It's a 401(k), Not a Piggy Bank ... So Don't Treat It Like One

Getty Images One of the joys we have as parents is teaching our three kids about money. With the oldest being just 6, a big part of that revolves around her piggy bank. Whenever she gets a small amount of money, it goes in there, and we talk with her about the importance of saving, giving, and having some to spend on things she wants, which is usually along the lines of a gumball. With a piggy bank, you put money in and take it out. It's a fairly simple tool, and it's great for what it's used for. A 401(k), on the other hand, is a great tool to save for retirement. But increasingly, 401(k)s are being used as something they aren't -– piggy banks. Startling Statistics Recent studies show that Americans are increasingly pilfering from their 401(k) accounts. With the economy being the way it has been since the financial crisis, that's understandable on one level, but the choice can put your retirement plans on a slippery slope. According to the IRS, $57 billion was withdrawn prematurely from 401(k) accounts in 2011 -- up 37 percent in inflation-adjusted dollars from 2003. You could argue that if a person needed the money to survive, then an early withdrawal from a 401(k), even with the tax penalty, is better than other options. That would be right -- to a point. The most disconcerting number, in my opinion, is that younger individuals are withdrawing the most. According to a Fidelity (FNF) study, nearly 40 percent of workers between 20 and 39 are cashing out their 401(k) plans when they change jobs. There could be many reasons for this, but the Fidelity study points out that many don't see the need to roll over their old 401(k)s when the amount being considered is "only" several thousand dollars or a little more. Add that to those people who take out 401(k) loans to fund such things as real estate purchases, and it paints a worrisome picture. The Real Purpose of a 401(k) To a degree that it hasn't for decades, the burden of retirement planning now falls on individuals. Only about 30 percent of companies still provide pensions, and even among those, more firms are freezing them. In light of that, your 401(k), with its tax-advantaged status, is likely going to be one of your best options for putting aside money for retirement. While there may be times where you need to take out loans for different purposes, simply cashing out a 401(k) should be avoided at all possible. This is especially the case if you switch jobs: When that happens, you will want to either roll over your 401(k) into your new plan or into a rollover IRA. Not only will this allow you to avoid losing money due to early withdrawal penalties, but it will also keep the power of compound growth on your side as you build up your retirement nest egg. Saving for Retirement Is a Long Game The rise in early 401(k) withdrawals reveals a broad lack of understanding about retirement planning. Saving for your old age is is a marathon, not a sprint -- one that takes decades to complete. By raiding your 401(k), you're only harming your future. Unless you plan on working until you're 80, it behooves you to leave your savings untouched so you can reach retirement relatively close to when you plan to. When we're talking about amounts under $10,000, it can be easy to think that they'll mean nothing in the long run. But if you invest it wisely and let it stay in the market long-term, it can build on itself to and turn into serious money each month for you in retirement. (Don't believe it? Check out the first two slides in this article. The math is clear: Small Money + Time to Compound = Big Money) Part of saving for retirement is making sure we're doing what's best with our 401(k) funds. If you're tempted to withdraw money from it early, ask yourself if raiding your savings now is the best decision for your long-term wealth. In most cases, it's not.

Coca-Cola Profits Slips Even as Consumers Sip More Drinks

Daniel Acker/Bloomberg via Getty Images NEW YORK -- Coca-Cola's first-quarter profit fell nearly 8 percent as the world's biggest beverage maker faced a stronger dollar and sold less soda. But the company sold more of its noncarbonated drinks worldwide, and its earnings matched expectations. The Atlanta-based company says global sales volume rose 2 percent. In its flagship North American market, soda volume slipped 1 percent as the company raised prices. Coca-Cola (KO), which also makes drinks including Sprite, Powerade and Dasani, has been under pressure to deliver stronger results, particularly back at home where Americans have been cutting back on soda for years. The company isn't alone in its struggles to boost soda sales. PepsiCo (PEP), which reports its earnings Thursday, has seen even steeper declines in its soda business despite stepped-up marketing, including sponsorship of the Super Bowl halftime show. Both companies sell a wide array of beverages, including sports drinks, bottled water and orange juice. But sodas remain a big part of their businesses, and they're scrambling to figure out ways to stop the declines. "Look, we have Coca-Cola, and we have another 500 brands. The key is to offer a wide variety of choices," CEO Muhtar Kent said in an interview on CNBC regarding the concerns about soda. To boost sales, the company plans slash costs and put the savings into marketing in the year ahead. It also introduced a version of its namesake soda sweetened with a mix of stevia and sugar in Argentina, with plans to eventually introduce the drink elsewhere. For the quarter ended March 28, net income fell to $1.62 billion, or 36 cents a share. That compares with net income of $1.77 billion, or 39 cents a share a year ago. Excluding one-time items, net income totaled 44 cents a share, matching analyst expectations. Revenue fell 4 percent to $10.58 billion. Analysts expected $10.5 billion. Companies like Coca-Cola that do a large portion of their business overseas take a hit to revenue when the dollar is strong, because foreign currencies convert back into fewer dollars. Why is the battle between Coke and Pepsi -- two ultimately similar types of sugar water -- the most important struggle in the history of capitalism? Simply put, their rivalry transcends time, distance, and culture. It has divided restaurants, presidents, and nations. It has been waged in supermarkets, stadiums, and courtrooms. Its many foot soldiers include Santa Claus, Cindy Crawford, Michael Jackson, Max Headroom, Bill Gates, and Bill Cosby. In 1886 an Atlanta chemist introduced Coca-Cola, a tasty "potion for mental and physical disorders." Pepsi-Cola followed seven years later, though it would be decades (and two bankruptcies) before Coke acknowledged the company in the way it had other competitive threats: lawsuits. Pepsi-Cola had made hay during the Depression. Like Coke, the drink cost a nickel, but it came in a 12-ounce bottle nearly twice the size of Coke's dainty, wasp-waisted one. But by the 1950s, Pepsi was still a distant No. 2. It nabbed Alfred Steele, a former Coke adman, who arrived embittered and ambitious. His motto: "Beat Coke." Coca-Cola refused to call Pepsi by name -- the drink was "the Imitator," "the Enemy," or, generously, "the Competition" -- but it began tinkering with its business (and imitating Pepsi) to stay ahead. In 1979, for the first time in the rivalry's history, Pepsi overtook Coke's sales in supermarkets. It didn't last, and by 1996, declared that the cola wars had ended. Since then Pepsi, with its increasing focus on health and snacks, has as good as surrendered. America's favorite two soft drinks? Coke and Diet Coke. Winner: Coke 1. Coke vs. Pepsi Ford, founded in 1903, and GM, which came along nine years later, have been warring for 101 years. The epitome of crosstown rivals -- their headquarters are just 11.5 miles apart -- they face off every day on dealer lots and in motor sports. Both maintain operations to scour the other's new products. In 2011, Ford marketing chief Jim Farley was quoted as having said, "I hate them and what they stand for." Meanwhile, GM chairman and CEO Dan Akerson recommended sprinkling holy water on ailing Ford luxury brand Lincoln. "It's over!"

Apple Acting More Like Microsoft Than Facebook And Google

The technology sector has had an incredible multi-year run with a string of hot IPOs and the Nasdaq climbing back over 4,000. And yet the advance has come with barely any participation from the sector's single biggest company by market capitalization, Apple Apple.

Thursday, in a session that saw the Nasdaq and S&P 500 up 0.7% apiece, shares of Apple fell more than 1% to $531.38. In 2014 the stock is trailing broader benchmarks with a 5% decline.

New product categories were the proverbial light at the end of the tunnel for Apple investors who stayed bullish as the stock tumbled from its September 2012 peak. Even after the stock stabilized – helped along by the billions in cash the tech giant has redistributed to shareholders – the expectation of new wearable devices or a forthcoming television kept Apple optimists happy. But the argument that such products will restore Apple to its former growth trajectory has dulled and now another voice has left the chorus.

Barclays Capital analyst Ben Reitzes cut his rating on Apple to neutral from overweight Thursday, warning investors that the stuck may be locked into a trading range for the next year. More importantly, Reitzes admits that the prospect of a new category entrance from the Cupertino, Calif.-based company isn't enough to justify his formerly bullish stance.

"Frankly, we just couldn't quite bring ourselves to use smart watches or TVs as a reason to raise numbers – nor were we fully convinced that these products could move the needle like new categories did in the old days," Reitzes wrote.

Needle-moving developments in Apple's biggest business, the iPhone, have also been hard to come by. A long-awaited partnership with China Mobile China Mobile has finally arrived, but Barclays thinks "it will ramp gradually and its high price may limit adoption."

New developments in the payments space, location-based services and wearables or TV may have greater upside, but none, writes Reitzes, "seems as revoluationary as the iPhone or iPad." Despite repeated promises from Apple chief Tim Cook that more devices are coming, Steve Jobs' successor has clearly lost the benefit of the doubt from some former bulls.

Apple's sheer size (market cap: $474 billion) means that it is still a major holding for many investors and a sizable component of countless indexes. It also routinely shows up among the most widely-held names by retail investors and institutions, but it is rarely a highlight in conversations about exciting tech investments from either a growth or value perspective.

Not only has Apple been slow to enter new categories with in-house products, it has also been beaten out for acquisitions by rivals like Facebook and Google Google. Whether or not Apple bid for assets like smart appliance maker Nest Labs, which Google picked up for $3.2 billion in January, or messaging service WhatsApp, which Facebook bought in deal worth up to $19 billion Wednesday, is not the point. There is a perception that Apple is being outmaneuvered for the next batch of up-and-coming tech assets, and it's a perception the company does not seem to have much interest in dispelling.

In fact, thanks to the pestering of billionaire investors David Einhorn and Carl Icahn over the last year, the focus on Apple's cash hoard has centered on just how much it should be returning to shareholders in dividends and buybacks, rather than whether it should hunt for bigger game on the takeover trail.

Still, the "Apple as a value stock" line of thinking has many skeptics. Wally Weitz, a value investor who manages $5 billion at Weitz Investments, hasn't been tempted to add Apple to his flagship fund.

Apple's iPhone business "is great now, but it won't be that way forever [and] maybe the 'cheaper, not as good' competition gets good enough," Weitz told Forbes last month, which may signal that the stock still has a ways to go before it's irresistible to value investors.

That's a possibility that Reitzes touches on his note, comparing Apple to a stock that has been something of a punching bag for years: Microsoft Microsoft.

"We believe the valuation argument is becoming less and less helpful," he writes, noting that Microsoft's stretch from 2000 (shortly after it became the most valuable company by market cap) through 2010 is a troubling forebear that sharpens the doubts that Apple can get right back to its winning ways. Barclays Capital's analysts "see no precedent that large-size tech companies simply start to broadly outperform again after a tough year or two if the law of large numbers is catching up to them and margins have peaked."

Reitzes isn't necessarily calling for another big slide for Apple, and thinks its accelerated buyback program puts a floor under the stock at $500, but his voice is part of a chorus that has grown in volume wondering whether the upside in Apple shares is severely limited.

Can Harley-Davidson Truly Afford Its Dividend Hike and Buyback?

Harley-Davidson, Inc. (NYSE: HOG) is one of those truly iconic American brands. It was iconic enough that Warren Buffett even did a preferred financing deal with the company during the recession. The company has now announced a big dividend hike, and a huge stock buyback program. Despite its growth, there could be some issues that investors will take with the company’s latest efforts.

The motorcycle maker raised its quarterly dividend of $0.275 per share, up 31% from the prior dividend of $0.21. This dividend is payable March 7, 2014 to the holders of record on February 19, 2014. On top of the dividend hike, the company’s board of directors authorized the repurchase of up to 20 million shares of Harley-Davidson common stock. Where this gets interesting is that the buyback authorization is in addition to existing share repurchase authorizations – and some 8.6 million shares remained on prior board-approved share repurchase authorizations.

Brad Lamensdorf, of the Ranger Equity Bear ETF (NYSE Arca: HDGE), told us,

“Buybacks and dividends are a way to get investors excited in a stock when there’s very little reason otherwise to buy up shares. Buybacks are a low quality source of generating earnings per share. Historically, returns are much higher for dividend initiators and growers of dividends compared with buybacks.”

The Ranger Equity Bear ETF is currently short shares of Harley-Davidson, based upon inventory builds and based upon the new Indian competition that is at close to a 40% discount from its Harley-Davidson rival.

So, Harley-Davidson really has 28.6 million shares eligible to be repurchased. This came to almost $1.8 billion based upon Wednesday’s closing price. The company’s market value at the time was $13.7 billion. in short, the company wants to repurchase 13% of its common stock.

The company had cash and marketable securities of $1.17 billion at year-end 2013, plus long-term investments which offset its long-term debt. Keep in mind that the company did repurchase some 2.7 million shares in the last quarter, so the total buyback could  last ten quarters or so at the current pace.

Can Harley-Davidson afford this? When you add up the money from the higher dividend with a 1.8% yield after the hike, this is close to $250 million per year for a dividend. That comes to over $2 billion in needed cash (at static market conditions that is) for this plan.

Mr. Lamensdorf also said,

“HOG has been active on the buyback front. They have plenty of cash and cash flow to put to use. The question is are they better off managing the stock price through buybacks or using their cash in alternative ways to accelerate their business?

In HOG’s case, U.S. and international retail sales were well below some Wall Street expectations. Average selling price was below expectations as were total shipments in Q4. Furthermore, guidance was essentially in-line with expectations modeled into many Wall Street estimates.”

In order to be fair on both sides here, Harley-Davidson has managed to grow sales and earnings annually. Another boost is that earnings growth and sales growth are expected to be seen in 2014 and 2015 as well.

Thomson Reuters has earnings estimates of $3.88 per share in 2014, up from $3.28 in 2013, and sees $4.49 per share in 2015. Revenue growth is expected to be 10% in 2014 to $5.78 billion, followed by revenue growth 8.2% to $6.26 billion in 2015.

Shares of Harley-Davidson were up 3.1% at $64.13 on the news, against a 52-week range of $49.15 to $70.04. Maybe this is just the business cycle that Harley-Davidson is in. Maybe acquiring new lines or branching out into new products is simply off-base from the core of the company. After all, it would be hard to imagine Harley-Davidson SUVs, boats, or small airplanes.

December Auto Sales Disappoint; 2013 Still Best in 6 Years

David Zalubowski/AP DETROIT -- Automakers are going to have to work a little harder for your business in 2014. After four years of strong sales increases -- and few discounts -- as the economy improved, U.S. demand for new cars and trucks is expected to slow this year. That could mean better deals for buyers as car companies fight to increase their share of the market. The industry got a taste of what's to come in December, when General Motors (GM), Toyota (TM) and Volkswagen all saw their sales fall from a year ago. One reason: Competitors such as Ford (F) and Honda (HMC) increased their incentive spending on hot sellers like pickup trucks and midsize cars, according to TrueCar.com, which tracks car prices. Cold weather and strong sales over Black Friday in November also pinched December sales, automakers said. This year's slowdown is inevitable, analysts say. Many people who held on to their cars through the recession have now bought new ones. Those who haven't may not be in any rush, because cars are lasting longer than ever before. And unless there's a strong uptick in the economy, families aren't likely to buy a third car. Alec Gutierrez, senior analyst for Kelley Blue Book, expects U.S. sales to increase by around 700,000 to 16.3 million in 2014. That compares to increases of more than 1 million each year since 2009, when U.S. sales bottomed out at 10.4 million. "Sales are approaching an equilibrium level of demand based on the needs of population and the number of licensed drivers in the country," he said. So 2013 could be remembered as the last of the boom years. As automakers reported full year sales Friday, analysts were expecting an increase of more than 1.2 million -- or 8 percent -- to around 15.6 million. It would be the best performance since 2007, when 16.1 million new cars and trucks were sold. Ford led all major automakers in 2013 with an 11 percent gain to almost 2.5 million vehicles. Chrysler and Nissan posted 9 percent gains. GM, Toyota and Honda each posted 7 percent gains. GM sold 2.8 million cars and trucks in the U.S., compared to just over 2.2 million for Toyota. Hyundai's sales rose 2.5 percent. Among major automakers, only Volkswagen struggled, with sales falling 7 percent as its vehicles aged compared with rivals. Gutierrez said Honda offered $3,000 in bonus cash to dealers in December for every vehicle they sold beyond their 2012 numbers. And Ford said it spent $600 more per vehicle on incentives in December, likely taking aim at GM's new pickup trucks. Those are the kinds of tricks buyers can expect to see more of this year. "We think there's going to definitely be more competition," said Larry Dominique, president of Automotive Lease Guide, a company that tracks lease costs and car prices. On a conference call to discuss December results, General Motors executives made several references to competitors raising discounts to boost sales, especially on full-size pickup trucks. While they pledged to stick to their strategy of selling on value rather than price, U.S. sales chief Kurt McNeil said GM also has to respond to the market. Industrywide inventory is rising, and that could also increase discounts because carmakers will have to sell off excess vehicles. But McNeil said prices likely won't come down too much because the underlying economy is strong. Also, carmakers closed plants and got leaner during the recession, so the country is no longer seeing the kind of overproduction it saw a decade ago. The average price of a new vehicle in December was $32,890, which was about the same as a year ago, according to Kelley Blue Book.

By Michael Zak | AOL Autos

A recent Interest.com study looked at the 25 largest metropolitan areas in the United States to see which median-income households in those respective areas can afford to purchase a new car, the average price of which was $30,550 in 2012, according to TrueCar. The study found that in only one city can residents actually afford a car with this sticker price -- Washington, D.C. Households with an average income in Washington, D.C. can afford a payment of up to $628, which would allow for purchase of a $31,940 vehicle. The next closest city, San Francisco, can only afford $537 per month, equating to a $26,786. While it's not news that Americans like to buy things that they can't afford, the data is a little surprising given how many great cars there are out there for well under $30,000. Solid hybrids, CUVs, sedans and sports cars can all be had for less than this.

Wii U sales sluggish as new video game consoles…

While Microsoft and Sony celebrate early sales victories for their Xbox One and PlayStation 4 video game consoles, the forecast for Nintendo and its Wii U looks grim.

Last Thursday, Nintendo said sales of its Wii U console surged 340% in the U.S. last month, following a price drop to $299 instituted in September and the long-awaited arrival of fresh games, notably the critical darling Super Mario 3D World.

That more than three-fold increase sounds great. However, the Wii U has "really struggled," says David Cole of DFC Intelligence. He says that by the end of November both the just launched PS4 and Xbox One had surpassed the Wii U's total sales in 2013.

The Wii U is looking more like Nintendo's GameCube launched in 2001, "with a very small user base," says Cole. "It will appeal mainly to fans of Nintendo's first party brands."

The rocky start for Wii U — available since November of last year — is a far cry from the success of its predecessor, the Nintendo Wii. Global sales for the Wii U reached 3.91 million as of September, compared with 13 million for the Wii during the same time frame after its 2006 debut.

Although Nintendo did not disclose how many Wii U consoles have been sold this holiday season, Nintendo of America President Reggie Fils-Aime says holiday sales have been "very strong."

"A number of key games we hoped to launch very early in the system's life were delayed and launched later," says Fils-Aime. "We're seeing the positive impact now."

Among the games recently released: Super Mario 3D World, which sold 215,000 physical and digital copies in the U.S. in its first eight days, and the remake of role-playing adventure The Legend of Zelda: Wind Waker. New titles from key franchises such as Mario Kart and fighting game Super Smash Bros. arrive next year.

Despite the infusion of new games, DFC forecasts sales of the Wii U will approach only a quarter of the Wii's tally, which topped 100 million as of September. Meanwhile, rival consoles PS4 an! d Xbox One continue to gain momentum, each topping 2 million in sales.

Even with the PS4 and Xbox One still in short supply, the Wii U's technical shortcomings — and lack of an eye-popping feature like the Wii's motion controls — may limit its viability as an alternative to either Sony or Microsoft's consoles.

"Nintendo is not really well-positioned as a fallback (option)," says Wedbush Securities analyst Michael Pachter. "A PlayStation is not considerably more expensive and it feels like you're getting a lot more."

The holiday often brings a spike in all video game sales, and Wii U could benefit. EEDAR analyst Jesse Divnich says the console carries several advantages, including a lower price and "more games that target that family friendly audience."

However, the future prospects for Wii U appear challenging. "They are definitely in a difficult spot right now," says Divnich.

Follow Brett Molina on Twitter: @bam923.

China Vanke grabs largest stake in Huishang's IPO

HONG KONG -- China Vanke Co., China's largest property developer by market value, is set to be the single largest shareholder in Huishang Bank Corp. after it signed on as a cornerstone investor in the Chinese lender's Hong Kong initial public offering.

Huishang, which will begin taking orders from investors Tuesday, has secured about US$510 million of investment, or about 40% of the total offering, which could be up to US$1.3 billion, from five cornerstone investors, people familiar with the situation said Monday.

China Vanke has committed to US$400 million of the shares, which will be the biggest stake once the bank is listed, the people said. Vanke didn't immediately provide a comment.

Huishang, based in Hefei, Anhui province, is planning to sell 2.61 billion shares at between 3.47 Hong Kong dollars and HK$3.88. Cornerstone investors are usually guaranteed large allotments in IPOs in exchange for agreeing to hold the shares for a certain length of time. The price range represents 1.01-1.12 times of Huishang's 2013 first-half book value and 0.93-1.01 times of its full-year forecast book value, one of the people said.

Huishang is seeking to list on the Hong Kong Stock Exchange on Nov. 12. The bank couldn't immediately be reached for comment.

Property developers and banks typically have close relationships, because banks have historically lent money to such firms for land purchases and property development and always are involved in property launches, issuing mortgages to developers' customers. In recent years, however, as part of the government's campaign to rein in sky-high home prices, it has clamped down on credit for property developers.

Chow Tai Fook Nominee Ltd., an investment-holding firm controlled by business tycoon Cheng Yu-Tung, is another of the cornerstone investors, the people said. Mr. Cheng controls property developer New World Development Co. and jewelry retailer Chow Tai Fook Jewellery Group Ltd. Chow Tai Fook couldn't immediately be reached for comment.

Huishang has 199 outlets in 16 cities in Anhui province and in Nanjing, Jiangsu province. The bank reported 2012 net profit of 4.3 billion yuan (US$707.2 million), a 23% increase from 3.5 billion yuan a year earlier, according to investment banks' research reports.

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Slowly But Surely, the Tide's Turning For Vringo (VRNG)

Just for the record, I can't stand Vringo, Inc. (NASDAQ:VRNG). I've never agreed with its business model - litigation of patents that in retrospect probably shouldn't have been granted in the first place - and the investor hype that VRNG has surrounded itself with has largely obscured the truth and reality of its pivotal court case with Google (NASDAQ:GOOG).... a case that is now in post-verdict review, as the judge decides just how much money should be awarded. Yet, despite the fact that I'm anything but a fan of the company, I've got a funny feeling the stock's just a few days away from a major rally.

As those who've been following the Vringo story know all too well, though, there's more to it than just that, and "due process" has become something of a gray area as the matter finds itself in the middle of the court system, the U.S. patent office, and common sense. With all three forces already being blurred about where they stand, being caught in the middle of all three has just been absolutely maddening for Vringo, Inc.

Unlike most of the amateur journalists - and also probably shareholders - I don't come here to preach the merits of Vringo. Like I said above, I've found myself in the anti-Vringo camp more often than not. BUT, also like a said above, I've got a sneaking suspicion VRNG shares are on the verge of a monster-sized bullish move.

It's the shape of the chart that leads me to that conclusion. Slowly but surely, the post-verdict lull [the verdict from the suit against Google was handed down in October] has quietly been building into an uptrend. Actually, scratch that last statement. It's not an uptrend yet. I think it's going to be one soon, though. Here's why.

As you can see, since April, VRNG has made a string of higher lows. As you can also see, since March, Vringo shares have tested the 200-day moving average line (green) several times. Each brush of the 200-day average has promptly pushed the stock lower again. Additionally, as of this month, the stock's 20-day moving average line (blue) has crossed back above the 100-day (gray) and 50-day (purple). In fact - and this is the clincher - it looks like the stock is now, finally, finding support at those shorter-term moving average lines. The final clue we need is a move above the 200-day moving average line at $3.22, but given several months' worth of build-up, I'm pretty certain we'll get it. And once we do, it's off-to-the-races. Take a look.

Critics will be quick to point out that charts don't matter - fundamentals do. And in the case of Vringo, it's not even like the fundamentals matter, since there are none. The only thing really driving this stock is the promise of future settlements, or jury-awarded cash. I'll just say this - Vringo Inc. is one of those cases where the hype and buzz and speculation surrounding the stock has become far bigger than the company itself. In those rare cases, the chart reflects the ever-changing opinion of the stock's potential. Since it's opinion that's ultimately driving the stock's price, though, the chart suggests how public opinion is taking shape.... and will take shape in the future. (Sadly, human behavior is pretty predictable. This chart just puts that opinion on an X and Y axis, and shows us the brewing trend.)

Bottom line? If you wanted to take a swing on a long VRNG position, the odds are looking in your favor right now. If you wanted to wait until Vringo Inc. shares crossed above the 200-day moving average line - a reasonable reassurance - that would leave a little money on the table, but would reduce your risk quite a bit. Either way, the breakout's been brewing for a while, and I've got a feeling it's going to boil over soon... bullishly.

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Why You Can't Count On the Plastic Bag Anymore

BOSTON (TheStreet) -- They can be found everywhere: in the hands of shoppers, blowing down the streets, entangled in trees and even congregating as part of massive makeshift islands floating around our oceans. They are the single-use plastic bags offered to us with every purchase, which we often take and discard without a second thought. The plastic bag is so prevalent it was even named "most ubiquitous consumer product" by Guinness World Records in 2009.

There is an indication the decades-long popularity of the plastic bag here may be waning, though.

This past summer Los Angeles, the second-most-populous U.S. city, became the largest municipality in the country to pass a ban on plastic bags, of which it reportedly uses and disposes of 2 billion annually. The ban will go into effect early next year for stores larger than 10,000 square feet and in June for smaller stores. The ban is a follow-up to a 2010 ordinance in Los Angeles County banning plastic bags in unincorporated areas with more than 1 million residents and requiring stores to charge 10 cents per paper bag. The American Progressive Bag Alliance, the lobbying arm of the plastic-bag industry, is fighting the ban.

Large cities such as Chicago and New York City are considering measures to restrict or ban plastic bags. New York City, for instance, is considering a measure that if passed would mandate that retail stores charge a dime per disposable bag (whether paper or plastic) distributed. About 100,000 tons of plastic bags are transferred from the city to landfills in other states annually, costing the city $10 million a year. New York City might be hoping to achieve what Dublin, Ireland, did when it implemented a tax on plastic bags in 2002: reduce plastic bags in the city by 94%, to the ultimate approval by retailers and their patrons. Many other towns and cities in the U.S. have outright banned plastic bags in the past several years, including San Francisco, Seattle, Aspen, Colorado, Southampton, New York and Brookline, Mass. (Nantucket, Mass., was the first town to ban plastic bags, back in 1990.)
 Also see: Why It Makes More Sense to Dump Your Fossil Fuel Stocks>> This momentum on the municipal level has translated to six states -- California, Massachusetts, New Jersey, Oregon, Rhode Island and Washington -- that are considering full-on bans. Another eight states - Hawaii, Louisiana, Maine, New Jersey, New York, Rhode Island, Vermont and Washington -- are considering more moderate legislation to charge for bags. In Massachusetts, state Rep. Lori Ehrlich sponsored a bill that would effectively ban disposable plastic bags in large retail shops and grocery stores statewide but allow business to use compostable bags instead. If it makes it out of Ways and Means, it could come to the floor for a vote this year.

Many store chains have taken initiative. In 2007, Ikea introduced its "bag the plastic bag" program to the U.S., charging a nickel for plastic bags and offering an alternative reusable bag for 59 cents. In 2008, after a 92% reduction in use, Ikea stopped offering plastic bags altogether. Likewise, organic food behemoth Whole Foods Market (WFM) banned plastic bags in 2008 and offers only paper bags made from 100% post-consumer content or a reusable bag for 99 cents.

Whatever one's opinion is on formal bans, it cannot be denied that plastic bags cause significant harm to wildlife and the environment.

Each year, between 500 billion to 1 trillion plastic bags are consumed worldwide, with billions winding up in landfills. We throw away almost 100 billion plastic bags in the U.S. every year.

Plastic bags can take up to 1,000 years to degrade, while plastic waste kills an estimated 100,000 marine creatures (including dolphins, sea turtles, seals and whales) and 1 million sea birds annually. These animals often are strangled or choke on the plastic when they ingest it, mistaking it for jellyfish or other food. Also see: How to Stop Spending $2B a Year Killing the Pets We Love>> Plastic bags also can contribute to carbon emissions, since they are petroleum products that require intensive energy to make and transport. It is estimated that 12 million barrels of oil are needed to make 30 billion plastic bags. Thrown-away plastic bags often wind up airborne and washing into waterways. The prevalence of plastic has led to two large islands of garbage in our oceans, known as the Great Pacific and the North Atlantic garbage patch, respectively. The Great Pacific garbage patch is twice the size of Texas; the North Atlantic garbage patch has at times waxed to a maximum length of 990 miles. It is estimated that we successfully recover and recycle only 1% to 3% of the plastic bags we use in the U.S. In those cases where plastic bags are "recycled," they are often done so improperly by people tossing them carelessly in with recyclables on trash pickup days, where they go on to jam and damage expensive sorting machines. Studies show that people often do not take the initiative to return plastic bags to stores for recycling even when the option is available, and even when plastic bags are returned to stores for recycling they are actually downcycled -- that is, converted to a product of much lower quality than its original form. So what's a good alternative? In addition to refusing plastic shopping bags for single items that can easily be carried by hand, consumers should buy and make use of reusable cloth shopping bags. Canvas bags are 14 times better than plastic bags and 39 times better than paper bags from an energy standpoint, and can be used up to 500 times during their life cycle, according to a study by Australia's government.

Investors Become Complacent; Volatility Drops

Volatility in bond and equity markets is back down to levels that would have been familiar to investors back in 2007. Bond and share prices have all moved relentlessly higher, often into uncharted territory.

The only things that have changed for the worse are economic fundamentals.

Growth across developed economies remains subdued and though forecasters are hopeful next year turns out better than this one, that’s still a long way short of the unshakeable optimism most observers felt in the year or two before the financial crisis.

Economic gloom might support high sovereign debt prices, but it’s not so good for equities and corporate bonds. And yes it’s true that a greater share of GDP is accruing to companies than to workers, which at first light is supportive of both corporate debt and share prices. But ultimately the less money people earn the less there is to be recycled into demand, which is bad for firms generally.

Central banks are clearly stitching the whole web together. Weak economies mean central bank liquidity, which supports asset prices, fundamentals notwithstanding.

The problem is that investors have grown convinced nothing can possibly go wrong for them. The VIX, which measures S&P 500 volatility and is popularly called a fear index, is broadly back down to where it was during the boom years–if not quite to those lows. Ditto for the VStoxx volatility index which measures European equity market volatility.

The MOVE index, which measures bond market volatility, has dropped back from the summer’s highs when debt markets were rocked by fears the Federal Reserve would start trimming its bond purchase program by the autumn, and isn’t far off 2007 levels again.

To judge from central banks’ reaction functions, maybe investors have a point. The Fed relented on tapering when equities and bonds wobbled. In effect, the central bank was saying that it is putting a floor under asset prices. As long as investors believe this can be achieved, asset prices will keep climbing.

The key question then is to what degree can central banks achieve this promise? Eventually there will be enough growth to dictate higher interest rates for fear of inflationary consequences. Central banks have to consider where asset prices might be at that point if they maintain their current asymmetric response. Will they abandon price stability for fear of upsetting asset markets? Or will they accept another collapse on the assumption that it won’t be as catastrophic?

Recent history suggests that when asset markets spin out of control–in either direction–central banks find it hard to control them. What investors now have to consider is what might cause asset markets to lose control. Economic fundamentals might yet trump central banking liquidity and government interventions in pricing assets. As they’ve regularly done in Japan over the past two decades.