Why Starbucks is paying for college

  Starbucks paying for college? Really. NEW YORK (CNNMoney) Will a barista with a college degree want to remain a barista?

That's one question Starbucks (SBUX) will encounter as it begins offering employees free tuition for two years of online classes at Arizona State University. About 70% of Starbucks' 135,000 U.S. employees have not completed undergraduate degrees, and most are eligible for the program, the company said.

Employees aren't required to stay with the company after receiving their degrees, but CEO Howard Schultz isn't concerned about a mass exodus.

"This is an investment in our people, the most valuable asset that Starbucks has," he told CNNMoney's Poppy Harlow. "It's not the coffee, it's not the real estate, it's human capital and the person that wears the green apron."

Will graduates move on?

When employees who graduate take off their caps and gowns, it's entirely possible they'll also hang up those green aprons.

But Nick Setyan, an analyst who follows the industry, expects "there's going to be more than enough options" for those employees at the Starbucks of the future.

"They're consistently evolving in terms of what the stores are. I look at Starbucks as a consumer products company, not necessarily a coffee retailer," said Setyan, who is vice president of equity research at Wedbush Securities. The approximately $30,000 cost of two years of tuition is worth it to keep quality employees with the company, he said.

That's Schultz's vision, too. He said Starbucks has "never just been a coffee company," and to achieve the expected level of customer service, it needs bright workers who are there for the long term.

And even if they do leave, he added, Starbucks will be comfortable! that it contributed something to the U.S. economy.

What technology offers

While Starbucks is known for the coffee, its business model requires far more than beans, cups and a percolator.

Setyan points out Starbucks employees have opportunities beyond retail, such as managing the supply chain and marketing.

  Text, call or email for your latte

Starbucks has also stood out in the embrace of technology, such as its mobile payment app.

"There certainly has been a seismic change in consumer behavior and as a result of that every consumer brand has had to embrace technology," said Schultz. "I think our people who are going to graduate are going to find themselves with greater opportunities than just working in our stores as a result of the expansiveness of the company and the fact that as a company, our sights are set on a very high bar in terms of the future."

NeuroDerm Soars on Study Results

When a small drug maker doubles in value after posting clinical trial results, it's worth taking a quick look.

NeuroDerm (NDRM) nearly doubled in value today, rising to $12.25 a share after more than 15 million shares changed hands, after the company reported positive results in a small trial for a treatment for Parkinson's disease.

As MarketWatch reports:

…the company announced promising results from a trial of a treatment for Parkison’s disease. The Israeli company said continuous, subcutaneous delivery of two liquid product candidates had a positive effect on plasma levels, suggesting the high dose version that is aimed at severe sufferers of the disease may be an effective alternative to current treatments that require surgery. The higher dose candidate, known as ND0612H, “is designed to be delivered continuously, thus we believe it should offer a simple and effective treatment option that will minimize the need for surgical intervention in advanced Parkinson’s patients,” Sheila Oren, vice president of clinical and regulatory affairs at the company, said in a statement.

As Scott Henry, an analysts at Roth Capital Partners, writes:

The data confirms our positive hypothesis. We are a bit surprised in the magnitude of the stock price reaction based on the already available interim analysis. However, we maintain our bullish outlook with a price target of $17.50/share.

NeuroDerm went public in mid-November and as of yesterday's closing bell, the stock had fallen 32%.

Not Ready To File Your Taxes? Don't Stress Out, File For Extension

With ten days left until Tax Day, taxpayers are already in a panic, compounded by crazy headlines screaming about "last minute" filers and procrastinators. You can tell the folks who write headlines don't generally work with actual taxpayers: if they did, they'd understand that there's a good week or so to go before it's "last minute." For now, it's simply called tax season.

That said, if you are looking at the calendar and like me, you don't anticipate being any closer to filing on time in ten days than you are today, don't panic. You can join the nearly 10 million taxpayers who are expected to file for an automatic extension this year.

Filing for an extension isn't terrible. And don't buy the hype: it isn't an audit trigger. The IRS understands that there are a number of legitimate reasons why taxpayers may need more time to file. One of the most common reasons for filing an extension is owning or participating in a business. Depending on the nature of your entity, tax returns for the business may not even be prepared until March or April. In particular, if the business is a pass-through entity, that could make it tight to account for the Schedules K-1 from a business return on your personal income tax return by April 15.

There may be other reasons: you could be a beneficiary of a trust or estate or a shareholder or partner in a pass through entity which means that Schedules K-1 might not have arrived in your mailbox yet. You might not have received your other tax forms on time. You might still be waiting for a 1099-R. You might be funding an IRA (you have until April 15) and need to include that information on your form 1040.

Elgin pocketwatch (Photo credit: Wikipedia)

Whatever your reason for not being ready to file is yours. You don't need to tell anyone why you're filing for extension – even the IRS – since the extension is granted automatically if you follow the rules.

And again, it doesn't increase your risk of audit or examination. It's always better to file a complete, correct return on extension than a rushed, flawed return by April 15.

You have a lot of options for requesting an extension, ranging from doing it yourself to having someone do it for you. To file for an extension, you can:

Lennar Corporation Q1 Earnings Rise; Beats Estimates; Shares Up (LEN)

Shares of Lennar Corporation (LEN) were up on Thursday morning after the company reported increased earnings that beat estimates.

LEN’s Earnings in Brief

LEN posted Q1 earnings of $78.1 million, or 35 cents per share, up from 57.5 million, or 26 cents per share, last year. The most recent quarter included a tax provision of $45.9 million. Revenue jumped to $1.4 billion from $990.24 million last year. On average, analysts estimated earnings of 28 cents per share and $1.28 billion in revenue. LEN reported that its  new orders during the quarter rose 10%, while deliveries increased 13%.

CEO Commentary

Lennar’s CEO Stuart Millar commented:  ”Despite harsh weather conditions that impacted sales and construction during the quarter in some of our markets, we were able to achieve healthy year over year increases in both new orders and deliveries. Additionally, an 18% increase in average sales price and continued momentum from our land acquisition strategy drove gross and operating margin increases by over 300 basis points to 25.1% and 13.2%, respectively, the highest first quarter gross and operating margin in the Company’s history.”

LEN’s Dividend

LEN paid its last dividend of 4 cents on February 13. We expect the home builder to declare its next dividend in April.

See Also: The History of Home Builder Dividends

Stock Performance 

Lennar Corporation shares were up 86 cents, or 2.08%, during pre-market trading Thursday. The stock is up 4.5% YTD.

Thursday Analyst Moves: Bank of America Corp, Analog Devices, Inc., Duke Energy Corp, More (BAC, ADI, DUK, More)

On Thursday before the closing bell, analysts marked 2014′s first day of trading by upgrading and downgrading some big name dividend paying companies. Below, we look at all of the information that is relevant for dividend investors.

Analog Devices Downgraded at Wells Fargo and Goldman Sachs

Wells Fargo Goldman Sachs downgraded Analog Devices (ADI) to “Market Perform” from “Outperform” based on a valuation call. Goldman Sachs downgraded ADI to “Sell” due to ADI falling behind its peers when it comes to growth, while still carrying a high va

Avoid These 4 Common Investing Mistakes

It's been a great year for investors who stayed in the market, and stayed disciplined. The S&P 500 is up more than 25% on the year, and the Dow Jones Industrial Average has gained 21%.

But making money isn't just about finding stocks/investments that will increase in price. It also involves avoiding the common investing mistakes that prevent retail investors from enjoying record-high markets.

To make sure you aren't making any of those money-losing mistakes, here's a list of the four worst investing strategies we see happening today.

Four Common Investing Mistakes Made Today

Investing Mistake #1: Not Investing at All: The financial crisis has caused millions of Americans to lose confidence in the markets. Today, only 50% of middle-class Americans own stocks or bonds. That is down from 66% in 2008.

Instead, some people have all their money sitting in savings accounts right now. The bank pays them a whopping 0.2% to store their money, while the bank leverages it elsewhere in its own house account.

It's easy to grow fearful of another major market event. But the markets have stormed back since 2009, rising more than 100% - and those are gains you can't get any of unless you invest.

There are always safe companies with strong fundamentals that can absorb market shock. There are international equities that provide safe returns at lower risks. It's just a matter of knowing the types of companies to invest in.

Our Chief Investment Strategist Keith Fitz-Gerald recommends investing some of your money in companies he calls "Glocals." These are companies that are both local to the United States and have an international presence, helping you capture growth from the international markets, even during problems at home.

Investing Mistake #2: Not Using Trailing Stops: If you own stocks or equities, there is little reason for you not to use trailing stops. Without them, you can lose your profits - and your principle.

Trailing stops are a stop-loss order that investors can set according to the price of their stock as it increases or decreases. The stop is set at a percentage lower than the current price. They are important because in times of volatility, an investor is able to sell his or her position automatically to protect both gains and principle.

For example, if you purchase a stock at $100 and we set a 25% stop on it, the sell order would trigger at $75.

Trailing stops protect your gains so well because as share prices rise, so do the stop losses. Over time, the goal is to protect the profits you gain after owning the equity for a longer period of time.

But by protecting yourself on the downside, you can prevent losses from becoming catastrophic. Otherwise, you'll be chasing the stock to earn back your profits when you could reallocate your capital to a better opportunity and potential return.

Investing Mistake #3: Having a "Paycheck Mentality" When You Invest: A lot of investors seem to believe that owning stock is like earning a paycheck. Each week, they buy and sell stocks (paying outlandish broker fees) to attempt to capture small gains earned from short-term price movements.

Sure, there are times to engage in short-term plays with options and other vehicles when something is mispriced (that's exactly what our Strike Force service does).

But for most investors, that isn't a long-term plan. When it comes to your portfolio, and, especially your retirement, buying and selling at a fever pitch is the wrong approach.

Famed investor Jim Rogers once told me that investors need to treat their investment decisions as if they only had 15 trades to make... in their entire lives. That requires patience and diligence with each decision. This also this means that it's important to remain calm, utilize strategies like trailing stops to resist selling urges, and let your money do the work for you over time.

Investing Mistake #4: Lacking an Investment Strategy or Not Sticking to One: You wouldn't build a house without a blueprint, would you?

Because, if you would, I wouldn't want to live in that house.

The same goes with investing. You need to stick to a regimen. There are many different strategies out there that might fit your risk tolerance, asset levels, and general knowledge.

We call ours the "50-40-10" allocation model. Money Map Report readers know it well. It forms the basis of our Money Map Method.

You see, traditional diversification strategies are completely wrong. They are based on the allocation of capital with no regard for risk. As a result, they are frequently and often completely out of line with financial conditions, which can change month by month, or even hour by hour.

Consider a classic 60/40 portfolio of stocks and bonds, for example. For years that was okay because people simply split their capital into chunks between the two asset classes, not realizing that the 60% in stocks translated into 90% of the risk being carried by their equities.

The 50-40-10 portfolio is focused on a group of core economic realities - equities, interest-rate instruments, income production, commodities, and systemic credit. This focus makes the overall portfolio less susceptible to economic downturns because the risk is much more evenly distributed. Furthermore, because The Money Map Method requires that we constantly rebalance our risk, we can easily shift with varying market phases - growth, contraction, inflation, and even sentiment-driven events - all without placing significant portions of our capital at risk.

For more on The Money Map Method, here's an excerpt from Fitz-Gerald's book: "The Secret to Superior Returns"

The Secret Agenda That's Hurting Your Investing Returns

Jin Lee/APAutoNation CEO Mike Jackson If you follow the financial media regularly, you will find daily predictions about the direction of the markets. Breakout, a daily blog on Yahoo Finance's website, is typical of what passes for financial information. On Sept. 6, Breakout's Jeff Macke featured Mike Jackson, the CEO of AutoNation (AN), as his guest. Jackson opined that the economy "has moved into a self-sustaining recovery." He may or may not be correct in that assessment, but relying on his views or the views of others claiming predictive powers is more akin to gambling than investing. Macke's program is no worse than what is dispensed by many of his colleagues in the media. The format is familiar to all of us: Intelligent people in positions of power and influence make rational-sounding statements about the economy, the direction of the market or the merit of a particular stock or fund. What's missing is any data indicating that their views are worthy of consideration, based on a history of accurate past predictions or demonstration of predictive skill (as contrasted with luck). There is ample evidence to the contrary. In a paper published in July 2010, three finance professors from Duke University and Ohio State University published the results of an extensive survey they performed. Each quarter from March 2001 to February 2010, they surveyed "top U.S. financial executives." They asked them to predict one- and 10-year stock market returns and also for their predictions of best- and worst-case outcomes. The data they gathered aggregated 11,600 S&P 500 forecasts. You would think the accumulated expertise of these executives would permit them to make fairly accurate predictions about a commonly used index such as the S&P 500 (^GSPC). The opposite was true. The authors of the study found no correlation between the estimates of these top financial executives and the actual value of the index. In fact, the correlation was negative. When they predicted the index would decline, it was modestly more likely it would go up. Nobel Laureate Daniel Kahneman commented on this study in his book, "Thinking, Fast and Slow", noting, "These findings are not surprising. The truly bad news is that the CFOs did not appear to know that their forecasts were worthless." Since the data is overwhelming that predictions are basically "worthless," why do investors continue to pay attention to them, often to their financial detriment? Kahneman provides this answer: "Facts that challenge such basic assumptions -- and thereby threaten people's livelihood and self-esteem -- are simply not absorbed. The mind does not digest them." If investors accepted the fact that the predictive views of financial "experts" were "worthless," the ramifications would be profound. Much of the financial media would cease to exist. Brokers would go out of business because clients would view their advice through the prism provided by sound academic studies and the views of scholars such as Kahneman. This result -- threatening the livelihood and self-esteem of powerful segments of our society -- is simply not going to happen. While much of the financial media and many brokers are driven by this secret agenda to maintain their livelihoods, you should ignore their musings and base your investing decisions on reliable, peer-reviewed data. Dan Solin is the director of investor advocacy for the BAM Alliance and a wealth adviser with Buckingham Asset Management. He is a New York Times best-selling author of the Smartest series of books. His next book, The Smartest Sales Book You'll Ever Read, will be published March 3, 2014.

4 Investment Opportunities in Animal Health

Pfizer (NYSE: PFE  ) recently announced plans to sell its remaining 80% stake in animal-health company Zoetis (NYSE: ZTS  ) after about four months on the public market. Margins and profits aren't as high in the animal health business, which has pushed the world's largest pharmaceutical company to streamline its focus. It also highlights a delicate Catch-22 for Big Pharma.

While animal health companies represent a sizable chunk of total revenue in the dark days of the patent cliff, investors want to see pharma companies focus solely on pharma products to successfully clear the patent cliff. Pfizer ultimately decided to appease the masses. Depending on the success of Zoetis -- and perhaps its parent -- other pharmaceutical companies may decide to release their animal health businesses. That could open up several entirely new long-term investment opportunities for your portfolio.

The one and only?
The animal health business is a $100 billion global opportunity with a $22 billion medicines and vaccines segment that is growing at a CAGR of 6%. That represents the core focus for Zoetis, which has ridden the growth to become the largest animal health businesses in the world. It may be the first to test the public markets, but there are three other closely held companies investors can keep an eye on. 

Company, Parent

2012 Sales

2012 Sales Growth

% of Total Sales

Zoetis, Pfizer	$4.3 billion	3%	7.3%
Merck Animal Health, Merck (NYSE: MRK  )	$3.4 billion	4.5%	7.2%
Merial, Sanofi (NYSE: SNY  )	$2.9 billion	3.1%	6.2%
Elanco, Eli Lilly (NYSE: LLY  )	$2.0 billion	21%	9%

Source: Company 2012 SEC filings.     

Merck has made a big push to keep Merck Animal Health on the fast track for growth and recently announced plans to relocate the division from the Netherlands to its New Jersey campus. The company hopes the move creates a more efficient business by bringing 300 employees into closer quarters and reducing costs. It also brings the company closer to America's massive cattle farms, for which Merck Animal Health offers dozens of products.   

Merial was founded in 1997 as a joint venture between Merck and Sanofi, but it was bought outright by Sanofi a few years ago for $4 billion (after Merck assumed the Intervet/Schering-Plough Animal Health business in its merger with the company). Considering that Zoetis, albeit a bit larger, is now worth $16.5 billion that move could pay off tremendously. With well-known companion products such as Frontline and Heartgard and dozens of products for livestock and horses, Merial should continue to grow comfortably in the years ahead.

And finally investors have Elanco, which is smaller but growing like a mangrove tree. Couple its growth with the fact that it represents 9% of Eli Lilly's total sales and it is easy to see why CFO Derica Rice flatly rejected the notion that it would consider a spinoff. Instead, the parent is pushing the company into major growth opportunities in emerging markets. I wouldn't expect the company to grow at a 21% clip for the next few years, but I wouldn't be surprised to see it ascend the list above. 

Forbidden: patent cliffs and insurers
You may question why an animal health business belongs in your portfolio at all. Although margins may be lower than human pharmaceutical businesses there are several key advantages. Animal health companies don't have to face generic competition or deal with pesky insurers -- two of the biggest risks juggled by Big Pharma. It also helps that livestock vaccines represent a relatively small cost for the food industry and pay big dividends for productivity, so farmers don't question their usage.

Foolish bottom line
Unfortunately, investors looking to get into these businesses must invest in their pharmaceutical parents or simply wait for an IPO. There are no current plans for Merck Animal Health, Merial, or Elanco to go public, but I think investors will see these companies sport tickers of their own in the not-too-distant future. If that does happen you should consider an investment. The industry is enormous, growing, and relatively stable. Besides, if Roofus gets sick you'll probably pay whatever veterinarian bill comes your way to get him back into top mailman-chasing shape. It only makes sense to take advantage of these investment opportunities.

One more big advantage: animal health companies get to steer clear of Obamacare, which will undoubtedly have far-reaching effects. The Motley Fool's new free report "Everything You Need to Know About Obamacare" lets you know how your health insurance, your taxes, and your portfolio will be affected. Click here to read more. 

Why Lifeway Foods Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, dairy products specialist Lifeway Foods (NASDAQ: LWAY  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Lifeway, and see what CAPS investors are saying about the stock right now.

Lifeway facts

Headquarters (founded)	Morton Grove, Ill. (1986)
Market Cap	$285.4 million
Industry	Packaged foods
Trailing-12-Month Revenue	$86.3 million
Management	CEO Julie Smolyansky (since 2002) CFO Edward Smolyansky (since 2004)
Return on Equity (average, past 3 years)	11.5%
Cash/Debt	$5.1 million / $5.4 million
Dividend Yield	0.5%
Competitors	Dean Foods  General Mills

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 16% of the 61 All-Star members who have rated Lifeway believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those bears, fellow Fool Rich Smith (TMFDitty), touched on the stock's seemingly unsustainable valuation:

I'll take advantage of an unwarranted price spike to short this one [on Thursday]. LWAY is a great company, but it's just reneged on a commitment to not spend money on expanding capacity, buying a plant to quadruple capacity instead. And [free cash flow] is down in comparison with last year's Q1. Time to exit.

While you can certainly make quick gains in speculative momentum plays, the best investing approach is to choose great companies at good prices and stick with them for the long term. The Motley Fool's free report, "3 Stocks That Will Help You Retire Rich," names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Not American? You still might have to file U.S. taxes

HONG KONG (CNNMoney) Think your taxes are a pain? Imagine if you had piles of U.S. tax forms to fill every year, and you weren't even an American.

That's the reality for many foreigners who marry Americans.

U.S. citizens are on the hook to file and pay taxes regardless of where they live or work. And couples including an American may need to make joint tax filings to the Internal Revenue Service.

They can sometimes save themselves the hassle of reporting to the U.S. government by choosing to file separately — as long as the foreign spouse isn't earning money from the U.S.

But that means they can't claim certain deductions or hold joint accounts.

Adam Millard, 39, was living in Beijing when he met his Canadian wife.

"We joined our finances [and] that's when things became considerably complex," Millard said. "All of a sudden, my wife, who is not a U.S. citizen, has never worked, lived or owned anything in the U.S. ... was subject to reporting and sending information to a country she had no ties with."

Millard is thinking about giving up his U.S. passport.

Things can get even more complicated for couples living abroad, like the Millards. They're caught by another law that requires Americans to report all financial accounts overseas.

Any joint accounts or other financial assets that have one American beneficiary have to be disclosed to the U.S. government.

"I have to be far more aware of what I'm signing my name to, or setting up for my wife and I -- being a two-citizen family has made it exponentially more difficult," said Millard.

Many couples choose to keep their finances se! parate in an attempt to reduce the paperwork, said Chris McLemore, senior counsel at Butler Snow. That can be a source of stress in itself.

"Decisions like that start to test marriages, because that's not how you would normally arrange your affairs," he said.

For example, some couples abroad might decide against jointly owning their home, because that would complicate their U.S. tax burden. A home purchased in the U.K. and sold later, for example, would be eligible for capital gains tax in the U.S. if one of the owners were American, said McLemore.

For Millard, the logistics of tax filing is a mess. Accountants told him he could only file his return electronically if his wife had a U.S. taxpayer identification number.

He felt this was intrusive, so instead chose to mail his 100-page annual return, at a cost of $100 in postage and thousands more in accountant fees. He also had to submit more papers to explain why he didn't file online.

To make matters worse, banks in Denmark -- where they now live -- refused to offer them a joint account because of burdensome new disclosure rules covering American-owned assets abroad.

That made it hard for them to find a home loan when they wanted to buy an apartment.

Millard is not sure he'll ever return to America, and is thinking about renouncing his citizenship. He estimates he pays as much as $8,000 a year in taxes and accountant fees -- a cost he's reluctant to pay because he doesn't get the benefits of living in the U.S. as his job keeps him abroad.

"I grew up in the U.S., and appreciate the opportunities it gave me, [but now] I view my U.S. citizenship as a tax in of itself and see myself renouncing in the next few years unless the situation changes," Millard said.

The IRS didn't respond to a request for comment.

Read next: Nobody escapes U.S. taxes - even astronauts

Keep an Eye on These 5 Stocks for December 23, 2014

Related WAG #PreMarket Primer: Monday, December 22: White House Struggles To Respond To Sony Hack Earnings Expectations For The Week Of December 22 Making Money With Charles Payne: 10/22/14 (Fox Business) Related PRLS Benzinga's M&A Chatter for Monday December 22, 2014 UPDATE: Peerless Systems Announces Will Be Purchased by Mobius Acquisition for $7/Share in Cash

Some of the stocks that may grab investor focus today are:

Wall Street expects Walgreen Co. (NYSE: WAG) to report its Q1 earnings at $0.75 per share on revenue of $19.50 billion. Walgreen shares rose 0.01% to $74.28 in the after-hours trading session.

Peerless Systems Corporation (NASDAQ: PRLS) agreed to be acquired by Mobius Acquisition, LLC for $7.00 per share in cash. Peerless Systems shares jumped 27.25% to $6.72 in the after-hours trading session.

Analysts are expecting Cal-Maine Foods, Inc. (NASDAQ: CALM) to have earned $0.85 per share in the second quarter. Cal-Maine Foods shares rose 0.62% to close at $43.90 yesterday.

Steelcase Inc. (NYSE: SCS) reported better-than-expected third-quarter earnings. However, the company's revenue missed analysts' estimates. Steelcase shares dropped 3.46% to $17.30 in the after-hours trading session.

Chesapeake Energy Corporation (NYSE: CHK) announced a $1 billion buyback plan. The company also closed the sale of Southern Marcellus and Utica Shale assets for net proceeds of $4.975 billion. Chesapeake Energy shares surged 4.40% to $19.23 in the after-hours trading session.

Posted-In: Stocks To WatchEarnings News M&A Pre-Market Outlook Markets Trading Ideas

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Furious Week Fades as Dow Finishes Down Just 1%

War is hell, and the Brad Pitt-led Fury aims to demonstrate that as graphically as possible. A World War II U.S. tank team heads into Germany on a mission to rescue American soldiers trapped behind enemy lines. But really, the story is about blood, guts and horror. A new soldier peels a face off the tank; legs get shorn off by machine-gun fire; Brad Pitt stabbing a Nazi in the eye. NPR’s Chris Klimek writes that “Fury reminds us like no film since Saving Private Ryan 16 years ago that there was nothing good about [the Good War], and it does so with considerably less flag-waving,” while the Philadelphia Inquirer’s Steven Rea notes that “Fury presents an unrelentingly violent, visceral depiction of war, which is perhaps as it should be.” It should also top the box office this week with a $33 million haul, according to Box Office Mojo.

Columbia Pictures

The stock market had its own fury this week–if nothing compared to the horrors of war–furies that don’t show up in final weekly numbers. Sure, the S&P 500 fell just 1% to 1,886.76, while the Dow Jones Industrial Average dropped 163.69 points, or 1%, to 16,380.41 and the Nasdaq Composite dipped 0.4% to 4,258.44. Heck, the small-company Russell 2000 even gained 2.8% to 1,082.33.

But that kind of misses the point. On Wednesday however, the S&P 500 has fallen as low as 1820.66–or down 4.5% from the previous week, while the Dow Jones Industrials had moved a total of 1,268 points as it fell, bounced, fell and bounced again. Look at the final numbers and it’s as if “nothing happened,” says JJ Kinahan, chief strategist at TD Ameritrade. A lot did happen, though Kinahan doesn’t necessarily think that’s a bad thing. He notes that every few years you get these moves, where volatility increases, and you get a “reorganization in the market where people try to reevaluate where valuations are.” Ultimately, though, Kinahan expects the market to head higher.

He’s not the only one. Nuveen Asset Management’s Robert Doll thinks the correction is nearing its end:

The past few days have been wild for the markets. Equities had been trending lower before volatility spiked and prices dropped sharply earlier this week. Investors are now asking whether the near-term downturn is finished and if this bull market is ending. Our answer: We think there is a two-out-of-three chance that we have already seen the lows for this current correction (1,820 for the S&P 500 Index), although volatility is likely to remain elevated and we may see another test of those lows. In any case, we also expect the bull market to continue.

That may be the case for the overall market, but Deutsche Bank’s Stephen Richardson and team acknowledge that the worst might not be over for energy stocks, which have dropped 8.2% in October, despite rallying 0.9% on Friday:

A commodity price assumption underlies any investment in E&P equities. The tacit assumption of the market has been that with global prices in the $90-110/bbl band, domestic oil producers would remain in a halo of profitability where the excess rents associated with resource expansion, drilling efficiencies, and technology advances would all accrue to the producers. The humbling reality is that without support for global prices, these excess returns (and the growth fueled by re-investment rates) evaporate and so follows equity valuation…

The recent decline in the equities has been a reminder of the cyclical nature of the industry and that despite growing resource and technology advances, pullbacks of this scale have previously occurred. Putting the recent ~30-35% EPX pullback into context with declines seen over the past decade shows we have been in this environment before with the most recent ~30% decline occurring in 1H12. Although unlikely to be as severe as the decline following the financial crisis that saw oil prices decline from ~$145/bbl to ~$30/bbl, the continuation of US supply growth (on pace for ~900-1,000mbpd annual additions in 2014/15) and now lower global demand keep us mindful of these trends.

Like the Boy Scouts say: Be prepared.

Why pSivida (PSDV) Stock Is Soaring in After-Hours Trading Today

NEW YORK (TheStreet) -- Shares of pSivida  (PSDV)  soared 10.26% to $4.73 in after-hours trading Friday after the FDA approved the company's eye implant Iluvien.

The FDA approved Iluvien to treat diabetic macular edema (DME), a swelling on the back of the retina that can cause blindness should the condition become severe enough. Iluvien is an injectable implant, and its use involves placing a small cylindrical tube filled with a drug on the back of the eye where DME usually forms.

pSivida announced the FDA approval entitles it to receive a milestone payment of $25 million from Alimera Sciences (ALIM) , to which pSivida licensed Iluvien in February 2005. pSivida is also entitled to 20% of net profits from U.S. sales of Iluvien, which the company said should debut in early 2015.

Must Read: Warren Buffett's 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. Iluvien is already approved in 10 European countries, including the U.K., France and Germany. Alimera also surged 18.78% to $5.85 in after-hours trading. PSDV data by YCharts
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Turnkey Investing 101: What to Avoid and How to Know if It's Right for You

Turnkey investing is a very hot topic in real estate circles and seems to only be getting hotter. On a daily basis in the BiggerPockets Forums there could be from half a dozen to two dozen conversations involving turnkey real estate. Those conversations may involve questions from new investors to advertisements of opportunities, but almost all of them get comments from investors who hate the concept. Some are uninformed opinions, and others are comments from experience, but all seem to point to two clear conclusions:

There is no definition of what turnkey real estate really means. The worst investment you can make is a cheap $40,000 turnkey property!

Read this article carefully, and pay close attention to the end. If you are thinking about buying turnkey investments, there are many great opportunities all around the country, but there are probably more out there that are not. Investors are often their own worst impediment to making turnkey portfolios work, and I give a few ideas at the end regarding which investors this concept works for best!

What is turnkey real estate?
To be very brief, turnkey real estate involves a model where an investor purchases a property -- usually for long-term buy and hold -- that another investor or company has purchased, renovated and put under in-house management with a tenant. That is my definition of a turnkey real estate investment. However, and unfortunately for investors everywhere, every week there are new turnkey companies popping up and creating their own spin on what it means to be "turnkey."

Some companies own all of the services, while some do not. Some offer a completed property with tenant, some do not. Some companies are fully capitalized, while others need to use an investor's money. Still other companies act as a real estate broker working off the MLS and then broker all of the after-purchase renovation and management services as well.

I am not here to tell you as an investor which one of these definitions is correct. I have been in this business for a number of years now and have seen all of the good (and most of the bad) and can honestly say that the word "turnkey" no longer has any true meaning. It is defined by the seller and marketed and sold to the buyer. As an investor, this is a major issue when you begin to investigate buying turnkey investments because different companies will have a different definition of the word "turnkey" to fit their model.

Related: What Are The Different Kinds of Turnkey Properties?

What I will tell you is that no matter the definition, there is one type of investment that I have seen fail every time when it comes to turnkey properties. In my opinion, the real blame for this failure falls on the constant marketing of turnkey investments and the lack of experience on the part of turnkey companies. Everyone markets the same thing and attaches the same emphasis on return and service without thought about how those two things are going to be delivered.

If you are looking to invest in real estate through a turnkey provider, exercise extreme caution when it comes to the marketing and pricing of properties. There are two absolutes when it comes to this business: turnkey investments sold at super cheap prices with super high returns are the riskiest investment you can make today. No matter how sincere a company or turnkey provider may be, it is impossible to maintain long-term relationships and high-level management and service without building in the revenue.

High quality renovations, high quality customer service and high quality long-term investments are not words that can be used by super cheap, low-end property turnkey sellers. They do not go hand in hand.

The worst turnkey investment
I started as an active real estate investor and had many opportunities to invest all over the country. My business was extremely successful, which gave me all the capital I needed to make lots of mistakes! I didn't know it at the time, but my biggest mistakes were the properties I was investing in for passive income. I was buying a lot of properties in Memphis, where I had spent part of my time growing up and where my family was still investing. The properties were turnkey for all intents and purposes even though that term wasn't really out there at the time. What attracted me most (looking back it is easy to see why I, like many new investors, was attracted) were the low prices and low barrier of entry into real estate. I was buying cheap properties with little work being done to them -- and what on paper were fantastic double-digit returns.

Before long, I had other investors around me asking what I was doing and what projects I was working on ... so I told them. These same investors were some of the first investors to push my family to start our turnkey company. Unfortunately, like I said, when we first started, we fell into the mind-set that super cheap properties with super high returns were great investments. We also believed that the best way to compete for investors was to offer cheap pricing. Keep the pricing low, and allow investors a low hurdle to their plans to build portfolios.

I speak from experience when I tell you that cheap properties -- defined by me as anything priced $50,000 and under -- make the worst turnkey investments. I have had them in my portfolio, and I have managed them in the past for other investors, and they are not profitable for anyone. We are currently managing over 2,700 turnkey investment properties, and here are our conclusions from reviewing factual data from managing those properties:

Two percent rent ratios are unicorns in the turnkey industry. They may pencil out as 2% properties, but you will pay in deferred maintenance what you should have paid for proper renovation and see your rent ratio cut to 1.5% or less. Turnkey providers who operate with these low price properties have two major issues to overcome and one, if not both, eventually force a change in model.

It is impossible to staff a turnkey company correctly with a focus on high-touch customer and tenant relations when selling low-cost properties. There is not enough room to build in the needed revenue to build and train a team properly. In the end the client and the tenant lose out, which both lead to problems for the company.

It is not realistic for an owner to plan to spend a vast majority of revenue on team and systems, in turn keeping their own income low. In my experience, many choose a different concept altogether called "stay small, keep it all." They choose to remain a small company while still marketing like a big company and simply keep the profit all to themselves. You can guess who loses out in this scenario!

Because renovations are often done at the lowest prices possible and some maintenance issues are deferred, those issues eventually have to be dealt with while a tenant is in place. At the same time, permits are a sticking point since permits can drive up pricing in some cases by 2% ($1,000 in permits for electric, water and gas on a $50,000 property). So often work is done without permits, which can lead to more issues in the future when deferred maintenance has to be addressed and no issues have ever been pulled for any work. At some point, the major work on a property is going to have to be permitted, and often that falls on the owner when they are dealing with deferred maintenance.

Tenants do not hang around properties with ongoing maintenance issues, and management companies do not survive when poorly renovated low-price properties eat up their time and resources. There simply is not enough money in the deal to operate on a high level and deliver on marketing promises to owners.

It is a vicious cycle, where the company does not make enough money to cover permits or to hire and train team members. At the same time, because of efforts to keep prices low, more work has to be done on an ongoing basis. Eventually a turnkey company owner realizes their time is worth more than they are earning, and they have to change their model.

Which investor should buy turnkey properties?
The answer is: any investor who values service and quality over hyped returns and wants a steady yield in return for a passive investment. Unfortunately, that does exclude a lot of investors who end up being sold turnkey investments anyway!

Related: The Lessons of 'Rent Ready' And Turnkey Investment Properties

Brand new investors who are struggling to come up with down payments on investment properties should avoid turnkey investing at all costs. These are the investors who are most likely going to get caught up in a cheap property offering. Remember that turnkey investments are categorized as passive for the most part. There are literally dozens of ways to get started investing in real estate in a passive manner without running the risk of buying cheap turnkey properties that cannot perform at a level you should expect.

What level of performance should you expect? Well, for starters, there should be no deferred maintenance. On an average 1,500 sq. ft. property, the renovation costs could easily reach $25,000 when all systems, roof, flooring, paint, locks, doors, hardware, lighting, permits, fence, aesthetics and trees planted near water and sewage lines are addressed.

On the management side, an investor should expect a property management company to be owned and operated by the turnkey company and to be 100% responsible for the performance of that property. The property management company should be staffed at a level where the tenants and investors both can get quick service and fast replies. In my opinion, customer service fits right under the property management column since most of the communication for an investor occurs after they purchase a property is going to involve property management.

Customer service, in my opinion, does not involve having an answering service take in coming calls so you can return them. Customer service means going above and beyond so an investor buying from 1,500 miles away feels they have competent, safe and secure investments. It means reaching out when there are issues and being proactive on move-outs, as well as maintenance and rental issues. Whether a company is any good at providing service is another story! They have to at least have the personnel and systems in place before they can do it!

Passive investing, especially in a turnkey investment, should be all about the highest level of service, consistent returns and a no-hassle experience as much as possible. None of those things occurred when I was buying the super cheap properties from far away. None of those things were important when we first stated buying and offering cheap properties. And none of those things are present today when investors turn to super-cheap turnkey investments. Turnkey should be held to a very high standard by investors if they want to have a good and profitable experience.

Are you a turnkey investor? What would you add to my assessment?

This article originally appeared on Bigger Pockets and is Copyright 2014 BiggerPockets,

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Stagflation, Anyone?

Remember the 1970s? It was known as the “Me Decade” and for bad music (disco). Among the other, more significant developments was “stagflation”: a period of stagnant economic growth, soaring inflation and, as a consequence, high unemployment.

Stagflation has edged back into the conversation about the economy and markets this month. First, the World Bank lowered its projected global growth rate for 2014 to 2.8 percent from its previous 3.2 percent. Then the International Monetary Fund lowered its forecast for U.S. growth from 2.8 percent to 2 percent.

This week, the final revision for the U.S. economy’s performance in the first quarter of 2014 came in at a dismal -2.9 percent, even worse than the pessimistic consensus.

Based on the general tenor of economic reports over the last three months, growth likely rebounded to an annual rate approaching 3 percent in the current quarter and could do so again in the July-September period.

After that, it’s anybody’s guess, particularly with the Federal Reserve gradually tapering its monthly purchases of Treasury and mortgage securities. We have yet to see 3 percent annual growth in the current economic recovery, which is now entering its sixth year.

In addition, job growth remains sluggish, with the decline in the official unemployment rate to 6.3 percent attributable in large part to the many people who have left the work force.

Meanwhile, prices of most commodities are up sharply in 2014. Energy, agriculture and precious metals led the way, with only industrial metals faltering. Prices for food, health care, heating/AC and more have climbed meaningfully. No doubt, many of you have noticed shrinking portions of various supermarket products, just like in the inflationary ’70s.

Last week, we heard that the consumer price index (CPI) is now up 2.1 percent over the last 12 months through Ma! y, and 2 percent excluding food and energy.

This week brought the latest numbers for the Federal Reserve’s favorite inflation gauge, the core personal consumption expenditure (PCE). Core PCE gives more weight to health care and less to housing. Over the past 12 months, the PCE has climbed 1.8 percent, and the core PCE, again excluding food and energy, is up 1.5 percent.

Either way, it’s widely acknowledged that the official government numbers understate inflation, partly because of changes made in the calculation methods over the years.

In other words, inflation indeed is dormant if you don’t eat, don’t drive, don’t send kids to college, don’t need healthcare and don’t breathe. 

What Lies Ahead?

Over the past 20 years, the CPI has averaged 2.4 percent, far from the double-digit levels of the late 1970s. So the current level of inflation is near the long-term trend.

Better economic growth seems likely in the near term, in the U.S. if not elsewhere. Our job market, as defined by qualified workers, may be tightening. The movement to raise the minimum wage is gathering momentum.

By historically normal measures, economic growth of 2.5 percent a year (we hope); 2 percent inflation, which is the Fed’s target rate; and a 6.3 percent unemployment rate would call for a more normal monetary policy.

In theory, that should lead the Fed to start raising its benchmark short-term interest rate as soon as the first quarter of 2015, earlier than most people currently expect. That rate has remained in the zero-0.25 percent range since December 2008.

We see three counter arguments. First, the Fed likely has to risk acting too late before hiking its short-term rate. Reason: If economic growth falters, the need for easier money could increase again, leading the Fed to reverse course.

Second, inflation is considered primarily a monetary phenomenon by many. In other words, it comes from “too much” mo! ney chasi! ng goods and services. Currently, all too much money is doing nothing: Money velocity is low despite the Fed’s aggressively easy policies.

Third, aging societies tend to grow more slowly than when their populations were younger. To a lesser extent, the US is now experiencing what has been happening in Europe and Japan for some time.

Bond investors, arguably the most inflation-sensitive, aren’t worried yet. Fixed-income yields are depressed in much of the world, including the 10-year U.S. Treasury issue down nearly 2.5 percent.

Cliffs Natural Resources: Deutsche Bank Cuts EPS Estimates in Half on Lower Iron Prices

The analysts keep piling on Cliffs Natural Resources (CLF), with Deutsche Bank the latest to predict tougher times ahead for the iron miner. The reason: lower iron prices.

Deutsche Bank’s Jorge Beristainand team explain:

DB's commodities team has cut its 2014-16E seaborne iron ore prices by an average of ~$10/t (-9%) to average ~$97/t during time period ($5/t higher-than-current spot). New iron ore price forecasts reflect recent spot price movement (-33% YTD) and considers a scenario of lower Chinese demand…

We are lowering our 2014-16E EBITDA estimates for Cliffs by 11-29% and EPS by 46-84%, on reductions of 3-8% in iron ore price realizations (as US legacy iron ore operations somewhat buffer impact of reduced seaborne prices). EPS estimates cut to $0.50 (-46% vs prior) in 2014, $0.24 (-63%) in 2015 and $0.26 (-84%) in 2016, which are fairly in-line with ThomsonOne consensus estimates of $0.13, $0.23 and $0.21, respectively, albeit an increasingly meaningless number as EPS are now trending towards pennies per share vs +$11/share as recently as 2011.

And yes, Beristain says Cliffs dividend could be at risk.”…our estimates assume that dividends to common shareholders cease to be paid starting in 1Q15 (preferred dividends continue to be paid) in effort to conserve cash,” he says.

Today, at least, the report doesn’t seem to be having an impact. Shares of Cliffs Natural Resources have gained 2.3% to $14.07 today.