't a worry for that company. But still, investors aren't thrilled with the idea that Microsoft's best idea for what to do with its mountain of cash is to pour it into the smart phone business, and to assume the sole burden of building the market share of the Windows Phone operating system to a significant Number 3, behind Android and Apple (AAPL).

Second, the market wasn't convinced that Nokia could pull off a turnaround in its phone business and it's no more convinced that Microsoft is up to the task. (Maybe the most intriguing aspect of the deal is that Microsoft/Nokia CEO Stephen Elop, who left Microsoft to run Nokia three years ago, will return to Microsoft. With current Microsoft CEO Steve Ballmer announcing in August that he'd retire in 12 months, Wall Street is awash in speculation that Elop now has the inside track to be the next CEO at Microsoft. Given the task facing the next CEO at Microsoft, and Elop's less than awe-inspiring performance at Nokia, that seems unlikely to me.)

Yes, the deal will immediately give Microsoft an increased margin on each Windows Phone device sold-the company gets just $10 a share in gross profit now for every Windows device Nokia sold, and after the deal, that will go to $40 a unit, Microsoft told Bloomberg. But Microsoft will still face the huge task of clawing market share from Android and Apple phones. That would be a tough job, even for a company with a reputation for nimble innovation-and Microsoft doesn't have that reputation or track record.

If you own Nokia shares-as I do in my Jubak's Picks portfolio-the big question is, what is Nokia worth after the deal?

The company will have three major businesses:

1. The wireless network equipment business. Nokia bought out its partner Siemens (SI) in this joint venture last month and the business has recently broken into the black. On estimated sales of 11.8 billion euros in 2013 (and a 9% operating margin), this business is worth about 1.60 euros a share.

2. The HERE mapping and location services business. Sales for this unit, Credit Suisse estimates, will hit 950 million euros in 2013 with a very modest 2% operating margin. That values this business, Credit Suisse calculates, at 0.13 euros a share.

3. Licensing of patents to Microsoft and other companies. Nokia currently makes 500 million euros a year in licensing revenue with an operating margin of near 100%. Say the licensing business is worth 1 euro a share.

Add that valuation of 2.73 euros a share, to the 2.1 euros a share in cash that the company will receive from the sale to Microsoft, and you've got a sum of the parts valuation of 4.83 euros a share. At today's exchange rate, that works out to a valuation of $6.35. That's 15.2% above Nokia's share price as of 2:45 PM, New York time on September 5.

Whether you decide to hold, in hopes of that potential gain, or sell today, depends mostly on your view of the market over the next few months and your sense of your available opportunities for investing the cash from selling Nokia shares.

As I've noted, I think September and October are likely to bring significant market volatility and I'd like to have more cash, rather than less, to invest in any bargains that volatility might create. If the market is volatile over the next two months, it's unlikely that shares of Nokia will escape the turmoil. And with the deal not expected to close until 2014, I think you could be looking at more time, rather than less, before the stock worked its way toward that theoretical $6.35 target.

My choice was to sell the shares out of my Jubak's Picks portfolio on September 3 and to hold the cash in hand. At the September 3 close, I was looking at a 6.4% loss on the shares I bought for Jubak's Picks at $5.49 on March 30, 2012.

Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did own shares of Apple as of the end of June. For a complete list of the fund's holdings as of the end of June see the fund's portfolio here.

SEC, FINRA Enforcement: Radio Personality Fined Over ‘Buckets of Money’

Among recent enforcement actions by the SEC were a bar against radio personality Raymond Lucia associating with any investment advisor, broker or dealer, as well as other penalties, for his “Buckets of Money” violations; a freeze on the proceeds of illegal distributions of Biozoom stock; and a freeze on insider trader assets in the case of Onyx Pharmaceuticals. Also, a $9.5 million fine was levied by FINRA and exchanges on Newedge for failing to supervise trading by clients.

'Buckets of Money' Violations Bring Bar, Fines

Radio personality Raymond Lucia Sr., who in September of last year was the target of an SEC administrative proceeding over promoting his “Buckets of Money” strategy while never having backtested it despite claims to the contrary, is the focus of another ruling.

Cameron Elliot, SEC administrative law judge, barred Lucia from associating with any investment advisor, broker or dealer. The judge also revoked investment advisor registrations for him and his firm, Raymond J. Lucia Cos. (RJLC), and also imposed a $50,000 penalty against him and a $250,000 penalty against RJLC. The judge’s decision found that that RJLC had violated investment advisor antifraud statutes and that Lucia had aided and abetted RJLC’s violations.

Until the SEC got onto his case, Lucia had given investment seminars at which he touted his “Buckets of Money” strategy. At those seminars he claimed that extensive backtesting over extensive bear-market periods proved the strategy’s validity. In fact, however, he and his firm had done little, if any, backtesting to verify those claims.

FINRA, Exchanges Hit Newedge With $9.5M Supervisory Fine

FINRA along with BATS Exchange, New York Stock Exchange, NYSE Arca and NASDAQ censured and fined Newedge USA of Chicago $9.5 million for failing to supervise trading by clients that directly accessed U.S. equities markets through Newedge's order routing platform and/or internet service providers (known as "direct market access," or "DMA") or routed orders directly to market centers (known as "sponsored access," or "SA").

Newedge also violated Regulation SHO and SEC Emergency Orders concerning short sales, and failed to obtain and retain books and records.

FINRA and the exchanges found that Newedge did not have sufficient procedures, adequate surveillance tools, or necessary information to monitor DMA and SA client trading. Newedge's supervisory violations occurred over a four-year period, during which numerous internal documents noted the firm's deficiencies. Even after these "red flags" were raised, Newedge did not take adequate steps to satisfy its supervisory obligations, FINRA found.

Purse Maker-Turned-Biomed Developer Is Focus of Insider Trading Case

Eight Argentine citizens have been charged, and their U.S. brokerage accounts frozen, on allegations of insider trading in the unregistered sale of millions of shares of Biozoom. Two other Argentine citizens who owned Biozoom shares but had not yet sold them have also seen the assets in their U.S. brokerage accounts frozen. Trading in the company’s shares was suspended the last week of June on concerns that insider trading was taking place.

In April, Biozoom, formerly Entertainment Art, announced that it was changing its name and making a drastic change in its business model; instead of producing leather bags, it was going to develop biomedical technology. The ten defendants, from March to June 2013, received more than 20 million shares of Entertainment Art; that amounted to one-third of the company’s total outstanding shares. The defendants claimed to have acquired the bulk of the shares in March from Entertainment Art shareholders who had bought them in private placements that began in 2007. /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ While each of the defendants provided stock purchase agreements between themselves and the former shareholders that were purportedly signed by the defendants and those shareholders, the Entertainment Art investors had actually sold all their stock in the company nearly four years before, in 2009; That, said the SEC, made the documents false.

But that didn’t stop the defendants, who deposited their Biozoom shares into their accounts as shares that could be freely traded. They then proceeded to do just that, despite the fact that no registration statement was filed with the SEC for any of the sales transactions. Starting in the middle of May, over the course of a one-month period, eight of them sold more than 14 million shares, which yielded almost $34 million. Nearly $17 million of that amount was wired to overseas bank accounts. There is approximately $16 million in cash in the frozen U.S. brokerage accounts.

Magdalena Tavella, Andres Horacio Ficicchia, Gonzalo Garcia Blaya, Lucia Mariana Hernando, Cecilia De Lorenzo, Adriana Rosa Bagattin, Daniela Patricia Goldman and Mariano Pablo Ferrari are the eight defendants who have already sold shares. Mariano Graciarena and Fernando Loureyro have not yet sold the shares they hold.

The SEC is seeking return of the selling defendants’ allegedly ill-gotten sale proceeds, and civil penalties, as well as preliminary and permanent injunctions against nonselling defendants Graciarena and Loureyro, because of the likelihood that both defendants will offer or sell their Biozoom shares to the public.

The investigation is continuing.

Foreign Accounts’ Assets Frozen in Insider Trading Case

The SEC swooped in before courts closed for the July 4 holiday to obtain emergency freeze orders for foreign accounts used by traders hoping to cash in on insider information.

Onyx Pharmaceuticals had received an acquisition offer from Amgen and was slated to announce that fact, along with its rejection of the offer, on Sunday, June 30. In advance of the announcement, traders gambled that the news would send the stock higher, and on the three trading days before the announcement was made, June 26, 27 and 28, they loaded up on call options for the stock.

Onyx was the recipient of an unsolicited proposal from Amgen to acquire all of Onyx's outstanding shares and share equivalents for $120 per share in cash. The former planned an announcement on June 30 of the offer from Amgen, as well as the news that it had rejected the offer and instead had authorized its financial advisors to contact potential acquirers who may have an interest in a transaction with Onyx.

The $120 price per share offered by Amgen represented a 38% premium to Onyx's closing share price on Friday June 28. The announcement, however, caused Onyx's share price, which closed at $86.82 on Friday, to rise more than 51% on Monday, July 1, and its stock’s trading volume increased by more than 900% that same day. The traders, using their inside information, made about $4.6 million in profit on the call options they’d bought in those three days before the announcement was made.

Many of those options bought by the unknown traders were out of the money; also, the SEC said that the trades were suspicious in both timing and size, since they represented large increases over the historical volume for those call options purchased.

The unknown traders have been charged, and the SEC also seeks a final judgment ordering the traders to disgorge their ill-gotten gains with interest pay financial penalties, and to permanently bar them from future violations. The investigation continues.

The Real Crisis in Employer-Provided Health Insurance

One of objections that opponents of Obamacare give against the landmark health care legislation is that employers will have an incentive to drop the health insurance coverage that millions of workers currently receive as employee benefits. Yet even before Obamacare became law, the trend among employers was to offer health insurance to fewer employees, leading to increased stress on families seeking to protect themselves against potentially catastrophic health care costs.

In particular, a recent study from the Employee Benefit Research Institute looked at the question of workplace-provided health insurance coverage. With its examination of trends in recent years, the EBRI confirmed what has long been a known fact: that the cost of health insurance is the key determining factor in whether employees choose coverage. Let's take a closer look at the study and its implications for your insurance coverage going forward.

2 key trends in health insurance
The EBRI study focused on two different measures of health insurance coverage. First, the study looked at the percentage of workers with employer-provided health benefits. Then, it turned to the reasons that those who weren't covered cited in explaining why they went without insurance coverage.

On the first topic, trends toward a smaller percentage of workers having employer-based health benefits have been in place for well over a decade. After peaking above 80% in 1999 and 2000, the percentage of people having any employer-based source of insurance coverage -- whether in their own name or by being a qualifying dependent on another person's policy -- has fallen steadily ever since, with levels declining to the low 70% range as of early last year. In particular, coverage in workers' own names has fallen dramatically in recent years, with the 60.4% in December 2007 falling to just 54.7% as of October 2011.

Those figures suggest that more employers have been pulling back on offering health insurance benefits to their workers. Yet in the second part of the survey, the experience of uninsured workers strongly contradicts that hypothesis, pointing instead to cost considerations as being paramount in the decision to go uncovered.

In particular, the EBRI found that as recently as 2001, roughly 40% of uninsured workers claimed that their employers didn't offer them health benefits. Yet by the end of 2011, that figure had declined almost in half, to 22%.

Access therefore might not be the issue. But what nearly 90% of uninsured workers say is that even if they're eligible for employer-provided health insurance, its cost is too high for them to accept it. Cost has always been a major consideration for those who go uninsured, with figures since 1995 routinely falling within the 70% to 90% range, but cost has been particularly important in the years since the 2008 recession.

Why the uninsured are so important
One big question that Obamacare proponents and opponents are wrestling with right now is the extent to which these uninsured workers will get coverage under new health care laws. On one hand, the individual mandate requires most people to obtain coverage. Yet if cost truly is the problem, Obamacare provides an exception to the mandate that exempts those for whom the cost of care is prohibitive.

That in turn could create a problem for hospital companies. Tenet Healthcare (NYSE: THC  ) , Community Health Systems (NYSE: CYH  ) , and Health Management Associates (NYSE: HMA  ) have all seen their share prices jump sharply as investors grow increasingly excited about the prospects of uninsured Americans getting mandated coverage under Obamacare. The hope is that by having more people insured, these hospital companies will lose less in uncovered health care expenses they incur when they treat uninsured patients.

As a result, much will depend on government subsidies to help low-income workers bridge the gap between available coverage and affordable coverage. If subsidies don't succeed, then the real crisis in employer-provided health insurance could well continue -- and hospital stocks could give back much of their gains.

Still confused about how Obamacare might affect you and your portfolio? The Motley Fool's special report "Everything You Need to Know About Obamacare" takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger.

Apple's Latest Court Woes: E-Books

In a court case that is unusual for Apple (NASDAQ: AAPL  ) in that it neither involves patents nor Samsung, a U.S. District Judge in New York will soon decide if there is sufficient evidence to conclude that the iPad maker colluded with book publishers to change e-book prices and force Amazon to use an agency pricing model. While the government is not seeking financial damages, the case has significant value as a precedent, and could open the floodgates for further suits. The five publishers involved in the case have already settled.

In the video below, Fool.com contributor Doug Ehrman discusses some of the specifics of the case, and why its outcome could matter to investors.

Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

This Car Stock Innovates at Its Own Speed

Tesla Motors (NASDAQ: TSLA  ) isn't the type of company to wait for the auto market to tell it what to do ­-- it just does what it wants. That's why just a few days ago the company's CEO, Elon Musk, announced that Tesla will triple its supercharging battery stations, making a cross-country trip in its vehicles a reality.

Tesla's innovations seem to be moving at the speed of light recently, and investors are responding. The company's stock is up almost 195% since the beginning of this year (yes, you read that right). But it's not just the company's stock investors should be pleased with -- it's Tesla's discipline and drive in building a great car company.

Road trip!
In the past, a high-mileage trip was the bane of existence for electric cars. Tesla helped change that situation with its Model S and its range of up to 265 miles. For comparison's sake, it's worth noting that Ford's (NYSE: F  ) Focus Electric gets 111 city miles and the all-electric Honda (NYSE: HMC  ) Fit EV has a range of 118 miles. The cars aren't entirely comparable, considering that the Model S starts at $62,400  and both Ford and Honda's vehicles are priced under $40,000 . But the Focus and the Fit aren't a four-door sports sedan with base model achieving 0-to-60 mph in 5.9 seconds, either.

As if the Model S's mileage range wasn't enough, Tesla said this week that its new supercharging stations -- which allow the car to recharge halfway in 30 minutes -- will make it possible to drive from New York to Los Angeles by the end of the year. Musk said Tesla is tripling the supercharger production this year and that they'll be available in most metropolitan areas by the end of 2013.

The company only has nine charging stations right now and was planning 100 stations by 2015, but Tesla has ramped up the production faster than previously planned. Increasing charging stations is one key component in growing the car company from a niche electric vehicle company to more of a mainstream option for consumers.

Aiming for average
The second piece of the puzzle for Tesla is lowering the cost of its vehicles. In the next three to four years, Tesla plans to introduce a $30,000 car -- which is the current average price of a new car. If Tesla does, it'll be cheaper than the current version of the Focus Electric and the Fit EV.

Not only is Tesla aiming to bring its electric-car prices down to the level of internal combustion cars, but it's also already outselling cheaper electric vehicles on the road. Ford sold a total of 685 Focus Electrics in 2012, and Honda has sold or leased only 161 Fit EVs since last year. Tesla, on the other hand, has sold 4,750 Model S vehicles in Q1 2013 alone.

With its new push to build even more supercharging stations, Tesla is showing that it's committed to its customers -- and stock investors -- for the long run. The company has bet its existence on electric vehicles, and it's ramping up charging-station production to meet the demand of current consumers and future ones. Compare that with many auto manufacturers who view their electric vehicles as side projects. Tesla doesn't have the option of failing, and it's fighting tooth and nail to show that an electric-vehicle company can survive -- and thrive -- in the auto market. So far, it's proving itself right.

Tesla's plan to disrupt the global auto business has yielded spectacular results. But giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.

Why the Dow Jumped 128 Points Today

Still gathering momentum in anticipation of corporate earnings, the markets rallied again today. Wall Street got some help from the Federal Reserve, which released the minutes of its latest meeting earlier than expected today. Bulls cheered the release, which suggested the central bank will only slow quantitative easing efforts when the job market improves markedly. Ending at an all-time record close, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) added 128 points, or 0.88%, to finish at 14,802. 

Health care was one of the strongest sectors today, and Merck (NYSE: MRK  ) shares didn't disappoint, adding 2.9% to lead the Dow. A Jefferies analyst raised his price target on the shares to $48, citing his bullish view on pharmaceuticals, because of compelling valuation. The company also announced that the FDA will review Merck's application to market an antifungal drug it's trying to hawk in Europe as well.

It's no surprise that the FDA also played a role in Pfizer's (NYSE: PFE  ) 2.8% climb today; drug manufacturers often live and die by the rulings of the regulator. Shares soared after the FDA labeled an experimental breast cancer treatment as a breakthrough medicine, meaning the agency will give priority review to the drug, speeding up the process it requires to get to market.

With tech stocks also flying high today, Cisco Systems (NASDAQ: CSCO  ) advanced 2.4% Wednesday. Trading a little over 10 times forward earnings and paying a 3.3% dividend, Cisco shares offer compelling value in a Dow that's risen 13% this year alone. The company's new offerings with Microsoft to boost data-center productivity may also help send the stock higher if they catch on quickly.

But not everyone can be winners. Wal-Mart Stores (NYSE: WMT  ) , for instance, was one of only four decliners in the Dow, slipping 1% on PR-related negativity. The executive who called the retailer's sales "a total disaster" in February, sparking investor fear, is leaving the company. A Facebook group of Wal-Mart critics, "Making Change," derided the departure as "more of the same failure to address the real issues."

Once a high-flying tech darling, Cisco is now on the radar of value-oriented dividend lovers. Get the low down on the routing juggernaut in The Motley Fool's premium report. Click here now to get started.

5 Rocket Stocks to Buy for Earnings Season Gains

BALTIMORE (Stockpickr) -- All eyes are on earnings season to start Monday, as investors hope that new earnings calls could help buoy stocks this week, just like they hit the brakes on the correction last week.

Must Read: Warren Buffett's Top 10 Dividend Stocks

So far, the earnings numbers have been overwhelmingly positive. Of the 86 S&P 500 components that have already reported their earnings to Wall Street, three-quarters have reported earnings that beat analysts' expectations. And just as importantly, stock prices are reacting favorably to positive earnings surprises this quarter.

A bullish earnings environment can act like a rising tide that lifts all ships – especially after a sharp selloff. And that's exactly why we're turning to a new set of "Rocket Stocks" worth buying this week.

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 270 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 81.59%.

Without further ado, here's a look at this week's Rocket Stocks.

Must Read: 5 Stocks Ready to Break Out and Trade Higher

Boeing

Up first is $89 billion aerospace giant Boeing (BA). Most consumers know Boeing best as one of the biggest manufacturers of commercial airliners, a business that's become increasingly important in the last few years as the firm's long-suffering airline customers suddenly see record levels of profitability. But building airliners is only approximately 60% of Boeing's total business. The balance comes from Boeing's huge status as a defense contractor.

Boeing owns some of the biggest aerospace contracts awarded by Uncle Sam, from replacing the Air Force's KC-46A refueling tanker fleet to retrofitting aging F-16s into unmanned aerial targets for military pilots to dogfight. But it's the commercial airliner business that looks the most attractive here, particularly as U.S. carriers look to upgrade their massive, aging fleets. With the fuel savings attained by next-generation airframes such as the 787 Dreamliner and the 737NG, the decision to sell off older aircraft becomes a whole lot more palatable -- especially in this prolonged low interest rate environment.

Because Boeing's product cycle is extremely long, the firm enjoys a massive backlog. At last count, that backlog weighed in at approximately $440 billion, or nearly five times sales. That abundance of orders in the queue provides a nice sales cushion for Boeing that helps to smooth out any economic speed bumps along the way. Keep an eye out for Boeing's earnings call on Wednesday.

Must Read: 10 Stocks Carl Icahn Loves in 2014

Morgan Stanley

Morgan Stanley (MS) has the distinction of being one of the few standalone legacy investment banks that made it through the financial crisis of 2008. Now, six years later, this bank holding company looks like a solid way to play the increased M&A deal flow that's been hitting the books in 2014 and beyond.

Morgan Stanley is undergoing big shifts in how it does business. With a low interest rate environment that's lasted longer than nearly anyone could have predicted, the firm is working to drive its fee-based businesses rather than sales sources that are rate-dependent. Growing the wealth management and investment banking businesses, for instance, provide fat margins without the risk that would draw regulators' ire. Owning MS is also basically a call option on rising interest rates. In the event that the Fed does ratchet rates higher, MS suddenly gets exposed to much fatter spreads on its asset-based revenues.

Meanwhile, MS has a much slimmer risk profile today than it did in 2007. And while that means that returns on assets are likely to remain lower forever, that's a change that's long been priced into shares. With a P/E ratio of 13, MS looks relatively cheap in this ripping market.

Must Read: How to Profit From October's Volatile Market

Philip Morris International

Now's a good time to think defensive with your portfolio -- and there are few names that look as attractive on that front at Philip Morris International (PM). This $134 billion "sin stock" is the second-largest tobacco company on the planet, with 28% of the global market outside of China and the U.S. PM owns some of the most valuable brands in the cigarette business, including flagship Marlboro and second-tier names such as L&M, Parliament and Chesterfield.

But it doesn't own them here in the U.S. Instead, Altria (MO) spun off its ex-U.S. assets into PM back in 2008, basically driving a wedge between the established (but slowly dying) U.S. market, and the fast-growth tobacco market in the rest of the world. That means that PM offers the rare combination of a huge 4.65% dividend yield, and material growth rates.

It's not all upside at PM, however. Recent dollar strength has been a challenge for the firm, which earns its sales in local currencies but ultimately has to report its numbers here in dollars. With the Fed and other central banks unlikely to take their thumb off the scale for some time, investors should expect dollar strength to persist.

On the whole, PM still looks attractive right now, and the lack of exposure to the U.S. makes it a great low-correlation asset to own if you're concerned about the health of the S&P's rally.

Must Read: 7 Stocks Warren Buffett Is Selling in 2014

Paccar

Heavy truck maker Paccar (PCAR) is one of the firms that's been celebrating the recent collapse in oil prices. With truck freight volumes hugely sensitive to the cost of fuel, a drop means more highway miles for the worldwide fleet. And that, in turn, means that truckers are more likely to justify a new rig from Paccar.

Even if you've never heard the Paccar name before, you've no doubt seen the firm's trucks. Paccar owns the Peterbilt, Kenworth and DAF names.

Worldwide, the average age of commercial vehicles has been climbing higher, and so have oil prices (even with the recent drop, crude is still sitting on the high-end of its historic range). Those are both big catalysts for upgrades to PCAR's latest and most fuel-efficient offerings. Fuel cost savings and maintenance savings make the justification for a fleet upgrade much easier to make, and record-low interest rates don't hurt either. (Not surprisingly, those are the exact same catalysts driving fleet upgrade demand for Boeing.)

Financially speaking, Paccar sports a well-capitalized balance sheet with $2.7 billion in cash to help offset the firm's total $8.3 billion debt load. Truck building may be capital-intense, but PCAR's leverage is reasonable right now. Look out for the firm's third quarter earnings call to hit next Tuesday.

Must Read: 10 Stocks Billionaire John Paulson Loves in 2014

Stericycle

Last up is medical waste management firm Stericycle (SRCL), a name that's getting added attention this month in the context of the Ebola epidemic. Stericycle is the largest medical waste company in the country, providing hospitals, medical offices and pharmaceutical firms with a way to dispose of highly regulated biologically hazardous waste. Not surprisingly, dealing with the consumables no one else wants to touch is a lucrative business, with deep profit margins and a sticky customer base.

The regulatory intensity of the medical waste business provides an attractive moat for Stericycle. Because healthcare facilities are bound by reams of internal rules as well as laws, SRCL's simplified waste disposal offerings take much of that regulatory risk off of its customers' shoulders. The demand for medical waste processors should continue to grow in the years ahead thanks to more healthcare needs from an aging demographic in Western countries.

Stericycle is one of the few companies that's been granted a special permit to transport and treat Ebola-contaminated medical waste. To be clear, the firm's Ebola-related volumes aren't going to have a material impact on its earnings, but it does send an important message to healthcare facilities that if they want to position themselves as capable of dealing with serious health hazards, they need to contract with a Category A infectious disease waste company like SRCL. Earnings later this week could be an important upside catalyst.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>5 Stocks Insiders love Right Now

>>Hedge Funds Love These Stocks -- but Should You?

>>5 Stocks Under $10 Set to Soar

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in the names mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

Nike Scores Big; Shares Spike 11%

Nike (NKE) is starting the new fiscal year ready to wear by beating fiscal first-quarter financial projecitons.

For the quarter that ended Aug. 31, sales jumped 15% to $8 billion to yield per share earnings of $1.09, 21 cents ahead of Wall Street estimates. Meanwhile, the athletic shoe and clothing giant expects per share profit to climb 20% during the 2015 fiscal year.

Granted, sales of soccer gear and apparel benefitted enormously from the World Cup. But shoe and apparel sales are also rising among people who have no intention of getting sweaty. During a conference call regarding the results CEO Mark Parker highlighted the entrance of athletically-styled clothing into casual wear, and even workplace apparel. Apparently, the new look is called "athleisure.”

Investors were impressed. Nike shares surged urged 11.2% to $88.69.

Why so excited? Nike posted a host of shockingly strong numbers, with sale rising in every product type, geography and category except golf and actions sports.

In North America, Nike's biggest market, sales rose 15%. In Western and Eastern Europe, sales rose 25% and 9% respectively.

And future orders were a bright spot. Orders for the Nike brand for delivery from September through January rose 14%.

As Canaccord Genuity analyst Camilo Lyon writes:

In no uncertain terms, NKE is firing on all cylinders, especially in higher-margin categories and regions. DTC growth of 30% (comp +15% and e-commerce +70%) was also outstanding and indicates the success NKE is having with its category offense initiatives. As we anticipated, World Cup, running, and basketball sales were solid while women’s is also growing at a healthy DD pace, helped by both an improved premium assortment and increasing shelf space at key retailers like DKS. Global futures orders of 14% CC (+9% units and +5% ASPs) point to continued momentum particularly in key markets like NA (+15%) and WE (+20%). Overall, this was a fantastic quarter.

This Chinese Company Leaves Even Tesla in the Dust

Tesla Motors Inc. (Nasdaq: TSLA) stock hit a new high on Aug. 29 thanks to very positive news out of China.

The world leader in electric vehicles is set to install 400 charging stations in roughly 120 Chinese cities. And that's on top of 200 charging stations Tesla already operates in the world's most populous nation.

The news comes just weeks after Tesla began selling its luxurious $70,000 Model S in China.

So far this year, TSLA shares are up more than 80%. And its Chinese expansion should propel the stock even further - in fact, I think China will become Tesla's biggest market within the next year.

But that performance, as impressive as it is, pales in comparison to the performance of a Chinese auto e-commerce company I told you about on Feb. 4.

Since then, your shares have gone on a tear, rising some 220%.

This exciting stock isn't done yet, however, and I think you're going to make another 50% over the next couple of years. Let's see how that's going to happen...

A Very Speedy Auto Rally

My good friend and colleague Money Morning Executive Editor Bill Patalon and I have many things in common, not the least of which is we're both "car guys."

I used to be an auto analyst in Detroit, and I've rebuilt a couple of cars and worked on a dozen more. And Bill loves to regale me with stories of how he is working on his "little hot rod" - a 1931 Ford Model A Roadster Pickup with a beefed-up, small-block V8.

Naturally, then, when he suggested doing a Q&A with me last February about my views on China's burgeoning new-car market, I jumped at the chance.

At the time, I was convinced Bitauto Holdings Ltd. (NYSE ADR: BITA), which offers e-commerce and marketing services to China's auto market, offered savvy tech investors the chance for massive gains in relatively short order. Here's how I described Bitauto to Bill:

Talk about a growth machine. It has a three-year sales growth rate of 54% and has grown earnings per share in excess of 60% over the past three years.

If it just had half that earnings growth, profits per share would double in less than three years. In fact, I think the stock could double well before that if everything plays out the way I believe it will.

To put it mildly, the stock greatly exceeded my optimistic projections - again, a 220% pop in about seven months.

However, when a stock goes on such a quick, impressive rally, many investors wonder how much upside is left. (I'm betting that includes many of you who didn't invest in Bitauto the first or second time I recommended it.)

In this case, I still see potential for strong gains - and here's why.

Bitauto is uniquely positioned to profit from big changes reshaping the market for new cars and light-duty trucks in China - a nation in the midst of a massive transformation based on several overlapping trends.

First, of course, is the long-term move from communism to capitalism. That alone is greatly raising incomes and standards of living.

Second, China's leaders want to move away from their previous emphasis on state-sponsored infrastructure spending to one that depends more on open markets.

Third is the massive population shift away from the provinces to the big cities.

With 1.3 billion people, China needs a lot of cars. And rising standards of living in urban centers are building demand for new vehicles.

Here's one way to look at China's exploding urban growth.

Kunming, a backwater provincial capital in southwest China you've likely never heard of, has a population of 3.8 million - about equal to Los Angeles, the second-largest U.S. city. And its population is expected to rise 50% by 2020.

And that's not all. Chenggong, a suburb built over the past few years to handle some of Kunming's expansion, already is home to more than 300,000 people - and should have a million residents by the end of this decade.

With so much rapid economic development, it's not surprising that China quietly became the world's largest auto market in 2010 and continues to grow. Analysts at Scotiabank are projecting 2014 sales of 18.86 million vehicles, for a two-year gain of 39%.

Moreover, Scotiabank data shows that, over the past quarter century, vehicles sales in Asia grew some 334%, with China accounting for the vast majority of that increase.

The United States is also in the midst of an auto boom, but its market lags China. In July, vehicle sales hit roughly 1.4 million units. Not only was that a roughly 10% increase from the year before, but that's the highest American July sales rate since 2006.

Thus, Edmunds.com forecasts vehicle sales of 16.4 million in the United States this year. That makes China's relatively young auto market already some 15% bigger than America's.

Wall Street Takes Notice of Bitauto

While the accelerating Chinese auto market is the main driver behind Bitauto's growth, it certainly isn't the only one.

I found Bitauto on my own - with no help from Wall Street analysts or other mainstream stock pickers. In fact, I tend to ignore all the noise coming off the Street.

But I like it when they follow my lead - because it can mean big profits for you. A "Buy" rating from a popular investment site can attract huge amounts of liquidity to a particular investment. And if you already own the stock, that's good news for you.

In this case, Zacks Equity Research just put its most bullish rating on Bitauto. And it backed that rating with some extreme positivity.

"Not only does the stock have decent short-term momentum... it is seeing solid activity on the earnings-estimate-revision front as well," Zacks analysts wrote. "These positive-earnings-estimate revisions suggest that analysts are becoming more optimistic on BITA's earnings for the coming quarter and year. In fact, consensus estimates have moved sharply higher for both of these time frames over the past four weeks, suggesting that Bitauto could be a solid choice for investors."

This is particularly good news for you because of the so-called "Zacks Effect." Since 1986, stocks with a Zacks "Strong Buy" ranking have generated an average annual gain of 26%. That's nearly triple the return of the Standard & Poor's 500 Index.

Additionally, Bitauto isn't "coasting" on China's growth. It's seeking out new niches within that market to exploit.

Until now, the company had been focused on the new-car market. But Chief Financial Officer Andy Zhang recently said that 4,800 Chinese used-car dealerships also are using Bitauto offerings.

As part of that new thinking, Bitauto has launched a valuation product for used cars, a Kelley Blue Book for the Chinese market. It developed this beta version with the China Automobile Dealers Association and Kelley Blue Book Co. Inc.

TSLA Has Competition in China - but Bitauto Wins, No Matter What

Tesla Motors (Nasdaq: TSLA) is not the only nameplate looking for big things in China. Most of the major U.S. and European nameplates either sell cars there directly, have Chinese joint ventures, or do both.

Ford Motor Co. (NYSE: F), for one, is ramping up there as part of its plans for higher global sales. Last year, Ford sold nearly a million wholesale vehicles in China, a 49% increase.

As for Tesla, its leaders haven't said how many cars they've sold there. However, according to Tesla's recent second-quarter earnings statement, the "Model S is off to a very encouraging start in China."

TSLA shares jumped 2.5% Aug. 29 to close at $269.70. And shares kept rising over the next several days, reaching an intraday high of $288 on Sept. 3.

But as far as Bitauto goes, it doesn't matter whether U.S. or European or Chinese carmakers do well - or all of them. No matter who wins, Bitauto comes out ahead.

It has a major high-margin way to profit from China's huge car market. As a leading automotive e-commerce player, it sells online advertising and provides reviews and pricing info for consumers.

It also serves as an online showroom for both new- and, increasingly, used-car dealers. Bitauto even helps dealers with digital ad campaigns, as well as setting up and maintaining websites.

In other words, it's got a seat at both sides of the table - buyers and sellers - with a very high-margin business model. It has operating margins of more than 16% and a return on equity of 20%.

And check this out: The most recently quarterly earnings were up 96%.

With a market cap of $3.68 billion, Bitauto is trading at around $88. It has a three-year sales growth rate of 50% and has grown earnings per share by 57% over the same time.

If it just had half that earnings growth, profits per share would double in about 2.5 years. But in a case like this, when a stock has had a huge run in a few months, it pays to be conservative.

So, I cut that forecast in half and am projecting two-year gains of about 50%.

Even with that caution, Bitauto is still the best e-commerce play on China's huge auto sector.

No matter how well Tesla's luxury cars do in China (or TSLA stock, for that matter), Bitauto stands to gain - and so do you.

More from Michael Robinson: Apple shares have dipped recently on a string of overhyped "threats," like the iCloud celebrity photo leak scandal. But the AAPL stock price won't stay low for long - in fact, it's headed to a split-adjusted $1,000 per share in less than two years. This may be your last chance to get a bargain on Apple...

OMG! Hot or Not is back!

  See the new Hot or Not LONDON (CNNMoney) Hot or Not, an online platform where people rate the attractiveness of participants, took the Internet by storm over a decade ago.

Now Hot or Not's creators have relaunched the dating app to help people connect with the hottest people in their areas.

The updated Hot or Not app encourages people to vote on the most attractive (and least attractive) users, then gives users a popularity score and compiles a 'Hot List' to show in real-time where the most babelicious people are each neighborhood.

The app is designed to take the guesswork out of tracking down good-looking people. For example, concert goers using the app will be able to check their iPhones to see whether highly rated 'hot people' are at the bar or near the stage. Users can also chat through the app, provided they rate one another as 'hot'.

"Since 2000, the Hot or Not brand has been an inspiration behind some of the most popular platforms and products currently available to consumers including Facebook (FB, Tech30) and YouTube," said Andrey Andreev, CEO of Hot or Not. "With the addition of 'Hot Lists' ... we are bringing an elevated and more exciting version of this iconic brand to a new generation of users."

But the app is not for the faint of heart. Online daters can be ruthless in their assessment of people's physical attractiveness. Each individual will have a "hot rating" attached to their profile, which is decided by voting. Needless to say, some users may not be happy with their results.

  App lets girls anonymously ! rate guys

The app currently has over 10 million users in the United States and is pitting itself against other popular dating apps it helped spawn, included Tinder.

The company behind the app -- London-based Badoo -- would not reveal user numbers in other markets, though the app is available in over 30 languages.

The Hot or Not mobile app originally launched in May 2013.

Financially Savvy Gifts For New Graduates

GWImages/Shutterstock LOS ANGELES -- Americans typically spend nearly $5 billion on gifts for graduates, with a little over half giving cash and a third offering gift cards, according to last year's National Retail Federation survey. Those surveyed spent an average of $49, which won't buy a laptop, a retirement fund or many of the other gifts often touted as "financially savvy." If you actually want to do some future good with your gift, here are some money-smart suggestions for grads from personal finance experts, college consultants and recent graduates: Living Life Experiences give us more happiness than stuff, according to various researchers. You can put those findings to practical use in a variety of ways. "I'm a sucker for experiences over products, so I might give a gift certificate or Groupon (GRPN) to a nice restaurant or a Paint Nite with a few friends," said personal finance columnist Kathy Kristof, Los Angeles-based author of "Taming the Tuition Tiger" and mother of a recent college graduate. (For her own daughter, Kristof bought the airline tickets for four months spent "kicking around the world.") College consultant Shirley Bloomquist of Great Falls, Virginia, sometimes buys gift certificates for lunch, dinner or a theater outing for the graduate and a friend. Cooking Essentials Learning to fix meals from scratch at home will save your graduate a fortune. A good basic cookbook, such as Mark Bittman's "How to Cook Everything," is one option. Kitchen starter sets are another. Ikea has 7-piece cookware sets for $25 to $50, while Caphalon and Oxo have kitchen gadget sets for $40 to $50. College consultant Bloomquist recently gave a gift certificate for a cooking class to a law school graduate that she could share with some buddies. Help Being Grown Up Transitioning to the work world often isn't easy. Grads may benefit from the services of a resume doctor, a career counselor, a wardrobe stylist, a fee-only financial planner -- or other professionals. "I know someone who had an interior designer just spend a day rearranging things in their apartment," said Zac Bisonnette, author of "Debt-Free U" and "Good Advice from Bad People." Such help, he said, "can turn an ad hoc sort of deal into something more adult." Professional help isn't cheap, however. The cost for any of these services can be $150 an hour, or more. Some may offer discounted initial sessions, but givers on a budget may have to resort to self-help books instead. For career advice, Lynn O'Shaughnessy, author of "The College Solution," recommends "Getting from College to Career: Your Essential Guide to Succeeding in the Real World," by Lindsey Pollak and "Graduate to a Great Job: Make Your College Degree Pay Off in Today's Market," by David DeLong. Some other titles to consider: "Get a Financial Life: Personal Finance in Your Twenties and Thirties," by Beth Kobliner. "Style Bible: What to Wear to Work," by Lauren A. Rothman. "Apartment Therapy: The Eight-Step Home Cure," by Maxwell Ryan. Prepaid Cards If you're still leaning toward a cash gift, you might consider a reloadable prepaid card that allows users to track their spending and offers some protection against loss, theft or fraud. "The main advantage over cash is that cash tends to disappear quickly," said Curtis Arnold, founder of CardRatings.com and BestPrepaidDebitCards.com. "I have a son that graduated a year ago, and I would never give him a cash gift ... even though I required him to take a personal finance class during college." A prepaid card that charges fat fees is, however, the exact opposite of a financially savvy gift. Arnold recommends two lower-cost options: Serve from American Express (AXP) and Chase Liquid (JPM). Serve has a $1 monthly maintenance fee, free point-of-sale transactions and none of the typical hidden third-party costs such as ATM and cash load fees, he said. Users can also send money by email, text and Facebook (FB) and set up subaccounts to easily share money among family members, Arnold said. Chase Liquid offers unlimited free withdrawals at Chase ATMs. Point-of-sale transactions are free and there are no cash load fees. The card can be used for paying bills and its "sophisticated mobile apps" are well worth the $4.95 monthly maintenance fee, Arnold said. The card you choose could well become the gift that keeps on giving. "Once they spend your gift, they will hopefully consider reloading the card later rather than using a credit card and running the risk of increasing their debt load," Arnold said. (.)

'CHiPs' Erik Estrada on motorcycles: Don't look…

The next time you see see actor Ed Harris cruising down the highway on a motorcycle, know that he learned the art of looking good on a motorcycle from the best.

CHiPs star Erik Estrada gave Harris a personal training lesson on the motorcycle in the late 70s when a struggling actor Harris made a guest appearance on the show.

The unlikely screen duo now voice helicopters in the Disney animated film Planes, which dropped a new trailer on Tuesday.

But it's not the first time they have worked toget

her. Estrada couldn't help but to talk about schooling the now four-time Oscar nominee when Harris was on the CHiPs set. Harris was playing a one-off bad guy on the supremely popular California cop show.

Estrada, of course, was at the height of his Hollywood power playing highway patrol man Ponch on the series.

"I remember he didn't know how to ride a bike at the time," says Estrada. "(Harris) asked me, 'How do I ride this?' I told him it was easy, that I had never ridden a bike before until I came onto CHiPs."

His advice to Harris: "Don't look down and stay in first gear or second gear. Just go slow," Estrada recalls. "He did really well. He rode that bike. And he's gone onto a great career."

Estrada's other rules of the road: "Sit up straight, don't slouch and smile." These are words we can work into all aspects of our life really.

Naturally, Estrada also recommends keeping the best equipment such as gloves, boots and and a helmet.

"There's only two kinds of motorcycle riders," Estrada says. "Those who have been down and those who are going down."

Estrada still rides his Harley-Davidson Road King with the Blue Knights International Law Enforcement Motorcycle Club. He no longer cruises on his CHiPs mobile. But he does have one of the originals from the show, a gift from the Teamsters as a parting show of thanks. The bike sits in a place of honor in Estrada's guest house, right next to the pool table.

Estrada himself is looking good in uniform ! as the 1980s RadioShack commercial proved during the Super Bowl. He keeps in shape with 45 minutes of treadmill work daily. But he admits it's not the same motorcycle cop uniform.

"I had to let it out a bit," says Estrada, who just turned 65.

Even his aging secrets speak like a man who still knows how to ride on the road. Take note Ed Harris: "I'm Latin, I'm well-lubed," says Estrada. "And I color my hair."

Want to Save a Fortune (and Your Marriage)? Ditch the Fancy Wedding

Getty Images Receiving a piece of mail that wasn't a bill, a jury duty summons, or an offer from a credit card company used to be an exciting occasion for me. These days, it's usually painful and expensive. Now that most bills are handled online, only two things come in the mail for millennials: birthday cards and wedding invitations. Anyone serious about saving money wouldn't want to be responsible for the latter. Millennials -- as a generation -- are in debt. This is a well-known, over-analyzed, consistently reported on fact. To be more specific, the average millennial carries about $29,400 in student loan debt, according to a New American Foundation's Student Debt Review. That's only $1,047 more than the average wedding budget, reported by a 2013 survey from The Knot and WeddingChannel.com. Strictly based on the numbers, it's fiscally irresponsible for an average millennial to have an average wedding. But let's start at the beginning. The Engagement Ring The road to financial ruin begins with the ridiculous tradition of spending several months salary on a diamond engagement ring -- now costing an average of $5,431, according to a 2013 wedding survey by TheKnot and WeddingChannel.com. Diamond engagement rings became popular around the time the average millennial's grandparents were coming of age. Two generations later, we're still compelled by the unforgettable slogan the N.W. Ayer and Son ad agency penned for De Beers: "A Diamond Is Forever." A diamond may be forever, but a marriage built on materialism and debt sits on shakier ground. Creating the Guest List After the ring is on the finger and the engagement is announced on Facebook (so that it's official), the happy couple must sit down to draft the guest list. With help from their parents, of course. Suddenly, third cousins the groom has never heard of get added to the list while the bride tries to talk her parents out of inviting their next-door neighbors from 15 years ago. Perhaps a wedding should focus instead on the two people committing to each other -- a gathering of the couple's closest friends and family, instead of a convention that requires them to carry a cheat sheet to keep track of all the guests' names. The Invites The wedding industry is probably single-handedly keeping specialty paper suppliers in business. While most industries are pushing toward going paperless, your relatives may shame you if you dare to defy convention and mail merge an e-card wedding invitation. Ignore their condemnation in favor of free. Sure, it's exciting for about 30 seconds for the guests receiving that classy-looking piece of snail mail. It's more exciting to pocket the average $453 that it costs to send traditional invites. The Ceremony and Reception A public declaration of love combined with a dinner for nearly 150 people (remember that over-long guest list we were just talking about?) runs couples $18,408 -- the price of the average wedding according to The Knot and WeddingChannel.com. Simply signing a marriage certificate or holding a small ceremony followed by an intimate dinner or potluck could save a couple tens of thousands of dollars. Or just eloping. Undoubtedly, weddings are fun and provide both the guests and couple with lifelong memories. But are those memories really worth starting out your married life deep in the red? What Else Could Be Done with All That Money? Pay off or make a sizable dent in your student loans Pay off or make a sizable dent in your credit card debt Put a down payment on a home Furnish a new home Invest for retirement, future children or simply to capitalize on compound growth Buy a car (or two) Create an emergency fund Take a vacation Your Wedding Doesn't Last a Lifetime. Your Marriage (Hopefully) Does After the cameras finish clicking, the last bite of cake has been consumed, and your drunk uncle stumbles back to his room, the wedding is over. The marriage, hopefully, lasts a lifetime. But sometimes, it doesn't, and while you're thinking about that, consider this: Money-related arguments and financial stress are consistently reported as the top reasons for divorce. It stands to reason if money problems can split up a once-happy couple, it's not merely practical, but a potential marriage saver, to ditch the expensive wedding and focus those funds on building your future together.

Workers, Customers: You Really Can Make Big Businesses Listen

Alamy When you read something discouraging about a company you patronize or invest in, it's easy to think there isn't much you can do about it. But of course that's not true. As a customer, you can simply stop giving the company your business. If you're a shareholder, you can vote for or against various proposals for the company. And if those options don't feel like enough, there's another way to voice your displeasure -- a tactic that is growing in popularity and is truly bring about changes: You can start or sign a petition. If your first reaction to that is, "Nonsense, petitions never accomplish anything," your skepticism is understandable. But it's a little out of date. Social media has changed the petition game as it has changed so many other things. Banding Together for Change By now, you've probably seen petitions pop up on your Facebook (FB) page. You might have even signed some. But we don't often hear what happens next. In many cases, they work. For example, 162,150 people signed a petition protesting the name of a Jacksonville, Fla., high school, which had been named in the 1950s after a slave trader and Ku Klux Klan member, and the school board has agreed to change its name at the start of the new school year. Changes can happen at big companies, too. More than 307,000 petitioners were successful in getting Tyson Foods (TSN), the second-largest food-production company in the Fortune 500, to "stop torturing pigs." The company announced new animal-welfare guidelines for its pork suppliers, requiring more room for pigs to move around and more humane methods of killing the animals. Abercrombie & Fitch (ANF) is another example. It had long been criticized for policies such as not offering clothing in larger sizes and making someone's looks a major hiring criteria in order to distance itself from anyone other than "cool, good-looking people." The company has finally agreed to start offering plus-size clothing, likely persuaded in part by more than 80,000 people signing a petition urging Abercrombie to change its ways. SeaWorld Entertainment (SEAS) has come under fire lately for its treatment of captive killer whales, publicized in the disturbing documentary "Blackfish," which is now streaming on Netflix (NFLX). Disillusionment with SeaWorld seems to be growing, with it experiencing some traffic shrinkage. At Change.org, a petition asking singer Willie Nelson to cancel an appearance there worked, with fewer than 10,000 signers. Other similar efforts have led many other performers to drop Seaworld gigs. Sprint (S), petitioned by more than 175,000 people, agreed to improve its policies to keep domestic-violence victims safer. Verizon (VZ) did as well. Part of the problem were steep fees faced by those who were trying to separate themselves from joint accounts with abusers. Even Facebook, which is used to spread many petitions, was itself the subject of a successful petition, with the company agreeing not to censor images of women who have had mastectomies. More than 21,000 supporters signed that petition. Take Action

Schorsch: RCS Capital is the next Merrill or Raymond James

Bloomberg News

Fresh off the announcement Thursday of his intention to purchase Cetera Financial Group Inc., Nicholas Schorsch compared his new broker-dealer network, when the deals are completed, to two of the biggest names in the retail-securities industry: the old Merrill Lynch and Raymond James Financial Inc.

“This combination give us a great platform with massive synergies and the ability build a clearing business in the future or the ability to negotiate a better clearing deal,” he said in an interview Thursday afternoon. “We are a newly minted investment bank with reach from Wall Street to Main Street.”

The cash deal is worth $1.15 billion, according a statement released by RCS Capital Corp., of which Mr. Schorsch is chairman.

The deal is expected to close later this year.

(See also: Lightyear Capital's Don Marron scores big on Cetera deal.)

Mr. Schorsch has spent the past five years building a nontraded-REIT business and real estate investment banking company.

A newcomer to the independent-broker-dealer industry, he is pulling off the largest IBD acquisition since 2005. That is when the predecessor to LPL Financial Holdings Inc. sold a 60% stake to Hellman & Friedman and Texas Pacific Group for $1.5 billion.

Scroll through our interactive timeline of what led to Cetera's purchase by Nicholas Schorsch's RCS Capital.

Mr. Schorsch's broker-dealer holding company, RCS Capital Corp., said Thursday it agreed buy Cetera Financial Group, a leading network of four broker-dealers and 6,600 registered representatives and financial advisers, from Lightyear Capital. Cetera reps and advisers have about 2 million clients and $145 billion in assets under administration.

Mr. Schorsch is starting off 2014 where he left off last year, when he completed the acquisition of one broker-dealer holding company, First Allied Securities Inc., and announced two others, those of Investors Capital Holdings and Summit Financial Services Group Inc.

Once those three firms and the four Cetera broker-dealers are under his roof, he will have close to 9,000 reps and advisers producing about $1.65 billion in annual revenue, according to an investor presentation about the Cetera deal.

A Cetera acquisition would make Mr. Schorsch's broker-dealer holdings either the third- or fourth-largest network of independent reps and advisers.

The four Cetera Financial Group broker-dealers generated an estimated $1.14 billion in revenue last year. RCS Capital's purchase price translates into the acquirer paying about $1 dollar for each dollar of broker-dealer revenue, or 100% of trailing-12-month revenue.

That is an almost unheard-of sum in independent-broker-dealer mergers and acquisitions. In the past decade, buyers have paid in the range of 20! % or 25% to 60% or 70% of a broker-dealer's trailing 12.

When asked about the price tag for Cetera Financial Group, Mr. Schorsch said that using a formula based on a percentage of trailing 12 wasn't the right way to look at such a deal.

“You can't value a business like this,” he said.

“Cetera has $145 billion of assets under management, which means we paid less than 1% of its AUM. We view this as a very reasonable purchase and a great diversifier,” Mr. Schorsch said, adding that Cetera chief executive Valerie Brown and the rest of her team will remain with the firm.

“What you want is assets under control,” said Lightyear's chairman, Donald Marron. “From that comes the revenues.”

Mr. Schorsch isn't afraid to ruffle feathers in the financial services industry. Over the past five years, he has turned the nontraded-REIT industry on its ear, speeding up the return of capital to investors to the delight of many investment advisers.

With dozens of independent broker-dealers as outlets, American Realty Capital, his real estate company, was the biggest seller of nontraded real estate investment trusts and nontraded business development companies over the past two years. ARC raised $2.8 billion in equity in 2012 and $8.3 billion last year, far outpacing the competition.

Last year, Mr. Schorsch made a pivot away from producing new nontraded REITs and began buying broker-dealers and other financial services companies. Finishing the pending acquisition of Cetera would complete his transition from a REIT czar to a broker-dealer leader.

Mr. Schorsch and RCS Capital's work to complete the Cetera acquisition is perhaps the only thing that could slow down the indefatigable dealmaker.

“I think I'm going to take a break for a little while and catch up,” he said.

3 Resolutions You Can Actually Accomplish in 2015

Just under half of Americans make new year's resolutions each year, according to a poll by Marist. Unfortunately, sticking to your resolutions can be difficult, especially as life seems to get busier and more complex every year. Furthermore, resolutions like eating healthy and exercising are important, but they're also some of the hardest to commit to, as they require something from you every day.

The good news? You can take steps to make your resolutions more attainable. Here are three resolutions many people have made for 2015, along with some ideas on how you can achieve them.

1. Save more money

Image source: Ken Teegardin via Flickr

Much like diet and exercise, cutting your spending and saving what's left takes discipline. So instead of summoning the willpower to cut spending and save more on a daily basis, make your saving automatic so you don't have to think about it.

Here are two ways to make saving a lot easier and less stressful:

Set up automatic transfers from your checking account to savings, or have part of your pay direct-deposited to savings. Increase your automatic contribution to your retirement plan at work. If you don't participate, start contributing immediately.

The resolutions that are most likely to fail are the ones that require frequent action on our part. By automating your saving, you remove the biggest barriers to success: thought and effort. Not only will your savings rapidly accelerate, but you'll have less disposable income to spend, as the money will get moved to savings or a retirement account before you have a chance to spend it. You'll be surprised at how quickly you'll adjust your spending habits as a result.

Afraid you'll dip into the savings to splurge? Make it harder to get to. Open a savings account at an online bank, don't install the bank app on your smartphone, and cut up the ATM card. Make it harder to access the money, and you'll be less likely to raid your savings.

Bonus tip: If you increase your 401(k) contributions at work, your savings will go even further: You'll cut your income tax bill, as contributions are made pre-tax, and if your employer matches your contributions (as most do), you'll end up with a much bigger retirement account.

2. Be a better provider

Taking steps to provide for your family can take weight off your shoulders. Source: Flickr user Aaron Logan.

Resolving to be a better spouse or parent is admirable, but it's pointless without specific guidelines. Instead of trying to be better, try to change or eliminate the things in your life that make you worse. Considering that financial concerns are one of the biggest sources of stress for most people, removing or reducing stress tied to finances is a good place to start. 

If you're the primary earner in your household and you don't have a substantial nest egg, then having life insurance to provide lost income in the case of your death is a good idea. Only half of Americans have life insurance, and those who do are only covered for about three years' worth of income on average.

Furthermore, Accuquote's Byron Udell points out that 70% of people will need long-term care at some point in their lives, and the cost of that care will only increase over time. Acting today to prepare for an inevitable cost burden with a long-term care policy will not only protect your nest egg down the road, but it will also provide peace of mind for those you care about.

Making sure your family's financial future is protected can help ease your worries about the future, and that can go a long way toward improving your outlook and helping you be the kind of person you aspire to be.

3. Improve your health
Have you ever gone to a gym in January and then seen the same gym in February? It's amazing how quickly the crowd thins out -- and it's sad how quickly we give up on trying to live healthier lives. Fear of being unhealthy might get you going, but it probably won't help you stick to long-term goals. 

For many, fear of failure can actually have the opposite effect, keeping you out of the gym entirely.

Incentives and things that we enjoy, on the other hand, tend to motivate us much better. In other words, if you don't like going to the gym, find a healthy activity you enjoy and reward yourself for reaching short-term activity goals.

With this in mind, many companies now offer benefits programs that give employees incentives to be more active, like programs to reduce insurance premiums for workers who reach certain activity levels. Qualifying activities can include things like participation in a local sports league and physical activities like hiking and walking. If your employer offers a benefit like this, find things you enjoy that will also earn you some activity credit, and start building healthy habits around physical activities you enjoy. Not only will you get healthier, but you'll save a little money, too. 

You should also set short-term goals and reward yourself for reaching them. Instead of simply resolving to lose weight, plan to complete a minimum amount of activity. For example, walking six miles every week for the first three months of the year could mean you get to buy a new toy you've been wanting. Crank it up to 10 miles per week for the next few months, and you can reward yourself with something even better.

When it comes to being healthier, the more things we have to motivate us, the more likely we are to try. Setting specific, achievable goals with tangible rewards, be they monetary or otherwise, can help us keep going. Before you know it, you'll turn that trip to the gym or that early-morning walk into a habit.

Focus on the process, not the goals
One of the biggest reasons people fail at resolutions is that they fail to go beyond setting a goal. The Motley Fool's Morgan Housel said it best last April: "What you want is a system that allows you to be happy and successful, rather than goals that guide your system." He was writing about investing, but it applies to every aspect of our lives.

Don't get too caught up in trying to reach the goals -- you'll probably end up discouraged. Instead, think about the things you can control -- or better yet, make those changes automatic -- you'll be much more likely to do the things you resolved to do. Most importantly, you'll make healthy and happy changes that can last a lifetime. 

How one Seattle couple secured a $60,000 Social Security bonus -- and how you can, too
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JPMorgan’s stock buoys Dimon despite legal woes

As JPMorgan Chase inched closer to a tentative $13 billion deal with regulators to settle civil charges stemming from the financial crisis on Monday, the bank's stable stock price highlighted Wall Street's belief that CEO Jamie Dimon would stay put.

"I think Jamie probably stays in his job, but the investigation still seems to be ongoing,'' said Mike Mayo, a veteran bank analyst at CLSA known for contrarian calls and occasionally tangling with Dimon. "The bottom-line arbiter of this is the stock price, and JPMorgan still has outperformed most other bank stocks under Jamie Dimon.''

Mayo's comments came as the nation's biggest bank neared a settlement to clear up many of the investigations and litigation it has pending with state and federal regulators. The tentative deal reportedly doesn't resolve potential criminal charges against the bank. Since JPMorgan has already put aside $23 billion for settlements, most or all of the financial impact of the deal has already been absorbed.

To a bank the size of JPMorgan, with $2.4 trillion in assets, the $13 billion settlement almost exactly matches the company's net profit for the first two quarters of 2013. Profit is expected to grow rapidly next year, as housing and consumer markets accelerate slightly and the bank's international operations gain steam, Raymond James analyst Anthony Polini said.

Analysts' average estimate for earnings this year is $4.70 a share.

"They could make $6 a share next year,'' said Polini, who formally estimates 2014 earnings-per-share at $6.20 if there are no further write-offs. "They're delivering double-digit earnings gains when most banks are showing little or no growth.''

But the constant drumbeat of investigations has taken a toll even on JPMorgan's stock in recent years, Mayo said. Since October 2010, JPMorgan shares have slightly underperformed the Keefe Bruyette Woods index of major bank stocks.

Dimon has been CEO of JPMorgan since 2005.

One reason for Dimon's durability is Wal! l Street's sense that JPMorgan was misled by regulators who, eager to convince Dimon to rescue Bear Stearns in 2008 and Washington Mutual in 2009, let him think they would not pursue JPMorgan for misdeeds at Bear in particular, both analysts said.

JPMorgan has fed this idea by suggesting that 80% or more of the disputes it is resolving with regulators stem from misdeeds at WaMu and Bear, most recently in its third-quarter conference call with analysts.

"We didn't anticipate that we'd be paying anything for prior losses for Bear Stearns,'' Dimon said on the bank's earnings call Oct.11, adding that the deal prevented a bankruptcy in which $80 billion of bonds would have defaulted. He said regulators at the SEC, but not the Justice Department, had informally agreed to "take into consideration the circumstances."

"And we did ask,'' Dimon said. "We weren't completely stupid."

Mecklai graph: US 10-year bonds, safest heaven

The US 10-year yield approached an eight month high over the same-maturity German bunds on speculation the U.S. economy will grow faster than Europe's in 2013. The spread widened to 41 basis points on Dec. 18, which was the most since April. German bonds advanced this year as Europe's debt crisis drove demand for the relative safety of the nation's securities.

In the recent past, Treasuries lagged as the U.S. unemployment rate fell to 7.7 percent in November, the lowest level since 2008. The economy has recovered pretty well despite looming concerns of fiscal cliff. It is expected to expand 2 percent in 2013 versus 0.8 percent for Germany. All in all, data suggests that traders and investors all over the world are expecting US economy to do better than Europe and uncertainty in the latter will remain for most part of next year as well. Going ahead, German bunds will be the preferred investment destination despite yielding negative returns even as euro leaders mull over ways to get out of maze of euro-crisis.

Below graph compares US ten yields with German ten year yield since Jan 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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Big Pharma's Biggest Grudge Match

They compete in the diabetes market. The same holds true for the cardiovascular, neuroscience, oncology, and osteoporosis markets. Their animal health units go head to head. You might even say that Eli Lilly (NYSE: LLY  ) and Merck (NYSE: MRK  ) are engaged in big pharma's biggest grudge match.

Which of these two rivals makes the best investing choice right now? Let's look at how Lilly and Merck stack up.

Apples to apples
There truly are plenty of areas for apples-to-apples comparisons between the two pharmaceutical companies. Merck's animal health unit stands as the larger of the two, pulling in $840 million in revenue during the first quarter versus $499 million for Lilly. Both units grew sales roughly 2% year-over-year. Lilly's animal health business comprises around 9% of total sales, while Merck's makes up nearly 8% of total sales.

Both Lilly and Merck do quite well in diabetes. Lilly's Humalog generated $633 million in sales last quarter, with Humulin garnering nearly $312 million. The company also launched Tradjenta in 2011. Lilly's U.S. patent for Humalog expires this month, but no biosimilars have yet emerged.

Merck, meanwhile, pulls in even higher sales figures. In the first quarter, diabetes drugs Januvia and Janumet racked up combined revenue of nearly $1.3 billion. While Merck's sales numbers were higher, Lilly's growth numbers looked better last quarter.

Lilly is arguably better positioned for the future in terms of products on the way. The company counts three diabetes drugs in late-stage trials plus empagliflozin in regulatory review. Merck has one diabetes drug in a late-stage study.

What about other therapeutic areas where both companies compete? Merck again outscores Lilly in cardiovascular-related revenue. Its Zetia and Vytorin combined for slightly more than $1 billion in sales last quarter. Lilly's Effient and other cardiovascular drugs brought in nearly $694 million. However, Merck's cardiovascular revenue declined slightly last quarter, while Lilly saw more than 8% sales growth for the therapeutic category.

Lilly's biggest area is neuroscience, accounting for $1.85 billion in sales for the first quarter. Merck trails behind significantly, with products like Maxalt and Remeron bringing in less than $100 million in sales during the quarter.

However, Lilly faces declining sales from Zyprexa. The company also loses patent exclusivity for Cymbalta at the end of this year. Lilly's antidepressant edivoxetine and Alzheimer's disease drug solanezumab are in late-stage trials, but neither seems likely to make up for the revenue loss from Zyprexa and Cymbalta.

Merck awaits regulatory decisions for insomnia drug suvorexant and neuromuscular blockage reversal drug sugammedex. The company has a drug targeting Parkinson's disease in a late-stage study.

Lilly claims a lead in oncology, too. Its cancer drugs, primarily Alimta and Erbitux, notched sales of $764 million during the first quarter. Merck made $332 million from Temodar and Emend. Both companies also have promising cancer drugs in late-stage studies.

In osteoporosis, Lilly again claims an advantage. Its Forteo and Evista combined for more than $522 million in sales during the first quarter. Merck's Fosamax generated sales of $137 million during the same period.

Apples to oranges
Despite several overlapping markets, Lilly and Merck focus on other areas that set the two companies apart.

Merck's respiratory products, including Singulair and Nasonex, brought in $830 million in revenue last quarter. Lilly doesn't market any comparable respiratory drugs.

Vaccines also make up a significant portion of Merck's revenue. Its vaccines, with Gardasil leading the way, generated more than $1.1 billion in the first quarter. Lilly doesn't compete in the vaccine market.

However, Lilly makes products targeting some therapeutic areas that Merck does not. For example, Lilly's Cialis, which is used to treat erectile dysfunction and benign prostatic hyperplasia, saw sales of $515 million during the first quarter. The company's attention-deficit hyperactivity disorder drug Strattera garnered nearly $167 in revenue during the period.

There's also the matter of size. Merck's market cap of nearly $140 billion doubles that of Lilly.

Grudging opinion
Who wins out in this hypothetical grudge match? I'd go with Merck.

Lilly has a huge challenge before it with several of its top drugs losing patent protection. The company counts plenty of drugs in its pipeline, but it will have a steep hill to climb in making up for lost revenue. Merck faces revenue decline related to expiring patents as well, but it shouldn't feel the brunt quite as much as Lilly.

Looking back over the last year, there's no question that Lilly's stock has performed better. However, the two companies' valuations now appear to be nearly mirror images. Lilly's trailing price-to-earnings ratio stands at 13 with a forward multiple of 20. Merck has a trailing P/E of 23 and a forward multiple of 12. Merck is much more attractively valued looking ahead.

Merck offers one more bonus. It's dividend yield of 3.7% narrowly beats the 3.5% yield of Lilly. All things considered, I think this grudge match goes to Merck.

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Money Terms to Know: Net Worth

Alamy April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face. Today's term: net worth. In a nutshell, net worth is what you get when you subtract liabilities from assets -- what you owe from what you own. Like many economic and financial terms, net worth can apply in a variety of situations. If you're evaluating a company for your portfolio,you might glance at its balance sheet to get a handle on its net worth. Balance sheets break out assets (such as cash, inventory, and receivables) and liabilities (such as debt and accounts payable). Subtracting the latter from the former gives you net worth, which is also referred to in this context as shareholders' equity or book value. Here's an example: As of the end of 2012, IBM's (IBM) assets totaled $119 billion, and its liabilities totaled $100 billion. Thus, its net worth, or shareholders' equity, was $19 billion. Net Worth in Our Lives Each of us has an individual net worth, too, and it's arrived at in similar fashion. First, grab a sheet of paper and list all your assets. These would include the contents of your bank accounts, your investments, the equity you have in your home, your retirement accounts, the current value of your car(s), the value of your jewelry, the contents of your wallet or purse, and so on. Be thorough -- your sizable board game collection might be worth several thousand dollars, for example. Next, list all your liabilities, or debts. These would include what you owe on your mortgage or car loan, your credit card debt, any school loans outstanding, and any other debt, such as a home equity loan. Finally, subtract the liabilities from the assets. What's left is your net worth. Ideally, your net worth is positive and will grow over time. If your net worth is in negative territory, that's not great, but by saving aggressively, paying down your debts, and being careful in your spending you can reverse the situation over time. How Does Your Net Worth Compare? For the record, a typical net worth for an American family these days is between $100,000 and $200,000. The aggregate net worth of Americans has risen recently and is finally back to pre-recession levels. But much of those gains have gone to wealthy Americans and can be traced to the stock market's recovery. Middle-class Americans have about two-thirds of their net worth represented by their home equity, and home values have not recovered as much as the stock market at this point. The Dow Jones Industrial Average has more than doubled since its bottom about four years ago, while the national average home price is still some 30 percent below its peak. Other Reasons You Should Know Your Net Worth Knowing your net worth has practical value beyond just highlighting what you own and what you owe. It can also give you an idea of how well you're doing at saving for retirement. (Don't let seemingly large sums fool you -- even a million dollars at retirement may not be enough for some people's needs.) Net worth also matters when we engage in estate planning, as our estate is essentially our net worth. Deciding how to organize and manage your assets to minimize taxes and make things easy for your loved ones depends to some degree on the size of your estate, or net worth. So go ahead and calculate your net worth and see where you stand. . More money terms: Asset allocation Compound interest Opportunity cost