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NEWS MONEY SPORTS A great summer for a road trip LIFE AUTOS TRAVEL
L awrence J ournal -W orld - USA TODAY SATURDAY, MAY 16, 2015
MONEYLINE FIRST WORDS
This is a sad day for all of us at Blue Bell, and for me personally.” — Blue Bell Creameries CEO Paul Kruse on Friday. The company will lay off 1,450 of its 3,900 workers and reduce hours and pay for another 1,400 in the wake of its voluntary recall last month of all of its ice cream after finding listeria in some. Ten illnesses in four states, including three deaths in Kansas, are linked to the ice cream. CARL ICAHN INVESTS $100M IN UBER RIVAL LYFT Ride-hailing service Lyft announced a new wave of funding worth $150 million, including $100 million from BLOOMBERG billionaire investor Carl Icahn. One of Icahn’s managing directors, Jonathan Christodoro, will join Lyft’s board of directors as part of the investment, Lyft said in a statement Friday. “Ridesharing is poised to become a fundamental component of our transportation infrastructure,” Icahn said. In an interview with ‘The Wall Street Journal,’ Icahn called Lyft a “tremendous bargain” compared to the skyrocketing valuation for rival Uber.
Travel season’s gas prices could be lowest in 6 years
TOP 10 LARGEST YEARLY SAVINGS IN GAS PRICES States with the largest price drop (on average) for a gallon of regular unleaded gas from a year ago:
Chris Woodyard USA TODAY
Even though prices have climbed lately, gasoline will likely be the cheapest in at least six years this summer, experts predict. With prices about a buck cheaper a gallon than last year, drivers will be packing up their cars for trips that they may have been putting off. “This is the cheapest driving season since the summer of 2009,” says Tom Kloza, global head of energy analysis for the Oil Price Information Service. And, he notes, 2009 was a recessionary year when fewer consumers were in the mood or could afford to travel. John Waggoner
jwaggoner@usatoday.com USA TODAY
I’ve always avoided writing in the first person, in part because I first started this column in the late Cretaceous period. Back then, business writers used a tone that sounded like Thurston Howell III telling Gilligan never to dip into principal. It seemed pompous. And, while I know it’s trendy to share, I could never understand why anyone seeking information about personal finance would want to know about my fondness WARNER BROS. for lemurs. I’m basically a shy FAO SCHWARZ FLAGSHIP woodland creature. STORE TO CLOSE But today I wanted to tell you a FAO Schwarz, the Midtown Manstory about my biggest investhattan toy store with the giant ment mistake, and the lessons toy piano made famous in the that can be gleaned from it — as 1988 hit movie ‘Big,’ will close in July because of rising rents. Toys well as one of the best investments I’ve made. R Us, owner of the store, said it Here’s the story. After techhopes to open a new FAO nology stocks peaked in Schwarz flagship late next year. March 2000, I watched Meantime, a line of FAO with morbid fascination as Schwarz brand toys will be sold the Nasdaq 100 ETF, in Toys R Us stores and online. which trades under the ticker QQQ, plunged like a Sumo wrestler from a NUMBER OF THE DAY: high dive. Technically, QQQ is an exchangetraded index fund that tracks the 100 largest Netflix closing price on Friday, non-financial stocks on making it one of only five stocks the Nasdaq stock exon the S&P 500 with a share change. But basically, it’s price of $600 or more. The otha big basket of tech stocks. ers: Berkshire Hathaway, PriceTechnology had gotten line, Autozone and Chipotle. crushed since the Nasdaq DOW JONES INDUSTRIAL AVG. peaked on March 9, 2000 — and rightfully so, given the epic 18,350 size of the bubble. But when 4:00 p.m. QQQ caught my eye, the three 18,273 18,300 largest components were Microsoft, down 42% at the time, Intel, 18,250 down 56%, and Cisco, down 79%. These were not dot-com losers 18,200 9:30 a.m. like Pets.com, I reasoned. They 20.32 18,252 18,150 are all real companies, and should eventually recover. 18,100 I had some money that I wasn’t saving for a new kidney, so I FRIDAY MARKETS bought 100 shares. What the INDEX CLOSE CHANGE heck, I figured. What’s the worst Nasdaq composite 5048.29 y 2.50 thing that could happen? Standard & Poor’s 500 2122.73 x 1.63 I made that purchase on Sept. Treasury note, 10-year 2.15% y 0.08 10, 2001. yield Oil, light sweet crude, $59.92 x 0.20 In the vast scheme of the terribarrel ble things that happened on Sept. Euro (dollars per euro) $1.1461 x 0.0062 11, 2001, my 100 shares of QQQ is 119.29 x 0.07 Yen per dollar nothing. Nevertheless, I was SOURCES USA TODAY RESEARCH, MARKETWATCH.COM swiftly reminded of the first rule of investing: Things can always USA SNAPSHOTS© get worse. You can’t have rewards without risk. Summer job Rather than roaring back in an in-your-face display of American characteristics might, the stock market swooned What employers look when it reopened after the atfor in a summer employee: tacks. I had purchased the shares for $34.10. By Sept. 28, I was sitting on a 22% loss. This Positive attitude brings us a corollary of the first 40% rule: Just because a stock has fallen a great deal doesn’t mean it Previous experience can’t fall a great deal more. But these are trading rules 23% more than investing rules. If Commitment to work you’re trying to find value, it’s not for the entire summer enough to buy low. You want to 19% find stocks that are cheap relative Ability to work daily to earnings, if not other value schedule I need measures. Microsoft, while down 18% enormously since its peak, was still selling for about 43 times Source Snagajob Summer Hiring Survey of 1,000 hourly employee-hiring managers earnings in 2001. Intel was 33 JAE YANG AND PAUL TRAP, USA TODAY times earnings. High, but growth INVESTING
LUKE SHARRETT, BLOOMBERG
Gas could average $2.43 a gallon.
State 1. Ohio 2. Michigan 3. Kentucky 4. Hawaii 5. N. Carolina 6. Washington, D.C. 7. Connecticut 8. Indiana 9. W. Virginia 10. S. Carolina
2014 price $3.72 $3.70 $3.69 $4.38 $3.64 $3.87 $3.94 $3.72 $3.74 $3.48
2015 price Savings $2.49 $1.23 $2.52 $1.18 $2.54 $1.15 $3.23 $1.15 $2.50 $1.14 $2.74 $1.13 $2.82 $1.12 $2.60 $1.12 $2.63 $1.11 $2.37 $1.11
NOTE PRICES ARE AS OF MAY 11 SOURCE AAA (FUELGAUGEREPORT.AAA.COM)
The country’s national average gas price leaped 20 cents in a month to $2.69 a gallon this week for regular due to higher crude oil prices and West Coast refinery
outages, the Energy Department reports. For 2015, the department now predicts gas will average $2.43 a gallon, down 93 cents from last year. Next year, it pre-
My worst buy — and a goodbye As I head out the door of USA TODAY, one last bit of advice
$613.25
JOSE MANUEL RIBEIRO, AFP/GETTY IMAGES
is always expensive, I reasoned. Which brings us to another rule: Nothing’s eternal on Wall Street. Growth investing ruled from 1982 through 2000. But bargain-hunting came back into vogue after the tech wreck. No one wanted a stock with a P-E over 15 after 2000. In the wake of the meltdown, tech stocks got even more expensive because earnings slumped. Not only was the economy slowing, but many companies had
H. DARR BEISER, USA TODAY
1994: Freshfaced reporter.
shot their tech budget in 2000, preparing for a world that did not end because of the Y2K bug. And companies were in no mood to spend on IT in the middle of an epic bear market. I held on, assuming that sooner or later, a rising economy would lift the stricken tech sector. And I was absolutely, completely right. But it happened in 2006. QQQ stayed in the $20 range for most of 2002 and 2003, finally passing my purchase price in
LESLIE SMITH, USA TODAY
1996-ish: The good old days.
H. DARR BEISER, USA TODAY
2008: A little older and wiser.
This is my last column for USA TODAY. My company has offered a generous buyout package for those of us who started writing when dinosaurs roamed the Earth, and I’ve taken it. But I haven’t retired and will be writing elsewhere. Google “John Waggoner” and you’ll find me, along with references to lemurs and Venusian Brain Garglers. And investing. You can always reach me at johnmwaggoner@gmail.com. And thank you.
dicts, won’t be so bad either: an average $2.69 a gallon. The average household will spend $675 less for gas this year than last year, the department said this week. As a result, look for more travel. AAA predicts the Memorial Day weekend alone will see a 5.3% gain in car travel compared with the same three days last year. Gas prices likely won’t change much in the next couple of weeks until the holiday, it says. The wild card when it comes to gas prices will continue to be California, which operates almost as a separate gasoline market from the rest of the country when it come to volatility. After summer, look for bigger price drops. Barring hurricanes, which can temporarily drive prices through the roof if Gulf Coast refineries shut down, many stations around the country will be back to $2-a-gallon gas, Kloza says. 2004 and breaking $40, briefly, in January 2006. I finally threw in the towel at about $40 in 2006. All of this brings us to three more observations: uThere’s a point at which “being early” becomes “being wrong.” Many of the technology predictions of the tech bubble came true: The Internet was, in fact, an enormous game-changer. It’s just that these things happened much later than people thought, and investors paid too much for the wrong companies. All those people who have been predicting rampant inflation the past decade? They’re not early. They’re wrong. uHope is not a great investment strategy. Even if Microsoft and Intel were old tech, I hoped that American technological superiority would eventually produce a winner. It did, in the form of Google and other new tech giants. But it took far longer than many thought. uBuy-and-hold in volatile areas like technology or emerging markets is a lot easier in theory than in practice. One money manager told me, long after my QQQ debacle, that there are very few long-term technology investments. Most are trades, because technology becomes obsolete so quickly. Digital Equipment gives way to Lucent, which gives way to Google. And if you have other things to do in your life — like being a daily reporter — you probably don’t have the time or attention span to monitor trades. In the past three years, of course, QQQ has rocketed, with some justification. Americans really are good at technology. But QQQ’s good years don’t entirely make up for the many dead years. On an annualized basis, QQQ has gained about 9.6% since Sept. 10, 2001. The Standard and Poor’s 500 index has gained 16.4%. I would have been better off in a broad S&P 500 index fund the whole time. There’s value in making the occasional speculative investment, provided you don’t need the money for a new iron lung. And, of course, you have to take those lessons to heart — especially the ones you learn from your mistakes. Anyone can make a good investment and think he’s a genius. But it’s the bad ones that teach you the most, if you’re open to learning. The best investments for most people are widely diversified, lowcost funds that you throw money into on a regular basis. As long as you resist the urge to time the market, and as long as you have enough time in the market, everything should be fine. Which brings me to one of my best investments: working as a columnist and reporter at USA TODAY for a quarter of a century. My long-suffering editors have let me make bad jokes and write far too much about bonds. And I’ve worked with some wonderful friends, who are also some of the best writers in the business. My real pleasure, though, has been writing for USA TODAY’s readers, a tough and sophisticated audience, but also a kind and appreciative one. It has been an honor.