When rates are low, your nest egg suffers

Q. Once you retire, how do you make your nest egg generate enough money to live with interest rates so low?

A. If you can't take any risk, you really don't have many good choices. The last time you could get a five-year bank CD yielding more than 5% was in 2000, according to Bankrate.com. Since then, savings rates are lower than an ant's basement. The average money market fund yields just 0.01%, according to iMoneyNet. The top-yielding five-year CD in the nation, offered by VirtualBank, yields 2%, according to Bankrate.com.

Unfortunately, savings rates aren't going to rise any time soon. The Federal Reserve has said that it won't raise short-term interest rates until the unemployment rate falls to 6.5% or lower, and that probably won't happen until 2015.

What's a saver to do? If you really can't take a risk, you just have to wait it out. One solution: Divide your savings into four parts, and buy a one-year CD every three months. Right now, you'll get about 1% from the top-yielding one-year CDs, according to Bankrate.com. As interest rates rise — eventually — your yields will rise every quarter.

You could get a higher yield by investing in a 10-year Treasury note, currently yielding 2.74%. But at that rate, $100,000 would give you just $2,740 in income a year, or $228 a month, for a decade. Better not plan on eating out.

If you hold your bond until it matures, you won't risk losing money, except to inflation. If you sell before it matures, you could lose money if interest rates rise.

If you need higher rates than the 10-year Treasury offers, you'll be taking on additional risk. Although high-quality corporate bonds don't default often, it is a possibility. And low-quality junk bonds have considerably more risk of default — in which case, you'll have to stand in line with the company's other creditors.

You can get somewhat higher yields by investing in dividend-paying stocks. AT&T stock, for example, has a 5.08% dividend yield. Verizon yields 4.13%. Gene! ral Electric yields 2.81%.

The risk? They're stocks, and they could cut their dividends if times are tough. On the other hand, you don't have to put your entire portfolio in dividend-paying stocks. Putting 20% of your portfolio in riskier — but higher-yielding — investments won't send you to the poorhouse if the stock market falls. You'll still have 80% of your portfolio in cash.

Trends of the Future Favor Dividend Investing

NEW YORK (TheStreet) -- In a recent article, the headline queried, "Is Dividend Investing Doomed?" The conclusion was, "not the death of dividends" approaching, but rather, "that we could be witnessing the end of low-risk dividend investing." Nothing is further from what the history of dividend-paying stocks has been and nothing is further from what the future should bring from high yield, low-risk dividend-paying stocks such as Exxon Mobil (XOM), Wal-Mart (WMT), Coca-Cola (KO), Wells Fargo (WFC), and many, many more.

First, a little bit about the history of the role of the dividend in the total return of an equity.

Jack Bogle, legendary investor who founded the Vanguard mutual fund family, in his book Enough, says dividends have historically provided about 40% of the total return for stocks. That is why buying a stock that does not pay a dividend is called "dead money." That is also why of Warren Buffett's ten largest positions, eight pay dividends higher than the average of about 1.9% for a member of the Standard & Poor's 500 Index.

The trends of the future also favor dividend-paying stocks. Ralph Wanger, manager of the Acorn Fund which has topped S&P by more than 25% since its founding in 1970, advised investors that, "If you're looking for a home run -- a great investment for five years or 10 years or more -- then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge." The following three trends result in dividend-paying stocks having an "edge." Baby boomers are now starting to retire: about 10,000 are turning 65 every day. To pay for living expenses after quitting work, income is needed. Dividend-paying stocks, by far, are the best sources of income for individual investors. Wal-Mart, Coca-Cola, and Exxon Mobile are "Dividend Aristocrats," which means each has raised its dividend at least 25 consecutive years. That income record is far superior to a bond. It is also a significant factor for Warren Buffett being a major shareholder of the three aforementioned stocks. Buffett's largest position is in Wells Fargo, with a dividend yield over 2.70%. In the future, more will have to finance their own retirement. In 1998, 90% of Fortune 100 companies paid pensions. Now it is less than one-third. Those looking to fund a retirement that is decades away, and who researches the matter, will find that dividend-paying stocks outperform "dead money" investing. Investors are demanding that companies share more cash with shareholders. Carl Icahn and David Einhorn of Greenlight Capital with Apple (AAPL) is one such example. Dan Loeb with Third Point LLC hedge fund did the same with CF Industries Holdings (CF). This trend should lead to more companies offering and increasing dividends to appeal to all investors. In addition, according to Daniel Peris, Senior Portfolio Manager at Federated Investors, who wrote the book, "Dividend Imperatives," noted that there is a strong link between a company increasing its dividend and having its stock price rise, too. While not a trend, dividends perform a useful due diligence function for investors. The cash that goes out in a dividend payment cannot be faked on a balance sheet. A dividend also displays respect for all shareholders from the management. In an interview with the American Association of Individual Investors, Jesper Madigan, manager of several Asian income funds for the Mathews group, pointed out, "that of the more than twenty publicly traded Chinese companies revealed to be fraudulent, not a single one paid a dividend." The trends favor more and more investors buying equities that pay dividends. Those that have a history of increasing the dividend will be even more alluring. There is a huge appeal to getting a raise each year from Dividend Aristocrats like Coca-Cola, Exxon Mobil, Wal-Mart and others for simply remaining a loyal shareholder. Along with the allure of the stock price rising too, the future of investing in dividend-paying equities should be destined for further greatness for long term investors seeking a rewarding total return. At the time of publication, Yates held no positions in the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.      

Go Small for Safety? Yes — With These 2 Bank Stocks

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As we move into the fourth quarter today, the market faces some serious political challenges. Oddly enough, the best place to hide out might be in bank stocks.

We have a mixed bag of economic indicators, but on balance they show an economy that is recovering slowly but steadily. Consumer spending was up a little bit and the jobs outlook has steadied to some degree.

In a normal world, the stock market would be reflecting favorably on the economic outlook and continued low interest rates. Of course, with a government shutdown now in force and concerns about eventual tapering still hovering over our heads, we are not living in normal times.

I have talked several times about the fact that the rally would thin out and begin to favor stocks with the very best fundamentals. Well, one sector of the market — bank stocks — is seeing dramatic fundamental improvement, and could provide a little shelter from the storm.

The smaller regional and community bank stocks tend to move a little out of step with the market anyway, and unless the government shutdown lingers far longer than anyone participates, they should not feel much effect from the process. Small business still will function and make deposits, meet patrols and apply for loans regardless of what goes on in Washington. Meanwhile, people still will write checks, use the ATM and conduct their normal banking operations.

In addition, the real story in bank stocks is one of credit sand collateral improvement, not earnings growth, and that is not going to change anytime soon.

Many of these smaller bank stocks have received the highest grade of “A” from Portfolio Grader, and are well-positioned for profits in the final quarter of the year.

A great example of these small banks with big potential is Firstbank Corp. (FBMI), a $155 million market-cap stock that operates 53 branch offices in central Michigan. Firstbank provides commercial banking products and services, including traditional deposit accounts and loans tailored to meet the needs of its business customers. FBMI also offers trust, security brokerage and title insurance services, and even armored car services. This bank stock has been rated an “A” all year, and the fundamentals just keep getting better. FBMI shares remain a “strong buy” at current prices.

HopFed Bancorp (HFBC), at $85 million in market cap, operates 18 branches in middle Tennessee and Western Kentucky and can be thought of as poster child for what is going on in the small banking sector. An activist investor took a stake in the bank and opposed an ill-advised acquisition. Instead, he suggested HopFed management get its own house in order. Management went along and canceled the deal, instituted a stock buyback plan and doubled the dividend. HFBC was upgraded to an “A” back in May and still is a “strong buy” right now.

Investors should note that both stocks are very thinly traded, at less than 20,000 shares daily apiece, so limit orders and stop-losses are advised.

Nonetheless, small bank stocks can give you a place to hide from the market noise and turmoil without sacrificing the return potential that comes from owning the very best stocks.

Louis Navellier is the editor of Blue Chip Growth.

Chrysler IPO Filed, but Will It Actually Happen?

The smallest of the Detroit Three automakers is gearing up to file for an initial public offering. But this is no ordinary IPO. Chrysler's past few years have been met with reorganization, government bailouts, and a takeover by Italian automaker Fiat (NASDAQOTH: FIATY  ) . Just as the past has been unique, the present is filled with uncertainty. Even as underwriters are being signed up, some analysts are questioning whether the IPO will ever happen.

Reorganization
When Chrysler fell on hard times, there were a lot of stakeholders that took sacrifices. Bondholders were burned, dealerships were closed, and Chrysler's owners took losses. However, shrewd maneuvering allowed Cerberus Capital Management to escape with more than 90% of its investment by selling off Chrysler Financial to Toronto Dominion Bank  (NYSE: TD  ) , which used its comparatively healthy position in banking to make a move on the U.S. auto market.

The Voluntary Employee Beneficiary Association, or VEBA, also saw modifications. The VEBA was set up as a health-care trust for the UAW and was originally set to receive cash payments from Chrysler. However, Chrysler wasn't exactly swimming in cash, so a new plan was developed.

While Chrysler couldn't pay the VEBA in cash, it could pay in common stock. As a result, the VEBA is currently a 41.5% owner of Chrysler, with Fiat holding the remaining 58.5%.

A similar plan was developed for fellow bailed-out automaker General Motors (NYSE: GM  ) . Under GM's plan, the VEBA received common stock, preferred stock, and warrants to buy additional GM shares at $42.41 until Dec. 31, 2015. The warrants were sold by the VEBA onto the public markets and are now known as GM Class C warrants.

The Fiat plan
When Fiat took its stake in Chrysler, the plan was to eventually use Fiat platforms to replace much of Chrysler's aging lineup. Fiat CEO Sergio Marchionne has been enthusiastic about buying the VEBA's Chrysler stake and fully merging Chrysler and Fiat, and the VEBA is even looking to sell.

The conflict
Fiat and the UAW would both like to execute a sale of the 41.5% stake to Fiat, but the problem is agreeing on a price. As the UAW pushes Chrysler toward an IPO, the union is able to turn up the heat on Fiat as it tries to squeeze out a better price.

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As it is, Fiat is expected to need to borrow nearly $2 billion if it is to buy the Chrysler stake at the UAW's $5 billion valuation. So it's not a simple as just coughing up the cash. Taking on this amount of debt would quite likely worsen Fiat's already junk rating and drive up future borrowing costs.

Bizarre situation
Marchionne's grand plan was to turn Fiat into a world-class automaker by integrating it fully with Chrysler and entering the U.S. market in full force. But the price the UAW is asking threatens this integration, since Fiat and Chrysler can't be integrated to the same extent if Chrysler is only 58.5% Fiat-owned. And if the IPO does go forward, the process of having Fiat buy the shares from the public market (presumably Fiat would be healthier in the future) would be messy and take more resources.

So Fiat's in a no-win situation because it needs all of Chrysler (which it can't afford to buy) to complete its integration. For now, Marchionne is in the odd position of leading the IPO drive but being against having the IPO actually happen.

Not giving up
There is a possibility that a deal could be reached before the Chrysler IPO, but the two sides are more than $1 billion apart on their valuations of the Chrysler stake. If a deal is reached, it would probably involve some sort of other financial tactic such as issuing additional Fiat shares to the VEBA, making for a part stock/part cash purchase. That would allow Fiat and Chrysler to begin integrating and the VEBA to get the full value for its stake (it could sell the Fiat shares later or hold the shares and use the cash to fund health-care obligations).

If some sort of alternative financing deal can't be reached, then Chrysler will probably see an IPO, as it wouldn't be financially responsible for Fiat to borrow the full amount to buy the stake and the VEBA can probably get a better price in an IPO (UBS valued the stake at $5.6 billion). If Chrysler does become a publicly traded company again, investors should consider both company fundamentals and the condition of Fiat's health. After all, once Fiat is healthy enough, it may well want to finish its plan and make an offer for the publicly traded Chrysler shares.

Will Chrysler win big in China?
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5 Diversified Utilities Stocks to Buy Now

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The grades of five Diversified Utilities stocks are better this week, according to the Portfolio Grader database. Every one of these stocks has an “A” (“strong buy”) or “B” overall (“buy”) rating.

This week, Black Hills Corporation (NYSE:) is showing good progress as the company’s rating jumps from a B (“buy”) last week to an A (“strong buy”). Black Hills is an energy company engaged in electric utilities and gas utilities segments, non-regulated energy group comprises oil and gas, power generation, and non-regulated energy groups. In Portfolio Grader’s specific subcategories of Earnings Momentum and Margin Growth, BKH also gets A’s. .

DTE Energy Company (NYSE:) shows solid improvement this week. The company’s rating rises from a B to an A. DTE Energy provides electricity and natural gas sales, distribution and storage services throughout southeastern Michigan. At present, the stock has a dividend yield of 2.6%. .

Public Service Enterprise Group Incorporated (NYSE:) ups its rating to a B (“buy”) this week after earning a C (“hold”) in the week before. Public Service Enterprise Group is a public utility holding company. .

CenterPoint Energy, Inc. (NYSE:) boosts its rating from a C to a B this week. CenterPoint Energy is a public utility holding company that operates electric transmission and distribution facilities, interstate pipelines, and facilities for gathering, processing, and treating natural gas. .

This is a strong week for National Grid plc Sponsored ADR (NYSE:). The company’s rating climbs to B from the previous week’s C. National Grid owns and operates the electricity transmission network in England and Wales, the gas transmission network in Great Britain, and electricity transmission networks in the Northeastern United States. The stock has a dividend yield of 4%. .

Louis Navellier’s proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results — with A being “strong buy,” and F being “strong sell.” Explore the tool here.

Jim Cramer's 6 Stocks in 60 Seconds: TEVA SWY UA OXY WEN SSYS (Update 1)

Check out Jim Cramer's latest trading recommendations on "Action Alerts Plus". (Updates from 10:50 a.m. ET with closing information.)

NEW YORK (TheStreet) -- Here's what Jim Cramer had to say on CNBC's "Squawk on the Street" Friday.

J.P. Morgan said to be careful with Teva Pharmaceutical (TEVA) due to its high valuation when it loses its drug, Copaxone. "One day everyone will give up on Teva and therefore it will stop going down," Cramer said, adding it is an expensive stock. TEVA fell 1.4% to $38.34.

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Credit Suisse upgraded Safeway (SWY) to buy from sell. Don't sell the stock, Cramer urged, adding something big could be coming. SWY jumped 6.1% to $28.20. Credit Suisse downgraded Under Armour (UA) to hold from buy. Cramer completely disagreed with the call, saying to buy the stock. UA fell 2.6% to $78.50. Guggenheim likes Occidental Petroleum (OXY) because of the potential value creation from a spinoff. Cramer said the firm has also been right about ConocoPhillips (COP). OXY fell 1.7% to $89.49. Keybanc upgraded Wendy's (WEN). Cramer said the new bacon cheeseburger on a pretzel bun has been selling well. WEN was unchanged at $8.58. Stratasys (SSYS) is selling 4.95 million shares at $93 in a secondary offering and Cramer said that it makes sense for the company to do it now and everyone makes money. SSYS dropped 5.6% to $92.32. To sign up for Jim Cramer's free Booyah! newsletter, with all of his latest articles and videos, please click here. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell

Top 10 Best Cities for Small Business

According to recent findings from the National Federation of Independent Business, small business growth is up and business owners are more optimistic about the economy. Because most small business owners open a business near their home, we would expect major U.S. cities to see their fair share of new businesses. NerdWallet Taxes examined the top 20 biggest U.S. cities to find out how welcoming they are to small businesses. We calculated total scores for each city using data on local taxes, growth rates from the Milken Institute's 2012 Best Performing City survey, and business owner opinions of the local regulatory environment from the 2013 Thumbtack Small Business Friendliness Survey. Four of the top 10 cities are located in tax-friendly Texas, while New York City and San Francisco do not make the cut.

1. Austin, Texas
Tech giants Dell and IBM make their home here, but Austin proves equally friendly to small businesses. The city scores highly thanks to no state or local personal income taxes, and its second-place rank in the Milken Institute's 2012 Best Performing Cities comes for favorable growth prospects in technology, real wages, and jobs. Austin also scored second for its hassle-free business licensing requirements, according to data from Thumbtack's 2013 Small Business Friendliness Survey.

Local income tax: 0% (sample median: 0%) City property tax: 1.24% (sample median: 1.35%) Growth rate rank: 2 License friendliness rank: 2

2. San Antonio
Home to big companies such as Clear Channel and Valero, San Antonio earns the second spot in our list because it has the highest ranking for friendly licensing requirements, where on average small business owners say that the city's regulatory environment is "somewhat friendly." San Antonio also scores in the top 10 for its growth prospects.

Local income tax: 0% City property tax: 1.36% Growth rate rank: 6 License friendliness rank: 1

3. Dallas-Fort Worth
Dallas is home to more than a dozen Fortune 500 companies, and like other Texas cities, it is very welcoming to small businesses, scoring in the top five for ease of licensing requirements and growth prospects. While it did not score highly for property taxes, Dallas is still a very attractive city for small business.

Local income tax: 0% City property tax: 1.38% Growth rate rank: 5 License friendliness rank: 5

4. Baltimore
One of only three East coast cities to make our list, Baltimore earned a top 10 spot because it ranked third for its hassle-free licensing requirements. One downside is that Baltimore levies personal income taxes between 1.25 and 3.2% and scores poorly because of relatively high property taxes.

Local income tax: 3.2% City property tax: 2.27% Growth rate rank: 7 License friendliness rank: 3

5. Houston
Houston ranks fifth, thanks to a very friendly overall tax environment. It had the third lowest city property tax rates at 1.15% and ranked third for growth prospects.

Local income tax: 0% City property tax: 1.15% Growth rate rank: 3 License friendliness rank: 11

6. San Jose, Calif.
The only California city to make our list, San Jose earned the No. 1 spot in America in Milken's growth ratings, largely thanks to an influx of Silicon Valley technology companies and educated labor force. The city also scored in the top 10 for low-hassle licensing requirements.

Local income tax: 0% City property tax: 1.27% Growth rate rank: 1 License friendliness rank: 7

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7. Charlotte, N.C.
While North Carolina isn't known for its friendly income tax code, Charlotte did score highly for low unemployment tax rates and scored in the top 10 for property taxes, long-term growth prospects, and non-burdensome licensing requirements.

Local income tax: 0% City property tax: 1.28% Growth rate rank: 8 License friendliness rank: 10

8. Indianapolis
While not as tax-friendly as Texas cities, Indianapolis scored sixth for easy licensing requirements and 10th for future growth rates. Indianapolis ranked poorly for property taxes and also levies an income tax of 1.62%.

Local income tax: 1.62% City property tax: 3.35% Growth rate rank: 10 License friendliness rank: 6

9. Jacksonville, Fla.
Jacksonville scores in our top 10 largely thanks to its presence in Florida, a state with zero personal income taxes and relatively low payroll taxes. Jacksonville earned fourth place for its easy licensing requirements but scores lower for growth prospects (15th) and property taxes (12th).

Local income tax: 0% City property tax: 1.80% Growth rate rank: 15 License friendliness rank: 4

10. Phoenix
Phoenix earned 10th place mainly because of Arizona's tax-friendly environment: The state scores third for lowest income tax rates and second for lowest payroll taxes. Phoenix scores eighth overall for property taxes and ninth for ease of licensing requirements.

Local income tax: 0% City property tax: 1.30% Growth rate rank: 16 License friendliness rank: 9

Where are San Francisco and New York City?
New York and San Francisco perform poorly in the overall rankings (12th and 14th, respectively) for small businesses. For a business earning $100,000 a year in profits, New York City is the worst city from a tax standpoint. New York also scores poorly (12th) from a licensing standpoint. On the bright side, its attractive job growth rates and large workforce appeal to small businesses for ease of hiring, as it earned 11th place in the Milken study among all U.S. cities.

San Francisco did not make the list because of its difficult licensing requirements and California's high income and payroll taxes. Nonetheless, San Francisco appeals to many small businesses because of its diverse and educated workforce, favorable growth prospects, and established network of high-tech companies.

Methodology
To calculate each city's total score, we assigned weightings to the following variables: state income taxes (5%), city income taxes (10%), payroll taxes (25%), city property taxes (10%), city growth rate rankings (20%) from Milken Institute's 2012 Best Performing City survey, and ease of licensing requirements (30%) from the 2013 Thumbtack Small Business Friendliness Survey. Licensing requirements were coded from 1 to 5, where lower scores indicate friendlier requirements. To determine effective state and local taxes, we assumed the business owner files taxes jointly as married, earns $100,000 in annual profits, owns a $500,000 commercial property, maintains a $50,000 payroll with one employee, and qualifies as a new employer for state unemployment insurance tax purposes. Memphis was excluded because of data availability. Dallas and Fort Worth have been combined in accordance with the Thumbtack survey.

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Microsoft CEO Search Is Narrowing

Microsoft Corp. (NASDAQ: MSFT) is about to potentially be a far different company. Steve Ballmer’s resignation, retirement, or force-out, was sooner than some investors were expecting. Now we have a Bloomberg report that the board of directors is likely to narrow down the new CEO candidate in a board meeting on Monday, November 18. What is interesting is that we have heard and read this same notion of the candidate pool shrinking elsewhere, and not even this week.

Everyone is going to just have to deal with a new Microsoft, regardless of who becomes CEO. This is no longer simply a Microsoft under Bill Gates, and now longer a Microsoft under the Gates and Ballmer duo. Microsoft has enough businesses now that a new CEO may even decide to break the businesses up.

Alan Mulally of Ford Motor Co. (NYSE: F) keeps coming up as a potential replacement. This would be bad for Ford, although our take is that Ford already has its full team in place now. Another question is whether or not his age would be a factor. We already pointed out how there is literally no young blood on the Microsoft board of directors. A guy in his late-60s who has been an industrial CEO might not be the right fit at a struggling software and technology company even if he done incredibly well elsewhere.

Stephen Elop is still in the hunt apparently, and he will be rejoining Microsoft from Nokia Corp. (NYSE: NOK) when the acquisition of the handset division closes. We have a hard time knowing if it is worth the risk of taking on a handset chief as the company’s full CEO. Nokia’s reputation has diminished handily, and the risk is that if a CEO replacement does not work out then it would look like a bonehead move that could have been avoided.

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Internal candidates running Microsoft businesses already are also up for consideration. We have seen several names, but it almost seemed as if the names were grabbed from the list of division heads.

A new CEO candidate seems to be on the way sooner rather than later. We recently saw a key analyst report to get Microsoft back to $45 or even $50 and that was in a post-Ballmer world. With the stock at 437.81 and a recent peak above $38.00, it is not as impossible to imagine as you might think.

A Post-Mortem on Sarepta's Epic Explosion, Mea Culpa Included

Sifting through the detritus of Tuesday's Sarepta Therapeutics  (SRPT) explosion and thoughts on the future of the company's Duchenne muscular dystrophy drug eteplirsen.

I was wrong to be bullish on Sarepta, even if I had warned recently about greater regulatory risk. I'll have more to say about my mistakes below, but first let's start with some thoughts from a fund manager who has been critical of Sarepta and short the stock.

I can't identify him by name but he made the right call and he does a good job explaining why Sarepta's stock price took such a beating. Below is an email from this investor, reprinted with his permission:

The FDA's issues with trial design are so wide-ranging that it seems like wishful thinking that Sarepta will be able to agree on a study design and start enrolling by the second quarter 2014. Major questions with dystrophin quantitative assay. Questions with results of anything less than two years. Need for a larger study to power the six-minute walk test (6MWT) data. Possible need to expand study population both high and low and go beyond 6MWT as primary endpoint. T

Pay Package for BlackBerry's New CEO Announced

John Chen will have a formidable challenge on his hands coming in as the interim CEO and chairman of troubled smartphone maker BlackBerry (NASDAQ: BBRY  ) . At least he'll be sufficiently compensated for his efforts -- the company revealed in an SEC filing that he will draw an annual base salary of $1 million.

Chen's compensation package also includes a performance bonus of $2 million, and he will be granted 13 million restricted shares of the company. Twenty-five percent of the latter will vest on both the three- and four-year anniversaries of his employment, with the remainder vesting on the five-year mark.

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His contract also includes a fairly big parachute. If terminated without cause, he will be paid his annual salary for the remainder of the year in which the termination occurs. He will also receive two times both his base salary and his base bonus and be able to keep his benefits for 18 months after the termination.

Chen's hiring is the company's latest attempt at revitalization. The move follows its decision not to go private, after top shareholder Fairfax Financial signed a letter of intent to do so for $9 per share. Subsequent to that, the firm announced it would sell $1 billion of convertible debt to a consortium of investors, chiefly Fairfax.

Chen is considered to be something of a turnaround artist, and BlackBerry investors are doubtless hoping he will be able to reverse the fortunes of their company. Previously, he was CEO of software provider Sybase, where he was instrumental in making the firm profitable after four consecutive years of losses. Eventually, it was sold for $5.8 billion to SAP.

At BlackBerry, Chen replaces Thorsten Heins, who was ousted last week.

Can Siemens Stock Trend Higher?

With shares of Siemens (NYSE:SI) trading around $128, is SI an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Siemens is an integrated technology company with activities in the fields of industry, energy, and health care. Siemens operates in six segments: industry, energy, health care, equity investments, Siemens IT solutions and services, and Siemens financial services. The company has equity investments in telecommunications infrastructure and household appliance companies as well as in a company that provides open communications, network, and security solutions.

Siemens reported earnings results that showed losses, although those losses were less than analysts had been expecting. Siemens also announced a $5.4 billion share buyback that CEO Joe Kaeser believes will help make the European engineering company more profitable. Income from continuing operations dropped 13 percent to 1.08 billion euros and revenue fell 1.3 percent to 21.2 billion euros. Siemens raised its forecasts for the fiscal year, as Kaeser plans to raise the company's profit margin to 10 percent of sales next year.

T = Technicals on the Stock Chart Are Strong

Siemens stock has struggled to make significant progress in recent years. However, the stock is currently trading near highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Siemens is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Siemens options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Siemens Options	21.11%	3%	1%

What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
December Options	Flat	Average
January Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Siemens’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Siemens look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-12.50%	11.36%	-7.03%	-0.79%
Revenue Growth (Y-O-Y)	Top Biotech Stocks For 2014 -1.29%	-10.15%	3.83%	2.24%
Earnings Reaction	2.09%*	0.44%	-1.08%	1.35%

Siemens has seen decreasing earnings and mixed revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Siemens’s recent earnings announcements.

* As of this writing

P = Weak Relative Performance Versus Peers and Sector

How has Siemens stock done relative to its peers, General Electric (NYSE:GE), ABB (NYSE:ABB), Phillips (NYSE:PHG), and sector?

	Siemens	General Electric	ABB	Phillips	Sector
Year-to-Date Return	17.62%	29.16%	21.21%	31.91%	25.97%

Siemens has been a poor relative performer, year-to-date.

Conclusion

Siemens provides a range of valuable technology products and services to a number of industries around the world. The company reported earnings that showed losses, although they were less then expected. The stock has struggled in recent years but is now trading near highs for the year. Over the last four quarters, earnings have been decreasing while revenues are mixed, which has produced conflicting feelings among investors in the company. Relative to its peers and sector, Siemens has been a weak year-to-date performer. WAIT AND SEE what Siemens does this quarter.

Goldman-Led Twitter Underwriters to Make $59.2 Million From IPO

Goldman Sachs Group Inc. and other underwriters on Twitter Inc. (TWTR)'s initial public offering will share about $59.2 million for managing the sale after accepting one of the smallest fee rates for a U.S. IPO this year.

The projection is based on the 3.25 percent of the $1.82 billion IPO that Twitter agreed to pay the banks managing the sale, people familiar with the matter said last month. Goldman Sachs is leading Twitter's IPO, with help from firms including Morgan Stanley and JPMorgan Chase & Co., regulatory filings show. The fee pool is typically split unevenly among underwriters, with larger shares going to banks that are more actively involved in the process.

At that rate, Twitter's banker fees would reflect a smaller proportion than underwriters have received in nearly every U.S. initial offering this year, data compiled by Bloomberg show. While investment banks use fee income as a major measure of success in deal underwriting, firms are sometimes willing to take a smaller share of proceeds for high-profile sales that may generate future business.

"Goldman being the first name on the S-1 has little to do with fees," Max Wolff, chief economist and strategist at ZT Wealth, said by phone from New York. "This is about Goldman rebalancing itself as a serious leader and competing with Morgan Stanley's dominant position in technology."

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San Francisco-based Twitter is still paying a higher rate than Facebook Inc., where underwriters collected about 1.1 percent of the $16 billion raised in May 2012. Excluding Twitter, U.S. IPOs overall have paid underwriters an average fee of 5.6 percent this year, according to data compiled by Bloomberg.

Valley Bankers

Twitter's IPO was led by some of the best-known investment bankers from Silicon Valley to Wall Street. Anthony Noto, the Goldman Sachs co-head of technology investment banking who led the offering, according to a person familiar with the matter, formerly served as the chief financial officer for the National Football League, a job he held until 2010.

Michael Grimes, Morgan Stanley's co-head of tech banking who helped helm the offering, according to another person, has led other high-profile Internet IPOs by Facebook and LinkedIn Corp. (LNKD) JPMorgan Vice Chairman Jimmy Lee managed the Twitter offering for that bank, a person said. The people asked not to be named because the information is private.

Twitter's IPO is the largest that Goldman Sachs has led for a U.S. technology or Internet company, data compiled by Bloomberg show. The offering is helping the investment bank bounce back after losing the prime spot on social-media IPOs from LinkedIn to Facebook. The lead-left role -- so named because of the way the bank names are printed on the offering prospectus -- is typically the most lucrative job for advisers in a stock offering.

Digital Media

JPMorgan's Lee worked with Liz Myers, the global head of equity capital markets, as well as Noah Wintroub, who heads Internet and digital media investment banking.

Twitter will start trading today, listed on the New York Stock Exchange under the symbol TWTR. At the IPO price, the company has a market value of about $14.2 billion.

Among the largest U.S. IPOs this year, only Plains GP Holdings LP (PAGP) paid a smaller percentage fee to its underwriters when it raised $2.91 billion in an October offering, including an over-allotment, data compiled by Bloomberg show. Banks led by Barclays Plc, Goldman Sachs and JPMorgan received a 3 percent share of the cash raised in that IPO, the data show.

Electric Car Maker Tesla Fails to Dazzle Investors, Stock Gets Hammered

Tesla Motors Inc. (NASDAQ: TSLA) reported third quarter 2013 earnings after markets closed on Tuesday. For the quarter, the electric car maker posted adjusted diluted earnings per share (EPS) of $0.12 on adjusted revenues of $603 million. In the same period a year ago, the company reported an adjusted EPS loss of $0.92 on revenues of $50.1 million. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.11 and $534.64 million in revenues.

On a GAAP basis, the carmaker lost $0.32 per share, compared with a year-ago quarterly loss of $1.05. The significant one-time items included in the GAAP loss were $0.16 a share in stock based compensation and $0.21 for deferred profit due to lease accounting.

The carmaker boosted production by 10%, from 500 to 550 vehicles a week and delivered over 5,500 vehicles in the quarter, including more than 1,000 to European customers.

Tesla would have had to absolutely blow the doors off estimates for the quarter to have been called a success, and that did not happen. The anticipation bordered on the insane. Monday options trading included a weekly call option that expires Friday at a $230 share price. The stock closed at $175.20 on Monday night and is now headed for $150. I mean, really?

In its outlook, Tesla said it expects to ship about 21,500 Model S sedans in 2013, with just under 6,000 units shipped in the fourth quarter.

Gross margin is expected to be in 25% for the fourth quarter without the benefit of the zero-emission credits, a target the company set at the end of the second quarter. The company also noted that it expects to be equally profitable in the fourth quarter as it was in the third on a non-GAAP basis and to be "close to breakeven" on free cash flow.

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The company's shares are being punished in after-hours trading on Tuesday, down nearly 11% at $158.25 in a 52-week range of $29.85 to $194.50. The consensus target price for the shares was around $170 before today's report, with some wide variation. BofA, for example, had a price target of just $45 based on 2015 expected enterprise value versus EBITDA of about 12 times.

Apple Inks Sapphire Deal with GT Advanced Technologies

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NEW YORK (TheStreet) -- GT Advanced Technologies GTAT (GTAT), shares rallied on the news of its partnership with Apple AAPL (AAPL), rising 14% to $8.38 in after-hours trading, adding to the 3.8% in gains already seen through the day. The agreement calls for Apple to buy significant amounts of sapphire, which could be used in Apple's iDevices to bring TouchID to them.

Apple has started to use sapphire to protect delicate features of its hardware such as the iPhone 5s' TouchID, finger print sensor and camera lens. One of GT's key business segments is the production of synthetic sapphire using sapphire crystallization furnaces. The inking of this agreement suggests Apple will begin to use the material, more lightweight and stronger than its current glass components, on a larger scale across its hardware line.

"Made from laser-cut sapphire crystal, the surface of the button directs the image of your finger to a capacitive touch sensor, which reads beneath the outer layers of your skin to get a detailed print," Apple said on its website, regarding the TouchID fingerprint verification system.

There is also speculation, though unconfirmed, that Apple could use the material for its new iWatch. Sapphire is widely used for watch faces, but this deal seems more about existing products, including iPhones and iPads, then it does about future products. "We are very excited about this agreement with Apple as it represents a significant milestone in GT's long-term diversification strategy," said GT CEO Tom Gutierrez in a statement. "We believe that it is in the long-term best interests of our company, employees and shareholders to build a robust sapphire materials business with recurring revenues." GT Advanced Technologies signed a multi-year agreement with Apple to provide sapphire material at the latter's Mesa, Arizona facility. GT will staff the facility with more than 700 workers, initiating full-scale production at the plant funded by a $578 million prepayment from Apple. GT is expected to reimburse the amount over five years ending 2020. Shares of Apple finished the regular session higher, gaining 1.3% to close at $526.75. The stock was little changed in after-hours trading. --Written by Keris Alison Lahiff and Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia

Morningstar Finds TDF Fees Falling, Assets Growing

Average industry glide paths “should reasonably meet the typical worker's spending needs in retirement.”

Something of a hedge in confidence for a product that continues to generate controversy, but a report released Thursday from Morningstar details where target-date funds reside in their industry development.

The report, “Target-Date Series Research Paper: 2013 Industry Survey,” finds target-date series have become “established fixtures in defined contribution plans: assets are rising, fees are falling, and performance reflects strong broad market trends.”

It notes more target-date assets are shifting to passively managed investments, as both an underlying holding within a portfolio and as an overall investment approach. While 68% of target-date assets were in actively managed series as of Dec. 31, inflows to passively managed series—those that invest 80% or more in passively managed investments—surpassed flows into actively managed series for the first time for the 2012 calendar year.

Managers of target-date series have significantly increased allocations to non-U.S. equities. Since 2005, international stocks have risen from 24% of the average 2040 fund's equity allocation to 36%, as of Dec. 31. Emerging-market bond funds appeared in nine target-date series in 2008, compared with 18 in 2012.

"We found that target-date funds with significantly different asset allocations deliver similar retirement savings outcomes up to age 85,” Josh Charlson, Morningstar's fund-of-funds strategist and the study's lead author, said in a statement. "And as the target-date industry matures, we see an increase in diversification of the underlying investments in terms of both fund strategy and geographical location."

Using Monte Carlo analysis, Morningstar tested the likelihood that investors will be able to successfully retire. The firm defined success as whether or not an investor's savings would last through retirement.

Additional findings include:

Meanwhile, four target-date series shuttered in 2012: American Independence, Columbia, Oppenheimer and Goldman Sachs.

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Check out Target-Date Funds Shrink in Number, but Popularity Is Growing on AdvisorOne.