A Real Steal
It's every consumer's nightmare. You open a credit card bill to find a total that takes your breath away--not to mention a dizzying list of unfamiliar charges. With an increasing number of online transactions, more cardholders are experiencing that scenario firsthand. In fact, 1 in 20 online consumers were victims of credit fraud in 2001, according to market research firm Gartner Inc.
But now, with single-use credit card numbers, you no longer have to forego the convenience of shopping online to guard against having your credit card number-or worse, your identity-swiped from online merchants' databanks by hackers.
"Cardholders register on our Web site and then, each time they want to make a purchase, a click-through generates a unique account number," explains Judy Tenzer at American Express. "You use that number rather than your card number when you make a purchase on a merchant's site."
The single-use systems from issuers like American Express won't prevent all types of credit card fraud-thieves may still dig through your garbage for old charge bills, adds Tenzer. "But there's an added layer of protection."
Think the stock market's gone to the dogs? You may be more right than you know. Investment pros are howling with glee over how the Bush administration's proposal to eliminate taxes on most dividend income will boost a stock-picking strategy commonly known as the Dogs of the Dow method. The strategy holds that the 10 highest yielding Dow Jones stocks-known as "Dogs" because their prices tend to be beaten down-often fare better than the broader market.
How much better? Following the Dogs strategy would have yielded a 17.7 percent average annual return since 1973, as compared to the Dow Jones industrial average overall return of 11.9 percent during that same period, according to Dogsofthedow.com.
The dividend tax proposal will add to the strategy's appeal, says Neil Hennessy, president of Novato, California-based Hennessy Funds, which runs two funds that employ the strategy. "If you take that story and add in the elimination of double taxation of dividends, you get a huge upside potential."
To get in on the action, investors need only buy the 10 top-yielding Dow stocks at equal dollar amounts and then update their portfolios to the new roster each year, says Hennessy. Dogsofthedow.com will even identify each year's picks for you.
Last year, the SEC warned investors to view company-issued pro forma financial reports with skepticism. This year, the agency is cracking down on companies that use them. Pro forma reporting was originally intended to enable companies to issue financial releases that exclude "one-time expenses" from earnings to enable investors to better compare quarter-to-quarter or year-to-year performance.
"The bias was to remove things that made the earnings look lower, and it got out of control," explains Peter H. Knutson, associate professor emeritus of accounting at the University of Pennsylvania's Wharton School, who says some companies used pro forma figures to mislead investors.
To bring pro forma reporting back under control, the SEC recently prohibited companies from making misleading statements and omissions in pro forma reports. It also ruled that companies must clearly delineate what transactions have been excluded or included, detailing how pro forma statements differ from Generally Accepted Accounting Principles (GAAP).
While critics charge that corporate lobbying efforts have been effective in softening some of the recent SEC regulatory reform efforts, the regulations on pro forma reporting are clear and enforceable. However, says Knutson, because companies have to adhere to GAAP in preparing financials anyway, the ruling will pose no hardship to ethical firms. "All they're doing is flipping a light switch in a dark room," he says. "It's a matter of revealing what they've already done."
Jennifer Pellet is a New York City-based freelance writer specializing in business and finance.