Archive for Sunday, November 27, 2005

The Motley Fool

November 27, 2005

Advertisement

Name that company

I'm the nation's largest turkey processor, founded in Minnesota in 1891. I debuted the world's first canned ham in 1926 and a year later had salesmen selling from "sausage trucks." The new Monty Python musical might remind you of the famous luncheon meat made of spiced ham that I introduced in 1937. My other brands include Dinty Moore, Homeland, Little Sizzlers, Old Smokehouse, Patak's, Rosa Grande and House of Tsang. In 1986, I bought Jennie-O, the premier turkey product maker. I rake in nearly $5 billion annually and recently paid my 309th consecutive quarterly dividend. Who am I?

Last week's question and answer

Think of luxury, and you should think of me. The brands I've amassed include wine and spirit names such as Dom Perignon, Hennessy, Château d'Yquem and Veuve Clicquot Ponsardin; fashion names such as Kenzo, Givenchy, Fendi, Donna Karan, Marc Jacobs and Berluti; perfume and cosmetic names such as Christian Dior, Guerlain, Loewe, BeneFit Cosmetics, Acqua di Parma and Fresh; and watch and jewelry names such as TAG Heuer and Chaumet. I'm based in Paris and have a partnership with diamond titan DeBeers. Some of my companies date back to the 1700s, and one to 1593. Who am I? (Answer: LVMH Moet Hennessy Louis Vuitton)

Give thanks

Thanksgiving season is here, and it's a good time to reflect on all we have. Even those of us of modest means are still exponentially better off than billions of others on this planet. (To become more hopeful about the state of the world, visit www.Foolanthropy.com and learn about some organizations doing amazing work.)

Take a little time to reflect on your financial condition. Don't think it's hopeless. You're probably not too young, too old, too poor, too risk-averse or too ignorant to invest in stocks. And as Motley Fool co-founders David and Tom Gardner pointed out in their book "You Have More Than You Think: The Foolish Guide to Personal Finance" (Fireside, $14), you might be overlooking some assets. For example:

¢ You have brains. Managing your finances takes brains, but you don't have to be a rocket scientist. The brothers explain how we often use things like credit cards and mutual funds without stopping to see how much they're charging us. A little education and comparison could save us thousands. Learn more at www.fool.com/ccc and www.fool.com/mutualfunds/mutualfunds.htm.

¢ You have time. Even if you're 60 years old, you may well have 20 to 30 years ahead of you, so don't write off investing. And if you're a teen, it's not too early. (Visit www.Fool.com/teens for some guidance and www.lavamind.com for some fun, educational financial games.) If you plunk $3,000 in an index fund that advances at the market's historical average of about 10 percent per year, in 25 years it will grow to $32,500.

¢ You have other people. You're not alone when grappling with financial decisions. The taboo against talking about money is silly. Strike up conversations with friends and family. Your uncle might be a savvy, experienced investor. Your mother-in-law might know a lot about buying homes. Perhaps a co-worker can recommend a terrific financial adviser. (Learn more about advisers at www.sec.gov/investor/brokers.htm.) Another nifty way to take advantage of several heads being better than one is to form an investment club.

ExxonMobil floats on

Another quarter is in the books, and energy behemoth ExxonMobil (NYSE: XOM) continues to generate - and share - copious amounts of cash flow. Much like rival BP (NYSE: BP), ExxonMobil continues to do right by its shareholders even though energy production levels aren't anything to crow about.

For the third quarter, the company saw revenue grow 32 percent to $101 billion. Leaving out some so-called "extraordinary" items, ExxonMobil saw net income rise 33 percent in the quarter and earnings per share grow by 38 percent.

Operating cash flow totaled $15.7 billion in the period, up by two-thirds from last year's figure. While the company continues to pour a lot of that money into exploration and other capital expenditures - to the tune of $4.4 billion this quarter - it also spent $6.8 billion on share repurchases and dividends.

With the big oil and gas players, production is something of an issue. Production was down 4.7 percent, much of that tied to hurricanes and divestments. The decline was offset by higher realized prices, with oil and natural gas climbing in price by more than 30 percent from last year on an average realized basis.

ExxonMobil is a strong cash producer as well as a good income-oriented idea.

Fiddling while stock burns

During the great tech-stock bubble, I bought 300 shares of Gene Logic at $6, an $1,800 investment. Some few months later it soared past $150 - a $45,000 jackpot for me. But I didn't sell. I held it as it fell and fell, selling half at $30 and the other half at $16.

Although I made a profit, I fiddled and hesitated while my treasure burned. - B.B., Flagstaff, Ariz.

The Fool Responds: Your error wasn't in failing to sell at the stock's peak. After all, exactly when a stock hits its peak is never clear except in hindsight. But when a stock surges, it's good to examine it closely, to see whether it has gotten ahead of itself and is trading at values well above its actual worth. That's what happened to the stock of many good companies during the heyday of the late 1990s and early 2000. At least you got out with a profit. Many others lost their shirts.

Historical prices

Where can I find historical prices of a stock? I want to learn how much it traded for on a particular day some years ago. - P.R., Ocala, Fla.

Sometimes the company itself can tell you. Try giving its investor relations department a call. Another good resource is your public library, where librarians should be able to help you look up the price in newspaper archives or elsewhere. If you're online, click over to http://quote.fool.com and type in the company's ticker symbol. Once you get its quote, click on the "Historical" link to access its price history.

I'm young, debt-free, with no children and no house. Do I need life insurance? - D.L., Denver

You might consider skipping it - for now. Think of insurance as protection against the consequences of a loss, not as an investment. (After all, there are more effective ways to invest.) If you had young children, you'd want to carry insurance to protect against income loss, should something happen to you. But if you don't need to protect any income stream, you might be better off parking your money elsewhere.

Still, take some time to read up on the topic more - at www.insweb.com/learningcenter and www.fool.com/insurance. One upside to buying life insurance while you're young is that it should be relatively inexpensive.

It's also worth looking into disability insurance, which provides an income if you become disabled. We often worry about and plan for death, but give little thought to the possibility of an extended period of disability.

According to some reports, nearly half of all mortgage foreclosures are due to disability. Disability insurance can seem expensive, but that's largely because there's a high chance you'll use it.

Comments

Use the comment form below to begin a discussion about this content.

Commenting has been disabled for this item.