Entries for August 2008

Blogger Tom Konrad, who writes about renewable energy, shares his strategies on how to profit from T. Boone Pickens's plan for reducing the nation's dependence on foreign oil, which includes building wind farms and transmission lines connecting these sites to power plants, as well as redirecting natural gas to replace imported gasoline and diesel. Here are Konrad's suggestions for profiting from the plan:

1. Invest in wind farms, including the makers of wind turbines and other wind-related stocks. These green investments include the source of Pickens's turbines, GE (symbol GE), Zoltek (ZOLT), which makes carbon fiber used in turbine blades, and two wind exchange-traded funds (First Trust ISE Global Wind Energy and PowerShares Global Wind Energy; tickers FAN and PWND, respectively).

How much money does it take to be rich? Not surprisingly, definitions are all over the board. According to this Houston Chronicle story:

In a January telephone survey of 253 people with at least $500,000, 45 percent said it takes at least $5 million to qualify as rich. Another 25 percent said $25 million, and 8 percent picked $100 million, according to the Spectrem Group, a consulting firm that specializes on research about wealth.

More analysts are missing the mark these days, according to Bloomberg: Their accuracy in predicting U.S. profits dropped to the lowest level in at least 16 years last quarter. Earnings estimates from analysts have matched results for only 6.7 percent of companies in the S&P 500 that have reported second-quarter earnings—the fewest since Bloomberg began tracking this information in 1992, the report said.

Accuracy peaked at 30 percent in the fourth quarter of 2000, the year Regulation Fair Disclosure, known as Reg FD, was adopted, and has fallen for six of the seven years since.

More closures in the ETF industry: Earlier this month, PowerShares shuttered plans for six ETFs in registration, and now XShares is axing 15 of its HealthShares offerings. (The firm is leaving four open, and says it's redesigning the closing funds.) XShares told the Wall Street Journal that the ETFs didn't "resonate" with investors, and that it plans to roll out new HealthShares—including an Asian Health ETF—in the coming months.

The highly specialized funds on the chopping block include HealthShares Metabolic-Endocrine Disorders, HealthShares Orthopedic Repair, and HealthShares Dermatology & Wound Care.

Struggling investment bank Merrill Lynch (MER) is examining its contract with United Artists—Tom Cruise's production company—to determine whether it can revise the deal on better terms, reports the New York Post . Last year, United Artists secured $500 million in financing from Merrill to fund 15 to 18 movies over the next five years. The firm "is looking for any event that might trigger a default on the loan and open the door to renegotiations," according to the Post . (A potential loophole is the recent departure of United Artists' co-owner and CEO Paula Wagner.) To guard against any Merrill moves, United Artists has hired Goldman Sachs (GS) as a strategic adviser, the paper said.

This week, 20-something blogger Broke Grad Student published the 167th edition of the Carnival of Personal Finance, which highlights last week's top blog posts on topics ranging from budgeting to investing (including my post on 5 Ways to Track Your Stocks). My favorites are Everyday Finance's pick for the best mutual fund of 2008 (it's the Fairholme fund, which we've also written about), and the Beginner's Guide to Saving for Retirement, by My Retirement Blog.

Not only are snack makers scrimping on ingredients these days, they're also reviving left-for-dead brands in their product lines. Why? When the going gets tough, it's apparently more cost-efficient to resurrect an old brand than to develop a new product, reports the New York Times.

Last week, Kellogg reintroduced Hydrox cookies, Oreo-like knockoffs that were discontinued in 2003. (During the second quarter, the maker of Pop-Tarts and Keebler cookies managed to grow its North American snack sales by 6 percent.)

Eagle Snacks, the brand sold off by Anheuser-Busch and subsequently acquired by River West Brands, are also back. Another strategy companies use in a slumping economy includes launching new products associated with well-known brands. (The Times cites Alka-Seltzer Wake-Up Call, a hangover-relief tablet, as an example.)

So, how did these products become "ghost brands" in the first place? A number of factors could be responsible, says the Times: declining sales, stronger competitors, advertising budget cuts, or a company's desire to focus on newer brands.