What Bankrupt Athletes Wish They Knew About Financial Windfalls
Few among us haven't dreamed of sudden riches - the financial windfall of a big legal settlement, an unexpected inheritance, a winning lottery ticket, or, for the young and athletically gifted, a lucrative contract with a major professional sports franchise.
But it turns out that few are prepared for a financial windfall when it comes their way.
Nowhere is this more obvious than with big sports stars.
Despite the proliferation of multimillion-dollar contracts, an astonishing number of professional athletes are forced to declare bankruptcy within a few years of hanging up their jerseys.
In the National Football League, for example, where the average salary is $1.9 million, 78% of former players are in bankruptcy within five years of retirement. That figure is 60% for former National Basketball Association players, who earn an average of $5.5 million a year as players.
How can people so generously compensated go broke so quickly?
Part of it has to do with youth, but many of the mistakes athletes make with the financial windfall of a professional sports salary also are made by regular people who suddenly come into large sums of money.
There's a lot we all can learn from their mistakes. When it comes to financial windfalls, it's best to know what to expect ahead of time so you can put the money to work for you instead of squandering it.
"Every single day, people come into large sums of money, whether it's a thousand dollars or a million, and without proper planning, funds quickly disappear," writes Jim Wang in U.S. News and World Report. "Just look at the horrible stories you often hear of lottery winners, and you'll have enough evidence that everyone needs a little preparation, even if you don't expect to get a windfall."Read More...
Stock Market Today: With Dow at Record High, Will the Climb Last?
The Dow Jones Industrial Average was at a record high after nearly six years, as the stock market today (Tuesday) rallied enough to push the index up nearly 70 points at the open.
Just minutes after the opening bell, the Dow sailed passed its all-time high of 14,165 hit on Oct. 9, 2007. Less than a half-hour into the trading session the Dow roared higher by triple digits propelling benchmark to yet another record.
By 1 p.m. the Dow was up 146.99, or 1.04%, at 14,274.81. The Standard & Poor's 500 Index added 17.32 or 1.14%, to 1,542.52, leaving it in striking distance if its record close of 1,565 hit in 2007. The Nasdaq climbed 43.39 or 1.37% to 3,225.42.
Money has poured into stocks over the last several months as individuals have begun to feel more comfortable about the health of the economy - but can it last?
"The question is, can the Dow maintain these levels? The market is interested in risk-that's why the Dow is higher, why the riskier currencies are higher," Matthew Lifson, currency trader at Cambridge Mercantile Group in Princeton told Reuters.Read More...
- Does the Heinz Deal Mean Warren Buffett Has Become a Doomsday Prepper? At $28 billion, the famed ketchup maker is valued at a rich 23x earnings. And Buffett won't even control management. Given Warren's long and storied history of value investing and a hands-on style, this purchase is bizarre. Unless... Read More...
- Will the Year of the Snake Bring Another Stock Market Crash? The Chinese New Year officially began Feb. 10, starting what some investors consider a very bad zodiac year. Not only does the year of the snake havethe worst stock market returns, but some of the darkest moments in U.S. history. Take a look. Read More...
As Insiders Head For the Exits, Do They Know Something "We" Don't Know?
According to the latest Vickers Weekly Insider Report, in the past week, there have been nine insider sales for every one buyer among NYSE stocks.
The last time insiders sold this aggressively was in early 2012 - right before the S&P 500 took a 10% header.
Does that mean there’s a correction in the works?
There are all kinds of legitimate reasons insiders sell their shares. But what concerns me is that insiders, particularly when you're talking about senior management types, typically know a lot more than the average investor. Further, they tend to have a consistent view of very specific longer term market conditions and, more importantly, its earnings potential.
Here’s what insiders know that you probably don’t… Read More...
Stock Market Today: Will the Dow Keep Going Above 14,000?
The stock market today (Friday) hit a high not seen in more than five years when the Dow Jones Industrial Average crossed 14,000 for the first time since October 2007.
Less than an hour into trading the Dow spiked 140 points, or 1%, to hit 14,000.97. In mid-afternoon trading, the Dow rallied further, tacking on 150 points. The move leaves the Dow around 200 points, or 2%, from its all-time high of 14,198.10.
Friday's strong showing came on the heels of the Dow's strongest January (up 5.8%) since 1994.
The Standard & Poor's 500 Index, which logged its best January since 1997, added 15 points, or just shy of 1%. The Nasdaq advanced 40.
The robust rally followed a lackluster report on the job market which gave "strength to the argument that the Fed will continue its bond buying program and keep rates low, which is also a positive for the stock market," Tom Schrader, managing director at Stifel Nicolaus told CNN Money.
That sentiment also gave bonds and precious metals a boost. Gold prices moved up $7 to $1,670. Silver added 37 cents to $31.94
A bevy of reports helped buoy markets Friday.
A Census Bureau report showed construction rose 0.9% in December, well above forecasts. The Institute for Supply Management's monthly manufacturing index rose to 53.1 in January, ahead of the expected 50.5 read, and the University of Michigan's sentiment index climbed to 73.8 last month, better than the expected 71.4.Read More...
Is the Obama Stock Market Rally the Real Deal?
At first glance, there can be no doubt that U.S. President Barack Obama has been good for the stock market.
The Standard & Poor's 500 Index has rallied by nearly 700 points - just shy of 86% - since the president's first Inauguration on Jan. 20, 2009.
This is the best stock market performance for a presidential first term since World War II, even beating the 79.2% rally during President Bill Clinton's first term in the White House, from January 1993 to January 1997.
In fact, the only time stocks rallied more during a presidential first term was during Franklin Roosevelt's first term from March 4, 1933, to Jan. 20, 1937, when the Dow Jones Industrial Average rose 245% off of Depression-era lows.
In a very broad sense, the condition of the stock market at the start of President Obama's first term in 2009 can be compared to the stock market in 1933. In both cases, stock prices had collapsed and were trading at generational lows when both presidents took office. In both cases, share prices rallied substantially off of the bottom as economic conditions improved.
But all this really proves is that the first leg of any rally is usually the strongest and most profitable.
As the S&P 500 is at a five-year high and is zeroing in on the 1,500 level for the third time in its history, one has to wonder if the Obama Rally is sustainable or are we just reverting to the mean?Read More...
Stock Market Today: Builders, Banks, Boeing in Focus
The stock market today rose right out of the gate Thursday on improved economic data, with the Dow Jones Industrial Average up 70 points just before noon, and the Standard & Poor's 500 Index up 7.
Giving equities a lift was a pair of reports that showed the U.S. economy continues on the path to recovery.
The Department of Commerce reported Thursday morning that construction for new U.S. homes leapt in December to the highest rate in more than four years. Gains were logged all across the nation, as well as in buildings and single family homes.
The 12.1% jump in housing starts in December was the best reading since June 2008.
"Overall, this report reinforces the current narrative of a positive growth momentum in the housing sector," Millan Mulraine, a macro strategist at TD Securities told Market Watch.
A measure of homebuilders on the S&P 500 jumped 2.1%, poised for the highest closing level since 2007.
The second report that juiced markets was data from the Labor Department. A report revealed the number of Americans filing first-time claims for unemployment benefits fell more than expected in the latest week to the lowest level in five years.
In the week ending Jan. 12, applications for jobless benefits fell by 37,000 to 335,000, marking the lowest level since Jan. 19, 2008, and well below estimates of 369,000.
"The labor market is certainly getting better," Brian Jones, senior U.S. economist at Societe General in New York, told Bloomberg News.
Even with typical seasonal adjustment, Jones added, "this is still a good report. Chances are claims remain at a fairly low level."Read More...
Stock Market Today: Can S&P Nudge Closer to its All-Time High?
The stock market today (Friday) will try to continue its impressive rally after the Standard & Poor's 500 Index closed at a five-year high Thursday.
The S&P 500 closed at 1,472.12, about 93 points away from its all-time high of 1,565 hit in October 2007 and its highest close since December of that year.
By 1 p.m., the S&P 500 was down just over 2 points, and the Dow was up 4 points, or 0.04%.
While the stock market today fights for a continued climb, here are companies investors should be eyeing.Read More...
Is Harry Dent's Stock Market Crash Prediction as Crazy as it Seems?
Economic forecaster Harry Dent just made another dire prediction, and investors should hope he's wrong.
Dent, bestselling author and financial newsletter writer, told CNBC Tuesday that he sees a stock market crash in the United States starting in the third quarter of 2013 and continuing for a year and a half.
Dent said real estate prices and stocks would plummet more than 60% by the end of 2014, or sooner, meaning the Dow Jones Industrial Average would fall below 6,000. He also said the United States would be close to bankruptcy by then.
Dent cited U.S. demographic shifts and the nation's debt crisis as the main drivers of a crash. He said had it not been for the U.S. Federal Reserve's recent moves to stimulate the economy, the stock market would already have collapsed.
"We call this the economy in a coma," he said. "Basically, without these trillions of dollars of stimulus, we would be in a downturn, in a depression, because we also have $42 trillion in private debt, the greatest debt bubble in history, and that needs to unwind."
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Five Stock Market Charts Bears Have Been Waiting For
As the bull market tries to enter its fifth year, many are wondering if it still has legs - but a handful of stock market charts warn there's high risk of a coming sell off.
In fact, a recent report from Credit Suisse Group AG (NYSE ADR: CS) outlined 10 technical factors that show the market is at its most risk-on level since just before the stock market crash that began in 2007's third quarter.
"Many of our tactical indicators point to a consolidation phase in the equity markets, in the near-term," Credit Suisse Global Equity Strategist Andrew Garthwaite said in a note to clients.
For a closer look at this bearish forecast, check out these five stock market charts pointing to a pullback.
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Nine Lessons From The Greatest Trader Who Ever Lived
The stock market has certainly produced its share of heroes and villains over the years. And while villains have been many, the heroes have been few.
One of the good guys (for me, at least) has always been Jesse L. Livermore. He's considered by many of today's top Wall Street traders to be the greatest trader who ever lived.
Leaving home at age 14 with no more than five bucks in his pocket, Livermore went on to earn millions on Wall Street back in the days when they still literally read the tape.
Long or short, it didn't matter to Jesse.
Instead, he was happy to take whatever the markets gave him because he knew what every good trader knows: Markets never go straight up or straight down.
In one of Livermore's more famous moves, he made a massive fortune betting against the markets in 1929, earning $100 million in short-selling profits during the crash. In today's dollars, that would be a cool $12.6 billion.
That's part of the reason why an earlier biography of his life, entitled Reminiscences of a Stock Operator, has been a must-read for experienced traders and beginners alike.
A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.
Here are just a few of his market beating lessons:
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The Best and Worst Stocks of 2012
As we prepare to invest in the New Year, we can learn from the five best and worst performing stocks of 2012 in the Standard & Poor's 500 Index.
While any investor would have loved to know this list a year ago, it's a good guide for 2013. Several of the factors that drove these share prices up and down in 2012 haven't changed.
The best stocks were led by signs of a recovery in housing, a slight return of consumer confidence, and the U.S. Federal Reserve's unprecedented monetary easing measures.
"The sector leaders are what one would expect with the [Fed] policy and with continued monetary injections into the economy this year through bond purchases," Peter Jankovskis, co-chief investment officer at Oakbrook Investments LLC, told The Wall Street Journal. "By pumping money into the economy the Fed boosts consumer confidence-and spending-which one would expect to boost consumer and financial shares."
While the leaders' success was tied to central bank actions, the biggest losers simply stumbled from their lack of innovation, inept management, and failed business models.
Best Stocks of 2012Here are the best performing stocks in the S&P 500 for 2012:
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Three Stocks to Buy in Next Year's Most Promising Sectors
Whatever 2013 brings for the markets, there will be plenty of quality stocks to buy - if you know where to look.
Overall, the markets are expected to have another positive year.
A survey of 10 top financial strategists by Barron's projects the Standard & Poor's 500 will close at 1,562 in 2013, a 10% gain from current levels. (By the way, last year's picks outpaced the broader index by 6%.)
That would follow modest gains in 2012 of 13.5% for the S&P 500 and 8% for the Dow Jones Industrial Average.
For next year, Wall Street's top guns predict certain sectors of the market - technology, industrials, and energy - will lead the charge higher. Companies in more defensive sectors like consumer staples, telecoms, and utilities, will be laggards.
So let's take a closer look at three stocks to buy from among these favored sectors that should be an excellent place for your money in 2013.
Stocks to Buy in 2013: Cheap TechTech stocks are hugely profitable and as a group currently carry a forward P/E ratio of about 11.
That's cheap versus historical levels.
Tech is also a bellwether for when companies start to invest capital.
"When we get an upturn in capital expenditures, it will show up in tech first," Barclays' Barry Knapp told Barron's.
One stock to buy that has a rock solid balance sheet and a mountain of cash is Cisco Systems Inc. (Nasdaq: CSCO).
Once the world's most valuable company with a market cap of $500 billion, Cisco's shares sank sharply when the tech bubble burst in 2000.
And the stock is still dirt cheap, trading around $20 a share, roughly 10 times next year's earnings. Plus, the company is sitting on more than $48 billion in cash, worth about $9 a share.
With a dominant market share of 60%, CSCO is the de facto choice in the switching market.
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ICE-NYSE Deal Signals Major Change in Future of Trading
Intercontinental Exchange (NYSE: ICE) announced Thursday it will acquire NYSE Euronext (NYSE: NYX) for $8.2 billion in cash and shares. What does it mean?
Keith Fitz-Gerald weighed in. Read More...