The Increasing Legal Costs all Major Blue Chips Face

Legal Costs Blue Chips

At any given time, every single blue chip company in the world is embroiled in a number of legal disputes, ranging from taxation issues to working conditions, pension problems and more. This is testament to the litigious society in which we live, as opposed to any maliciousness on behalf of these big companies (most of the time anyway). After all, actors, businessmen, sports stars and even writers find themselves involved with similar struggles on a day-to-day basis.

To the average person, a lawsuit is only worth pursuing if there is potential for a big payday at the end of the struggle. The average man and woman on the street can’t afford to rack-up legal bills in order to defend their reputation against libel and slander, or even to counter legal claims made by others. But to these companies it’s just another part of day-to-day operations.

There are a few cases that appear more than others though, ones that seem to have been costing the world’s biggest companies for years and will likely continue to do so for many more years to come.

Big Banks in Big Trouble

Over the last couple decades, the biggest banks on the FTSE 100 (the major index on the London Stock Exchange) have been paying out an astronomical amount in legal fees, essentially covering for their mistakes and trying to stay in the government’s good books. Of all of the legal costs accrued by the 100 blue chip companies in this index, half are paid out by the banks, which number fewer than half a dozen.

In total, these banks are setting aside more than £30 billion (about $40 billion) every single year, covering everything from LIBOR and FOREX manipulation disputes to PPI misselling. This combined total is more than the total annual revenue of Barclays, TSB and Standard Chartered put together, two of which are included in that $40 billion figure mentioned above.

False Advertising

In recent years Volkswagen have been tied up in an emissions scandal that will likely cost them tens of billions, money they will still be paying for years to come. When you factor in the loss of business and the general damage they have caused to the public’s perception of diesel cars, their total loss will actually be much higher. The VW Group have a revenue of close to $250 billion, so there is a lot to lose, but a small fraction of that is profit and they will be seeing a lot less of that for years to come.

At its heart, the emissions scandal was basically false advertising, albeit to a much more fraudulent extent (they were passing off their cars as being more environmentally friendly than they were, knowing it would drive up sales and drive down taxes). This is something that has caught many big companies out and VW are by no means the only ones suffering.

Danone were once fined close to $50 million for making a claim on their Activia yoghurts that something was “scientifically proven” when there was no such evidence baking it up. In the 1990s, Airborne were also hit with a substantial fine for claims that they made, while multi-million dollar false-advertising fines have also been paid by everyone from Extenze to Kellogg.

And believe it or not, even Red Bull were sued for claiming that their drink could “give you wings”.

The Mistakes of the Past Cause the Health Problems of the Future

Imagine for a minute that you run a manufacturing business and someone approaches you with a material that can essentially guard against fire and electrical issues, providing insulation and absorb sound, all for a rock bottom price. And not only is this a miraculous material, but there are no major health warnings and it has been mined by humans for 4,000 years.

You would probably take them up on the offer, right? Well, millions did. The problem is, that material was asbestos and as we all now know, it is highly dangerous and has since led to countless health problems for the workers that were exposed to it.

Asbestos is no longer widely used, but the conditions it caused are still prevalent, so much so that there are law firms setup primarily to help clients with asbestos-related diseases. Companies that used it and exposed their employees to it are still paying the cost, as are governments the world over. And rightly so, because families and individuals have been paying with their lives and their health.

Asbestos is not the only incident where a commonly used product previously thought to be safe and groundbreaking has gone on to ruin lives and bring the companies that used it to their knees. Over $50 billion is said to have been paid out on asbestos lawsuits alone, and then you have the payouts associated with damaging drugs like Thalidomide and chemicals like Radium.

But what is perhaps most surprising in these cases is that the companies at fault for manufacturing and distributing, usually bounce back, a benefit that will never be bestowed on the millions that suffered because of them.

The German manufacturers of the Thalidomide drug, which caused horrible birth defects in countless Americans and Europeans, were sued repeatedly and even tried for manslaughter, and yet the company remains to this day. In fact, they are the ones responsible for creating the opioid Tramadol, which has created a few problems of its own.

In other words, the little guys can fight back and get a little justice, but nothing stops these multinational from marching on. Whether you see that as a good thing or a bad thing is entirely down to perspective.

Is a Rolex, Tag or Omega a Good Investment? (Investing in Watches)

Investing in Watches

This is a question that has personally always interested us. We love to collect and invest and if we can combine that with a hobby, purchasing something we like and enjoy and potentially profiting from it further down the line, then even better. But is this possible to do with premium watches like Rolex, Tag and Omega?

That’s the question posed for this investment guide and it’s one we will look at here, seeing how watches like Rolex’s have held their value over the years and establishing whether or not they are a worthwhile investment.

Stocks vs Watches

Stocks vs Watches

Before we look at each of the big brands in turn and at the merits of investing in timepieces, let’s see what happens when you compare watches vs stocks over the last few decades.

Brands like Rolex really came into their own during the 1960s, when they began to be perceived as a brand of the rich, the famous and the wealthy, and when their value began to rise significantly to reflect this.

In the mid 1960s and early 1970s Rolex were releasing timepieces such as the Explorer, which had a retail price of less than $200 back then (before your eyes pop out of your skull, this was still considered a lot of money. According to DollarTimes  it equated to about $1,400 in today’s money)

However, that watch today has a price tag of between $5,000 and $20,000, depending on the model and the state of the timepiece. If we suppose that you bought the first release and that you kept it hidden from harm for 50 years, then you’d be making a 100x return on your initial investment.

This equates to an annual increase of around 9%. If you invested in the S&P 500 instead then your return would be closer to 10%. Based on that, stocks would be the better option, but only just, and what would you prefer to have owned for 50 years, a piece of paper or one of the most expensive watches in existence?

The Cons of Investing in Watches

The main issue with investing in these watches is that big brands seem to have their heyday. This is when their products retain the most value and can go on to be worth significantly more than they were at the time of purchase.

The 1970s and 1980s were the best time to buy Star Wars memorabilia; the 1920s through to 1950s was the best time for comic books; the 1950s and 1960s was the best time for Gibson guitars. That’s not to say that they don’t continue producing valuable products, because they do, but rather that they will never replicate the sort of price increases you could get during those specific eras.

This is especially true in the modern world, where there are more brands than ever and where every successful company is producing more stock than ever. Take comic books as an example. The reason the headline-hitting million-dollar comics sold for so much is not just because they were the first in a series, but because they signaled a breakthrough for the company and the medium in general, and they came at a time when very few books were produced.

Watches like Rolex and Omega are similar. They have had their heydays and those vintage pieces will likely always increase in price, but the new watches probably won’t have as much of an impact in the future. The world will move on to new brands and new trends and while the classics will continue to hold the public’s interest, the new stuff won’t.

Of course, you could just invest in the vintage pieces, but even then there are problems. If you buy a watch that is 50 years old and keep it in very good condition then it will probably be worth more than it is now in another 10 or 20 years, but the value will not rise as sharply or as swiftly, because you’re now selling a valuable collectible that you paid top dollar for, as opposed to a vintage piece you got for retail price.

Of course, another con to investing in watches is the fact that you are unlikely to make anything at all in the short term. You will likely need to be sitting on a time piece for at least 5 or 10 years before the value starts to rise significantly, assuming it ever does.

The Pros of Investing in Watches

Investing in Premium Watches

There are some benefits to investing in watches. It’s not all doom and gloom. For instance, if the watch was produced in limited numbers, was once owned by someone famous or contained precious metals, then it has inherent value that will always attract interest from buyers.

What’s more, while stocks can be high one day and gone the next, a watch with a strong inherent value will always be worth something and even if it’s not, at least you can still use it for the reason it was intended.

Watches from established, historic brands will also always appeal to a certain demographic, even if they have fallen out of favor with the general population. The current trend towards vinyl and old-school cellphones like the Nokia 3310 is a great example of this. Simply put, in a world of mass production and machine made products, people yearn for something traditional, something nostalgic. If you have a handmade or hand finished watch from a legendary and traditional brand, it could be akin to holding the first print of the first Pink Floyd vinyl today.

And whether you make money or not, the best thing about investing in watches is that you also get to own and experience these timepieces for yourself. So much work goes into the watches created by Swiss brands like Rolex and they are a true joy to behold. If you have a passion for them like we do, then investing in watches will be as much of a hobby as it is an investment opportunity.

So, put your money where your mouth and your hobby is and start investing in premium and vintage timepieces today.

The Financial Cost of Divorce (Rates, Stats and Facts in the US)

Cost of Divorce

Divorce can be expensive. You probably didn’t need us to tell you that. It is a common trope in TV sitcoms and romantic comedies and it’s something we also see everyday with celebrities and business owners whose divorces result in massive settlements and all kinds of resentment. But just how much does the average divorce cost in the United States, what is the divorce rate here and how does the US compare to other countries around the world?

Cost of Divorce in the United States

Before we get to the divorce rate in this country and its individual states, let’s look at the average cost of filing for a divorce. You will pay a filing fee to initiate the process and you will also need to pay for an attorney, typically by the hour. This can run-up a rather large bill, the total of which will depend on which state you reside in (as discussed below).

The average cost of divorce across the US is between $15,000 and $25,000, most of which ends up in the lawyer’s pockets. This is the amount that both parties will pay to get through the process and it does not include any possessions or money that changes hands. It also doesn’t include any assets that changed hands, any child support that was ordered to be paid, etc., So for many couples in the US this amount could just be the start.

What’s more, a huge number of Americans put themselves through this process every single year, helping to fund an industry that is said to be worth over $28 billion for the legal firms that help couples in this situation.

The US Divorce Rate

The rate of divorce in the United States is often quoted as being between 40 and 50 percent. However, this doesn’t apply to all states. California, for instance, has a higher rate at 60%, which is inflated by states like Orange County, which has one of the highest rates of divorce in the United States. It also doesn’t apply to all marriages, because if the couple have been married before then the rate increases even further.

When you take a closer look at marriage and divorce, the statistics are a little less doom and gloom. It is true that the average marriage in the US has at least a 50% chance of ending in divorce, but it’s also true that there is nearly a 70% chance that it will last for at least ten years and the odds that it will survive more than two decades is greater than 50%. Also, while the stereotype is that men stray and women stick, the stats seem to suggest the opposite and it is women who are more prone to ending the marriage. In fact, the odds of a marriage lasting 20 years are 52% for women, but 56% for men.

The Lowest Divorce Rate in the US

Divorce Rate

If Orange County has one of the highest divorce rates of all US counties, then which county and state has the lowest? You might expect it to be a religious state or a state in the Mid-West, but it’s actually New Jersey. The odds of the average couple ending their marriage in divorce

The Cost of Divorce in the US is lower here than in any other state. What’s more, second on the list is neighboring New York, followed closely behind Washington D.C.. Pennsylvania is also in the top five, just behind fourth placed Hawaii, suggesting that New England is a haven of sorts for marriage.

Most Expensive States to Divorce

Based on the average hourly fee of local divorce attorneys and the cost of filing for a divorce, the state with the most expensive divorce in the US is California, which is probably less of a surprise than the stats quoted above. The average hourly fee for an attorney is just over $400 in this state, and you’ll pay between $400 and $500 on average to file for a divorce.

The attorney fee is actually the third highest in the US, but only just, and the divorce filing fee is the highest, which is why the Golden State sits top of this list.

Cheapest States to Divorce

As for the cheapest, Wyoming tops this list, with an average attorney fee that clocks in at less than $200 an hour and a divorce filing fee of just $70 in many counties. North Dakota is also very cheap and South Dakota is only marginally more expensive, putting these two states in the top 3.

The US Divorce Rate Compared to Other Countries

The US is probably the most litigious country in the world. You don’t have to go far to find a quality, fully licensed attorney in this country. There are thousands of specialized lawyers for all kinds of sectors and family law, which focuses on divorces, annulments and other issues, is one of the most saturated sectors.

As a result, you could be forgiven for thinking that the divorce rate was higher here than in other countries and that the average settlement was also higher. But that’s not quite the case.

The divorce rate in the US is actually on the short side of average when compared to Europe and it’s much less than countries like Belgium, where the divorce rate is as much as 70%.

If you focus just on the cost of divorce in the US, then it is quite a bit more than most other countries. Take the UK as an example. It is very easy to settle a divorce for free or with legal aid in the UK, but even if you go down the paid route you will pay less than £1,500 (about $2,000) to cover the basics of filing, settling and getting consent. In Scotland it is even cheaper. Not only is it just as easy to do it for free north of the border, but the paid options can ensure everything gets settled for less than £500, or about $750.

How Much do Big Companies Spend on Marketing?

How Much do Big Companies Spend on Marketing

The modern world is dominated by big brands. Studies have shown that children as young as 2 can recognize a series of brand logos and most kids know dozen of logos and slogans before they even learn to read. This doesn’t happen by accident, it happens because these brands spend a lot of money to make sure of it.

Why Do the Big Brands Still Advertise?

We’ve all been guilty of looking at adverts for brands like Mars and Coca-Cola and thinking, “Do they really need to advertise?” I mean, who in the world doesn’t already know what these brands? But it’s a fickle business and the fact of the matter is that we consider brands to be big and prestigious because we see them everywhere. If Apple started pulling all of their Facebook ads, product placements and commercials, they would gradually fade away, creating a space that other brands would fill. Within a single generation it could go from one of the biggest and most recognizable brands in the world, to one that people barely recognize.

That’s why the marketing continues, it’s why these brands have a perpetual cycle of commercials, billboards, product placements and other marketing campaigns. But with so much on the go, just how much are they spending? In other words, viral marketing aside, what does it cost to create a big brand like this?

How Much do the Big Brands Spend on Marketing?

The amount that a brand spends relates to the amount of revenue that they receive. They put a significant portion of this to one side to account for all of their marketing efforts, because they know that without it, that revenue would decrease and the brand would eventually fade away.

According to an extensive study on brands and their marketing, the “magic number” was around 10% of total revenue. This means that a brand like Microsoft is spending about $9 billion on marketing every single year.

Of course, this doesn’t paint the whole picture. A company that is still finding its way in the marketplace is probably going to invest more, while a company that has a monopoly on the market may decide to invest less and to focus their spend on other areas. The amount that the company receives in revenue also seems to dictate just how much of their total revenue they are willing to spend.

According to the above quoted study, those earning less than $25 million spend around 2% more on average than those earning between $25 and $99 million, while those earning in the billions are not averse to increasing this to as much as 15%.

What Brands Spend Their Advertising Budget on

These days, social media advertising is becoming a key part of any big brand’s marketing campaign. Facebook is one of the biggest platforms here, offering publishers the chance to get the word out to targeted users of both Facebook and Instagram. Banks, fast food chains and credit providers are known to spend a lot of money on this platform, as are fashion brands like Nike.

For the most part, this advertising is all about increasing brand awareness and announcing the release of new products. There is no better platform for such campaigns. However, it has also proved to be a great asset for video gaming companies and major retailers in the past, generating positive cash flow in spite of huge spends. In 2012, Electronic Arts were said to have made a “small” investment of close to $3 million on Facebook ads, through which they generated a return of 440% in sales.

While his sounds like a lot of money, it doesn’t come close to what others spend. In fact, it’s a fraction of the amount that ZYNGA spent in a single month in 2012. In total, the mobile gaming giant gave Facebook over $200 million throughout 2012, and it wasn’t the biggest spending year for them.

What About Google, Twitter and Media Companies?

You’ve probably seen a few “sponsored ads” on the Buzzfeed platform and you may have also seen the same ads on similar sites. But if you were to hazard a guess as to how much they cost the brand, you probably wouldn’t get close. The minimum spend on Buzzfeed is $100,000. If you don’t have that then they can’t help you, and even if you do, it won’t get you much.

Buzzfeed is one of the biggest sites for what it does, but it still doesn’t come close to the sponsored packages offered by Twitter, who are known to attract tens of millions from major advertisers for single campaigns. And then you have Google, the granddaddy of them all. Through the Google Adwords program a company can get their message out across millions of sites that have signed up to Google Adsense (those tailored ads that you see everywhere and that seem to know exactly what you want) and through Youtube.

Google stands out for many advertisers because it gives them a chance to push a single campaign across many platforms and millions of sites. They can display 30 second or 5 second ads on videos; they can display text ads on websites; and they can display banners on mobile apps. That’s why Google are said to generate between $15 and $20 billion every single quarter through advertising spend alone.

Why Some Brands Spend More

Twitter are known to spend about $40 of every $100 in revenue on sales and marketing. This sounds like a disproportionately high figure when compared to other top technology brands, but only because Twitter doesn’t quite operate in the same way. It doesn’t have a product to sell, so it doesn’t need to invest in stock. It is also less reliant on physical assets. What’s more, while Twitter is far from a new company, it still has the feel of one as it has notoriously struggled to monetize its platform.

It’s one of the reasons why many investors are sitting on the fence with regards to buying Twitter stock. A company that throws a sizable portion of their revenue at sales and marketing is company that looks a little desperate and one that clearly doesn’t have confidence in its current setup. This is the opposite of Apple, who spend just 7%, and of Google, who spend 12%.

Of course, it’s not always a sign of desperation and could also be seen as a brand that is confident of its offerings and is keen to grow. But it’s something that you should check out with any company you plan to invest in. Signs of lost revenue, bankruptcy, impending audits and diminishing profits are also worth checking before you decide to invest in any blue chip stock or established company.

Major Companies that Went Bankrupt (Blue Chip and Bust)

Major Companies that Went Bankrupt

No one is safe from bankruptcy. That applies as much to you and I as it does to companies big and small. A controversy, a change in trends, a criminal act—these things can break companies in seconds and the world of investing is littered with broken billion dollar companies.

A blue chip stock is supposed to be safe from such occurrences, but this isn’t always the case. Big public companies are not immune from bankruptcy, and the same applies to private companies. In this guide we’ll show you just how far the mighty can fall as we look at major companies and blue chip stock that went bankrupt.

Northern Rock

If you are not in the UK, then you probably haven’t heard of this one. If you are, then it will be all too familiar.

Northern Rock was a huge bank that was listed on the London Stock Exchange. It generated a huge £5 billion in annual revenue and was one of the biggest financial institutions in the UK. No one expected it to fail and it seemed unlikely that such a thing would ever happen, but as you have probably guessed from its inclusion on this guide, that’s exactly what happened.

This one is actually very personal for me. I knew a few people who lost their jobs when this bank went under and I also once owned stock in the bank. This was the first time I truly realized how unstable companies can be, even at the very top.

That stock was given to me to cover a debt. I had helped someone out with a deposit for a mortgage and they were going to cash in the shares for me. Instead, they transferred the stock to me and insisted that I keep it because, and I quote, “It’ll earn dividends and will keep growing. It’s a blue chip after all”. At the time, I wasn’t interested in investing in banks, so I cashed the shares in immediately and used them to buy shares in another company.

A year later, they went into decline and my decision proved to be the right one. Northern Rock simply couldn’t maintain themselves in the banking crises. This crisis hit most banks in most countries and while the bigger ones stood defiant and strong, a few of them collapsed under their own weight. Northern Rock was the biggest to do this in the UK.

Enron

When Houston Natural Gas and InterNorth merged into 1985, Enron Corporation was born. The origins of these companies went back over half a century at that point and the merger served to create one of the biggest energy companies in the United States.

Enron quickly invested its money and began to improve its offerings. In the summer of 2000 their stock was trading for $70 a share. But things quickly turned sour. Promises were made to add huge value to the company and these promises never came to fruition. The company began to suffer and then a controversy hit.

There were fraudulent practices going on and all the audit assistance in the world couldn’t help this energy giant from bottoming out. They filed for a chapter 11 bankruptcy in 2001 and at the time they were valued at $65 billion.

General Motors

This company still exists and you can learn about it by visiting our General Motor Stock page. But the GM of today is decidedly different to the GM of yesteryear. In 2008 they were one of the biggest companies in the world and everything was looking good. They were had some of the highest revenues of any Fortune 500 company and it seemed unlikely that they would collapse, but collapse they did.

In 2009 they filed for bankruptcy and were eventually bailed out. They are now majoritively owned by the US government who ensure that this top US manufacturer still stands strong.

Lehman Brothers

There is not much to say about this former blue chip bankrupt stock that hasn’t already been said. They were the ones to cause the banking crisis because their bankruptcy came as such a shock to the wider world. They filed for this in 2008, putting an end to a company that had previously generated a revenue of close to $20 billion a year.

Lehman Brothers is the poster-child for major companies that have gone bankrupt. They are the ones that many people refer to when the question of whether you can be “too big to fail” arises. Simply put, and as Lehman Brothers proved, you can not be too big to fail and as the old saying goes, the bigger you are, the harder you fall.

It’s just a shame that the fall in this case dragged down many other companies and had a negative impact on the lives of many people around the world.

Washington Mutual

Another top bank that went bankrupt in 2008, Washington Mutual had been listed as a top investment opportunity just two years previous by Forbes Magazine. When they eventually filed for bankruptcy they had assets in excess of $300 billion and were the 6th largest bank in the United States.

Chrysler

Bankruptcy is not necessarily the end. There are many major companies that have declared bankruptcy and a number of them have gone bust, but others have managed to survive, much like General Motors did. Another big company that survived bankruptcy and near-failure was Chrysler, an American car manufacturer that struggled under the force of the financial crisis and was eventually ordered into administration by the former President of the United States Barack Obama.

It took them just two years to get out of bankruptcy and to become a profitable company again, which is one of the quickest turnarounds in history and is a testament to the brand power of this manufacturer. They were valued at just under $40 billion at the time they filed, and they have since been generating revenues in excess of $80 billion a year.

Are LEGO Sales Dropping: Is This a Bad Time to Invest?

LEGO Sales

LEGO has been one of the hottest toy companies on earth for the last decade. In that time it has grown into one of the most successful companies and by far the biggest toy maker in the world.

On our LEGO Stocks and Shares page we discussed everything that was good and great about this company. We told you whether you could or could not invest and we also provided some other tips on how to profit from the success of this company. But recently there have been some stark warnings made about LEGO and some suggestions that it may not be as big as once thought.

LEGO’s Past Struggles

In 2003 LEGO was struggling and it looked like it wouldn’t last for long. It had been one of the biggest toys in the world for a few decades but demand was on the downturn and it didn’t look like it would be able to sustain itself for much longer.

In a last ditch attempt to turn things around they hired a man named Jorgen Vig Knudstorp who had helped similar companies to succeed. And the appointment worked very well for this global toy brand, because the decade that followed was one of the most successful that the company has ever seen.

Jorgen Vig Knudstorp took them to the top, by-passing the likes of Hasbro and Mattel. It looked like LEGO had the world at their feet and this continued into 2017. After all, not only were their toys still selling, and not only were they producing millions of LEGO bricks a day, but they also had their films, their games and many other parts of the brand.

But then there was a downturn. This seems to have come out of nowhere and it has been a shock to the system for LEGO. The question is, is this the beginning of the end for the brand or will they turn things around in 2018 and beyond just as they did back in 2003?

LEGO Sales Have Slowed

LEGO has seen double-digit growth in the last 5 years, but the toy manufacturer saw a decline in sales in the first half of 2017. This decline was as high as 5 percent. That might not sound like much, but the fact that there is a decline at all is enough of a worry for a company that has been on the up and up for a number of years now.

This drop in sales was enough to shake the company into action and they immediately announced that they would be laying off a significant number of employees. Over 18,000 employees will likely lose their jobs as a result of this, accounting for around 8% of the total workforce.

The LEGO Revenue Drop in More Detail

LEGO Sales Dropping
LEGO have tried to turn themselves into a truly global brand. They targeted the Chinese market a few years ago and in the first half of 2017 they recorded a growth in the double-digits in China. This was huge and it should have led to a big year for the brand, but at the same time they lost traction in established markets in the US and Europe, and this is why they were hit so hard.

China may be a huge market, but a little growth in a huge country is never going to be enough to offset a huge loss in a big country. For whatever reason, demand for LEGO in countries like the US, UK and Germany was less in the first half of 2017 than was expected, less than it had been in previous years.

Total sales amounted to $2.38 billion. This was enough to keep them at the top of the list for biggest toy manufacturers in the world, but the decline suggests that some of the market is moving away from LEGO and towards brands that have been created by their biggest rivals.

The question is, just what has happened to the brand?

The Reason Behind the Decline

There are a number of things that could have caused this decline in sales. One of the main causes may be consumer fatigue. Simply put, the market has been saturated by LEGO products and by the LEGO brand in the last couple of years and in a marketplace that is built on fads and trends, this could have caused some disinterest to rise to the surface. Kids want the next big thing and a brand that has been around for a long time and that everyone knows about is never going to be that.

LEGO has continued to flourish purely because it’s a toy that all kids want by default and because they have occasional releases that trigger those trends to spark renewed interest in new generations, whether it be in the form of TV and film tie-ins, or because of the release of a new product. But this market is always going to follow trends and it’s always one new, exciting release from seeing a big shake up.

The LEGO Movie, which was released in 2014, played a big role in increasing interest in this toy and it came at a time when it was already growing in popularity. But 2017 has seen two further LEGO Box Office releases and a further two that went straight to DVD. There have also been TV specials and TV shows, and it’s surely no coincidence that 2017 has been the biggest year for on-screen LEGO appearances and this has also been the year in which people have began moving away from the brand.

The Future is Bright

LEGO Sales Decline

The important thing to note is that LEGO is still huge. It still far outsells anything else on the market and it has the sort of brand recognition that any company would kill for. Kids and adults love it, there are dedicated fan clubs and communities around the world based on this creative toy, and decreasing sales or not, it will still have a bright future.

So, as we mentioned in our LEGO share guide, it is still a good time to invest in LEGO sets, focusing on limited editions ones and preparing for these to increase in value like so many others have done in the past.

If you keep them in good condition, get the sets that are produced in small numbers and have something different to offer, and make sure you keep for at least a few years, then you can earn a small profit from investing in LEGO.

Do Insurance Companies Earn Money? How Much Profit, If Any?

Do Insurance Companies Earn Money?

We have discussed countless insurance firms here on Buy Shares In. These companies are usually a good bet for investors, but why is that? Are these companies actually profitable in a world where they seem to be handing out huge payments, getting sued and falling foul of legal restrictions and fines?

There’s only one way to find out. So, if you’re interested in Blue Chip stock like State Farm, then read on to discover if insurance companies make money and just how they do it.

How Do Insurance Companies Work?

The insurance industry was formed hundreds of years ago when merchants were provided with a way to safeguard their ship’s cargo against loss. They were transporting vast sums of goods across huge oceans and it wasn’t uncommon for these ships to get pirated or wrecked. Insurance was therefore a way for them to minimize risks and it’s the same today, only you can get insurance for everything you own against most eventualities.

You pay money based on a factor of risk determined by the insurance company and they agree to pay you a lump sum in the event that something untoward happens and you suffer major financial loss. It seems like a risky business for them to get involved with. After all, the money they pay out is far higher than the money you will put in and surely there will be enough claimants for them to run at a loss? Well, yes and no.

How Do Insurance Companies Make Money

Insurance companies have three major expenditures and all of the money they receive is pushed into one of these three areas.

The first is the pool of money put in standby to pay for all of the claims made against them. They have a fairly good idea of just how many claims there will be and how much will be claimed over the course of a year and they always have more than enough to cover these costs, as you would expect.

The second expenditure is marketing. Customers don’t just rock-up to their door and start paying them money. They need to spend to bring them in and there is a marketing budget for this. The final pool of money is used to invest. This means they operate much like a bank does, knowing that their actual operation may lose them money from time to time but that they will always have that investment cash to turn to and that it will continue to turn over a big profit.

Do Insurance Companies Make Money on Premiums?

How Much do Insurance Companies Make

Every year is different. Insurance companies that underwrite for home content loss and residential properties will suffer bigger losses in years where there have been particularly damaging storms. Generally, they will spend between $0.90 and $0.98 of every $1 they receive on paying for claims.

As you can imagine, once you add the marketing costs into this then there isn’t much left. In fact, most insurance companies do not make money from the very thing that they were setup to do. Their earnings come from the investments they make. If you give them $10,000 over the course of 30 decades and then pass away leaving $150,000 to your family, then it looks like a sizable loss on the surface, but that $10,000 could have been doubled or tripled fairly easily and once interest is added, it grows quite quickly.

All insurance companies need to very delicately balance the books in order to make sure that fraud and underwriting doesn’t leave them deeply in the red at the end of the year. This is where premiums come in. They will offer you a figure based on the condition of your health or your home, as well as the amount of fraud that they can expect to receive over the course of a year. This is a complex process and while it’s not an exact science, it means they can predict what kind of payments they are expected to make over the course of a year and even a decade and adjust all future premiums accordingly.

These premiums are changed individually and across the board. So, if you have been an insurance paying homeowner for 20 years without incident then you can expect your prices to come down. If you suddenly make a homeowner claim (see InjuryLawService.com) then you can expect future premiums to increase. However, factors such as a year of bad storms and an increase in fraud will have just as much of an impact on your premiums.

It might not have anything to do with you, but they still need to make money and so they factor these things in. That’s why you see so many claims about cases of fraud sending everyone’s premiums up. It’s not just a scare tactic, it’s actually happening and because they are only earning a couple of cents on the dollar they have very fine margins to work with and will do what it takes to maintain these.

So, Do Insurance Companies Make Money?

As mentioned already, this is a somewhat yes and no answer, but the same can be said for many big businesses. There is a strange trend for them to lose money and focus instead on growth. Amazon is known to lose money on countless products just so they can be the cheapest retailer of said products and they are also known not to draw major profits because they invest them back into the company. The same can be said for Google, albeit to a lesser extent.

Then you have the banking industry which runs on margins that are as fine (if not finer) than the insurance industry. After all, they may make money from credit card interest and overdraft charges, but when you factor in all of the money they pay out in interest on saving accounts and current accounts, it’s easy to see how those margins are so fine.

That’s because their goal is just to get you money and essentially reward you for giving it to them. They then take this money, invest it and try to make significantly more investing it than they will ever pay to you in interest. Insurance companies operate in a similar way, even if the setup is a little different.

The Darker Side of Wall Street and New York Trading

Drugs and Wall Street

When things on Wall Street are good, they’re very good. But when they’re bad, it’s not only the market that reacts.

There’s a dark side to Wall Street; traders are eager to see a return on their investments. And brokers feel an urgent need to perform, regardless of market conditions. Unfortunately, this pressure can cause both investors and professionals to suffer. Many turn to drugs, and still others determine that the weight of the job is too much to handle.

What really happens on Wall Street when professionals feel burdened by financial hardship? What lies on the darker side of Wall Street? Are drugs as prevalent on Wall Street as popular culture would have us believe?

Drugs are, in fact, commonplace on Wall Street. From the doctor-prescribed to the more illicit street drugs, mind-altering substances have become par for the course among, in particular, brokers.

Financial Crisis and Mental Health

Consider the Great Depression. Prior to the United States stock market crash in 1929, the world-wide suicide rate remained constant, at about 12.1 per 100,000 people. Over the eleven years which followed, that number jumped to almost 19.

The United States suicide rate across 100 cities was an alarming 20 per 100,000 deaths. In Davenport, Iowa, for example, the number was highest, at 50.3. Other nations fared no better. Austrian suicides claimed 34.5 of every 100,000 deaths. There was an immediate spike in the numbers following the market crash, and those numbers continued to increase in the two years which followed. It wasn’t until the beginning of World War II that they began to decline.

The Great Depression is only one instance of a decline in mental health due to financial crisis. The global financial crash in 2008 prompted an additional 5,000 deaths, each ruled suicide. Most were men.

Alden Cass is a psychologist who works primarily with Wall Street professionals. In 2000, he published a study detailing the mental health of retail brokers. His findings? Approximately 23% of subjects suffered major depression. Of these, most were men, and most had among the highest income levels within the field.

This is in no way meant to be an exploration of suicide on Wall Street. Instead, the purpose to citing these facts is to bring to light just how acutely the financial and professional stresses of Wall Street can impact a person.

Financial stability has a tremendous impact on mental health. And, of course, not all who struggle with job-induced stress opt to end their lives. Some, it would seem, do just fine. Others have found a different way to cope with hardships: substance abuse.

Substance Abuse on Wall Street

You may remember the story of Jordan Belfort, a former stockbroker. Known as the Wolf of Wall Street, Belfort’s memoirs became popularized by the film of the same name.

Belfort’s memoirs, and the subsequent film adaptation, were among the first attempts by a Wall Street broker to truly illustrate just how stressful the financial culture can be. In “The Wolf of Wall Street,” Belfort describes Quaaludes, in particular, as a common drug of choice during the 1990s.

The 1990s weren’t the beginning of it, though. Wall Street brokers have long been on the radar of the DEA. One of the most notable cases was in 1987; the Drug Enforcement Administration conducted raids of four Wall Street brokerages. That morning, 19 employees were taken into custody for possession and distribution of cocaine.

Drug use on Wall Street has changed over the years. While cocaine has been a drug of choice since as early as the 1970s, Wall Street itself has changed. While there are still actual and literal brokerage offices on Wall Street, the modern trader takes a more remote approach.

The younger generations have become increasingly interested in trading, in particular day trading. As a result, drug use has changed, too. Sure, there are still Quaaludes. There’s still cocaine. But now, Ritalin, Adderal and Ecstasy have entered the “market.”

Provigil, Zoloft, Xanax, Lorazepam and even Viagra are prescribed to brokers, simply to deal with the stresses of the job. Uppers are most common, while marijuana is frequently consumed to counter them – to “chill out,” as it were.

But why? Wall Street brokers hold the American dream job: a fast-paced career in one of the financial capitals of the world. And money. Lots of money. Why are stock brokers and other Wall Street employees still turning to drugs?

Drugs and Wall Street: A Necessary Evil?

Darker Side of Wall Street

Stress is inexorably linked to addiction. And in addition to being linked with addiction, it’s also partially responsible for addiction treatment failure and relapse. Loneliness can prompt drug use. Peer pressure can, as well. Experimentation is commonly associated with the onset of addiction. “Will this Adderall help me get through the day any more easily?”

Wall Street employees sometimes work in excess of 120 hours each week. They hold the responsibility of others’ fortunes in their hands. They frequently miss a work-life balance, missing children’s birthday parties and anniversary celebrations. They are at constant war with both their minds and their bodies.

As a result, these people turn to that which may make them feel. Feel what? “Anything,” some have responded. Alcoholism is frequent amongst Wall Street brokers. Eating disorders are, as well. Then, of course, there are the drugs.

A vast majority of Wall Street brokers are phenomenally intelligent people. In interviews, these employees have described their decision to turn to drugs, claiming that they’d grown accustomed to being in control. Once work on Wall Street began, they no longer felt that way. Drugs allowed them some to regain some semblance of control.

Older employees have struggled with addiction caused by a change in mental health as well. These workers have noted that there are many more regulations now. So many, in fact, that it’s a full time job just to keep up with them. They’re not doing more work and making less money.

Old and young, seasoned and inexperienced, Wall Street employees continue to turn to drugs to make the career more bearable. Unfortunately, as noted previously, drugs aren’t always the answer. The suicide rate on Wall Street is 1.5 times the national average.

The Changing Landscape of Wall Street

Today, not all Wall Street employees report to an office, where they may be offered access to mental and physical health services. The internet has spawned a generation of DIY and virtual brokers; many brokers today can be found camped behind their computers in the confines of their homes.

The change in landscape doesn’t mean a change in addiction, however. Young brokers report an increased use of Adderall and Ecstasy, among others. Wall Street is known for its party culture, but that extends to those who aren’t physically in New York.

And it likely won’t stop. As long as the physical and mental demands of finance take a toll on those who work in the field, the drug use and suicide rate among these people will likely remain very high. While brokerage firms have begun to assist in providing interventions and mental health care, these services do little. Drug use is, simply, socially acceptable on Wall Street.

Business Travel Tips: How to Keeping Earning on the Move (5 Top Tips)

Business Travel Tips

Whatever your business is, there’s a good chance you will be pulled to and fro from your place of work to destinations all over the world. So, make sure you pay attention to these business travel tips to ensure you can continue to work regardless of where you are in the world.

Business Travel Tip 1: Book into Business Hotels

It really does make a difference to stay in a business hotel. They tend to have better Wi-Fi and you have more reason to complain if this is not working. They also offer concierge services and have business rooms and conference rooms where you can access everything from printers to landlines, faxes and more.

In 2017, all of that might seem a little redundant, but there are still uses for it and it’s a good thing to have at your disposal. These hotels also tend to be devoid of families, which means there are very few little children running up and down the hallways interrupting you with screams.

Check with sites like Booking.com (owned by Priceline) to find the best place to stay. The speed of the Wi-Fi is also important. You might be called upon to have a video conference, you might want to catch the opening and closing of the New York Stock Exchange to make some trades. Whatever your reason, you need fast connections and the speed are never shown in the descriptions of the hotels.

For this you have to look at the reviews. Focus on the negatives first. If it’s a business hotel, as it should be, then the guests should have similar needs and if they are leaving bad reviews then you better believe they would mention slow Wi-Fi if that indeed was an issue.

If these reviews say that the issue was intermittent or if the hotel has responded to say it was a one-off, then contact them beforehand. Let them know that a high-speed connection is essential and that you expect a discount or full refund if they are not able to provide this. If they refuse, move onto another hotel.

Business Travel Tip 2: Bring a Dongle

You just can’t trust hotel Wi-Fi, even if there are no bad reviews. You don’t want to be left in the lurch because half a dozen teenagers are hogging the connection by uploading pictures to Facebook (NASDAQ: FB) and Instagram.

So, as a backup plan take a Pay as You Go Dongle. These devices will allow you to connect to relatively quick Wi-Fi wherever you are. They can get expensive if you use them too much so they should not be a Plan A. But as a backup plan they are perfect. Just be sure to top it up before you leave.

Business Travel Tip 3: Pack Well and Light

Business Travel

Yo can move much quicker if you pack light and don’t take any big suitcases. You should aim for carry-on luggage only, maybe with a toiletry bag. You have to be familiar with the specifics of these and of quality luggage in general. Shop well and you can save yourself time and money right now, as well as space and effort later on.

The last thing you want is to be forced to wait for the carousel to spit out your bag after you’re late for a business meeting, or for you to have lost an essential item amongst all of your clothes. We like to pack light and tight, making sure that toiletries have their own bag, documents have their own folder, and everything else is orderly and neat.

Business Travel Tip 4: Look for Premium Programs ad Schemes

If you can’t afford to wait in long lines and to join the meat factory that are airports, then look at the expedited travel programs. These range from “VIP” schemes at the airport that allow you to skip lines, to frequent flier programs that reward you for your globe hopping exploits. Everyone from EasyJet (LON: EZJ) to American Airlines (NASDAQ: AAL) offer these.

They may seem like needlessly expensive extras right now, but if they are within budget they are well worth it. When you’re tired, late and you just want to get tot he hotel or to a meeting, you’ll be thankful if you can skip the lines at the airport, just as you’ll be thankful when your frequent flyer miles mean you can take free business trips.

Business Travel Tip 5: Rest in the Air

Here at Buy Shares In we have done a lot of business travel ourselves. We’re used to working in many different countries, to trading stocks and CFDs in all time zones and to generally being workaholics. Take it from us when we say that the best thing you can do in the air is to put your phone away, put the laptop down and don’t do any work whatsoever.

If you force yourself to work in the plane then you’ll be more fatigued and stressed when you land. Not only will this make it harder to endure meetings and work when you arrive, but it will also increase your jet lag and generally make your entire trip unbearable. We find that the best thing to do is just to relax, maybe by watching a film or reading a book.

If you take your mind off work completely then you will be fresher when you land and better prepared for all of the days to come. If you work on tight schedules, you can’t afford mistakes and you have a lot of responsibility, then this could be crucial.

Finally…

Our final business travel tip is to try and find time to enjoy yourself. We know you are there to work, but you’re seeing the world, so it’s only right that you experience it as well. You could travel the world for years, seeing it all but not knowing anything about the cultures, the language, the way of life.

You have been afforded a unique opportunity that many would kill for. So, whether you’re traveling domestically or internationally, make sure you find time to enjoy yourself and to see what local life is like.

Health Care Reform Pros and Cons for the US Economy

Health Care Reform

Health Care Reform. What is it? Why do we need it? Do we actually need health care reform in the United States?

The Patient Protection and Affordable Care Act, also known as Obamacare, was signed into law by President Obama in 2010. Now, the current administration is looking to repeal it.

There are pros and cons to health care reform; just as Obamacare has its benefits and its downsides, health care reform will impact the American population and our economy. So how, exactly, did the Affordable Care Act change the economy, and why are so many looking to do away with it?

The Patient Protection and Affordable Care Act

For a great many years, the United States government has struggled to devise a way to make Universal Healthcare an option for Americans. As one of only a handful of developed countries not covered under such a universal plan, lawmakers have spent many days in debate over how to make insurance accessible to everyone.

Health insurance products, prior to the ACA, had been at the discretion of the states. In Massachusetts, for example, MassHealth existed to ensure that all individuals were covered by health insurance. Those who qualified under specific income guidelines were granted the opportunity to take advantage of public health insurance. Those making above that income level could purchase private insurance, or be subject to a tax penalty.

Obamacare worked in much the same way. Private insurances were consolidated and purchased through the Marketplace. Those who chose not to purchase insurance, and who could not qualify for public assistance, were fined a penalty on their federal taxes.

So what was the result? Simply put, the result was a lot of uninsured people. The premiums of Obamacare, in its beginning stages, were just unattainable for many families who didn’t qualify for public aid. Medicaid was expanded in several states, but in others it was capped and made inaccessible. In short, people opted to pay high emergency care and as-needed health care costs in lieu of paying the high deductibles and premiums offered by the ACA.

Health Care Reform

Obamacare

The Affordable Care Act did have its benefits to the American economy. First, it caused an increase in consumer spending. Raised prescription drug costs and higher insurance spending contributed to this. Second, there was a decrease in state-level spending on healthcare. This, in turn, freed up money to be used against the national deficit. The Congressional Budget Office projected that, if left in place, the ACA would reduce the Federal deficit $16 trillion over ten years.

However, it can’t be left unsaid that Obamacare did leave many Americans uninsured. The current administration has referred to Obamacare as a “disaster;” while that may or not be so, there are certainly areas which could use improvement.

There have been at least five revisions to the proposed repeal, and the most significant point of note is this: under the new proposed plan, the administration would cut back considerably on Federal funding to Medicaid and Medicare recipients. This would leave approximately 19 million adults uninsured.

This spending cut, however, would free up state money to be utilized elsewhere. It would also theoretically increase consumer spending. That is, if those uninsured choose to pay the costs of emergency healthcare and prescription medication. There’s always the risk that those individuals may not seek medical attention at all.

Obamacare certainly has provided benefits to the economy. And the proposed changes have, thus far, fallen short. So what’s wrong with Obamacare, and how can lawmakers truly fix what’s currently in place?

The Trouble with Obamacare

The first problem with the Affordable Care Act is that the plans were expensive. While the costs of those plans were designed to decrease over the years, that fact did little to assist people who were forced to purchase insurance plans from the Marketplace. The choice was simple: pay a high premium, or pay a hefty fine.

The fines themselves were confusing. Depending upon family size, income, and other factors, each America was assessed a fine. Or a percentage of AGI. Or an amount that he or she was responsible to pay. The list goes on, and, like much of the US tax code, it may take an attorney to figure out.

Signing up for Obamacare was meant to be easy, but in fact was quite complex. New insurance agents were hired to assist, but often they were unfamiliar with the rules of the ACA. At the launch of the Marketplace, the website did not work at all. Confusion about plans and how to sign up caused many Americans to miss the deadlines.

For those who could afford the Marketplace plans, Obamacare was a great program. However, most of those individuals were already enrolled in company insurance plan, and the ACA just muddied the insurance process. Plans were cancelled and individuals were forced to re-enroll in different, sometimes inferior coverage.

The Affordable Care Act initially existed to provide all Americans with health insurance. And in fact, that likely would have been the result if left in place. But there were too many short-term problems with the program which were insurmountable to many Americans. This leaves the current administration under a lot of pressure.

What’s Next for Health Care Reform?

Affordable Care Act

Recently, President Donald Trump’s newest plan to replace Obamacare was voted against, and legislators are left, once again, at ground zero. Democrats and Republicans are in stark opposition, as Democrats want to leave Obamacare in place while the Republican Party seeks to repeal the law.

The problem for many is that a repeal of the law would be just that. A repeal, with no new plan in place as of yet. Opponents of the repeal see this as dangerous: Obamacare was initiated without enough planning, shouldn’t a new plan be fully developed and ready to replace the ACA?

Regardless of any lawmaker or American’s stance on Obamacare and the proposed health care reform, it’s clear that there are benefits to Obamacare and that there would be certain benefits to refining the law.

Done right, a universal healthcare plan such as the ones proposed by both parties would help to decrease the national deficit. Money would be freed up at the state level to be added to other programs. Consumer spending would increase as more Americans bought insurance and paid for health care. Unfortunately, it’s up to lawmakers to achieve all of these goals while still keeping health care accessible to all Americans. It’s not an easy task; hopefully the Trump administration can work together to find a solution.