Name that company

I was born in 1925, when the Ohio Farm Bureau Federation incorporated the Farm Bureau Mutual Automobile Insurance Co. Started thanks to a $10,000 loan, I featured a one-room office in downtown Columbus. Today, I’m one of the largest insurance and financial services companies in the world, with more than $148 billion in statutory assets. I deal in domestic property and casualty insurance, life insurance and retirement savings, asset management and strategic investments. I’m on your side, and one of my commercials features M.C. Hammer. I take in about $4 billion annually. Who am I?

Last week’s question and answer

I sprouted in 1927 in Augusta, Ga., as a hardwood lumber yard. Today I’m one of the world’s top makers and distributors of tissue, pulp, paper, packaging, building products and related chemicals. I employ more than 55,000 people at 300 facilities in the United States, Canada and 11 other nations. I take in about $20 billion annually, and my consumer brand names include Quilted Northern, Angel Soft, Brawny, Sparkle, Soft ‘n Gentle, Mardi Gras, So-Dri, Vanity Fair and Dixie. You’ll find many of my offerings at Home Depot and Lowe’s. Who am I? (Answer: Georgia-Pacific)

Avoid market timing

Watch financial TV and you’ll see various gurus engaging in market timing, predicting when the market will surge or crash and advising others to buy or sell “now.”

Unfortunately, they’re often wrong. No one can consistently and accurately know what the market will do in the short term. In the long term, though, the trend is clear: The market rises.

Market timing was studied by University of Michigan finance professor H. Nejat Seyhun for Towneley Capital Management. He noted that an investment held in the stock market from 1963 through 1993 (7,802 business days) would have yielded a solid average annual return of 11.83 percent. But get this: He found that if you were out of the market (i.e. not invested in it) for the 10 days when the market rose the most, your average annual return would be only 10.17 percent. If you sat out the 90 best days, you’d be down to a mere 3.28 percent.

Much of the market’s gains can occur on just a few days. So anyone who tries to time the market risks missing out on substantial profits. Some will argue that by being out of the market on the worst days, you’ll improve your returns – but no one can correctly predict when those worst days will occur, either.

You may be a market timer without even realizing it. For example, you may mean to hold onto a solid investment for the long run, but after a relatively short period of lackluster performance, you lose faith and sell, moving into another short-term holding.

To combat this tendency, take the time to learn more about how you’re investing and have more confidence in your plan.

Over the long run, it’s usually more hazardous to your wealth to be out of the stock market than to be in it. By hanging on, you’ll be in the market on days when it counts, able to ride out occasional downturns. A great strategy is to regularly invest in the market, whether it’s up or down, perhaps through an index fund.

Learn more at http://money central.msn.com/content/P18323.asp and www.indexfunds .com.

For whom the Baby Bell tolls

SBC Communications (NYSE: SBC) is reportedly considering changing its name to AT&T when it acquires the venerable telecom firm. But does AT&T stand for honored tradition or creaky obsolescence?

Clearly, the AT&T moniker – which originally stood for American Telephone & Telegraph Co. – is known worldwide. It’s been around for more than 100 years. Its name recognition may be the primary factor attracting SBC, whose name is recognized only in certain regions of the country.

On the other hand, AT&T comes with baggage from its century-plus tenure in American communications, featuring the old monopoly, its breakup, and the birth of the Baby Bells (including SBC).

Meanwhile, of course, the telecom industry has changed dramatically. Look at the success of Skype (www.skype .com), a service that hasn’t even been around two years and has already corralled 51 million registered users and 2 million paying customers.

Vonage (www.vonage.com), a voice-over-Internet-protocol upstart, came out of nowhere to threaten the telecom traditionalists, and cable providers such as Cox and Comcast also have stepped into the arena. Even Microsoft is interested in providing VoIP.

When you’re dealing with an industry facing so much dramatic and tumultuous change, a powerful old brand may not mean that much at all.

Falling insurance

In 1991, I inherited $10,000. I wanted to put it in a safe investment to go to my children. A “broker/friend” convinced me to invest it in a life insurance policy because of its tax benefits. Well, the insurance company has withdrawn sums every year from my policy to cover “premiums.” In 1996, my death benefit was $44,167. Today it’s just $35,336. Cash value: $9,180. – Evelyn Luddke, Tulsa, Okla.

The Fool Responds: Ouch. You might consider taking the cash value and moving the money into an investment more likely to grow than shrink. Life insurance’s most important role is protecting an essential income stream, such as that of a parent of young children. Many people just don’t need life insurance. If you’re looking for an investment – providing perhaps capital appreciation or income – you might want to consider stocks, bonds or even CDs. You can get the scoop on all kinds of insurance that you need and some you don’t need at www.fool. com/insurancecenter and www.iii.org.

Early bird

I’m a teenager. Where should I invest my money? – F.R., Mobile, Ala.

College money shouldn’t be in stocks, as the market could drop in the short term. Long-term investments patiently can ride out downturns, so consider keeping money you won’t need for five or 10 years in stocks. Short-term investors should stick to safer plays, like money market funds or CDs.

You’re smart to start young. Let’s say you’re 14, you invest $500 in a stock index fund, and it earns the market’s historical average annual rate of 10 percent. In 30 years, when you’re only 44, it’ll become $8,725. Sock it away until retirement at 65 and it’ll be nearly $65,000. Add to it over the years, and you’re looking at early retirement.

Teens can learn more at www.teenvestor.com, www. brasscu.com and www.Fool .com/teens, and in our book, “The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of,” by David and Tom Gardner with Selena Maranjian (Fireside, $14).

What’s a stock’s “float”? – E.P., Racine, Wis.

It refers to the portion of shares outstanding that are available to be traded by the public. It’s good to pay attention to this number with smaller companies, as stocks with small floats (referred to as “thinly traded”) can be extra volatile.

Consider Cheese Sciences Inc. (ticker: CURDS) as an example. If it has 50 million shares outstanding, but a proxy statement filed with the SEC reveals that the firm’s founder owns 49 million of them, that leaves a float of just 1 million shares. This means that any kind of demand will send the stock price soaring, as supply is so limited. And vice versa.