7 Suggestions for Retirees Running Low on Money

10 Best Regional Bank Stocks To Invest In 2015

Alamy You know you should save for retirement. How much, when and what strategies to use are exhaustively dispensed by financial planners, accountants, economists and personal finance columnists. But what if you're a retiree who's sure you're going to be around for a long time -– but your money isn't? It's a universal fear. In a 2010 Allianz Life Insurance poll of 3,257 people ages 44 to 75, 61 percent said they fear running out of money during retirement – more than they fear death. As you've probably guessed, you don't have a lot of great options. Gene Diederich, CEO at Moneta Group, a wealth management firm in St. Louis, lays out the path for most people: "There is often not much they can do but be frugal with their spending, take a part-time job, consider a reverse mortgage and get with a financial planner to maximize the return on their remaining nest egg." Still, those ideas – and the ones below – may help remove some of the tarnish on your golden years. Downsize Your Home and Transportation If you've been living larger, start living smaller. The most obvious strategy is to sell your house, especially if the home is paid off and you'll receive substantial income from it. "I know it's hard to let go of the family home, or the home you have felt comfortable in for many years. However, the upside to getting rid of this big expense is the reduced stress and financial relief you will gain in knowing you have more cash now available," says Leslie Tayne, a financial attorney and debt specialist who runs Tayne Law Group in New York City. Or sell one car, if you and a spouse have two. Save on Medications With Patient Assistance Programs "The average retired person over the age of 80 takes approximately 11 medications a day," says Sandra Nohavicka, a licensed clinical social worker at the Visiting Nurse Service of New York, the largest nonprofit home health care agency in the U.S. She says anyone with high co-payments or those who have hit the "doughnut hole" –- in Medicare Part D, the point where medication is full price –- should check out needymeds.com, which offers information about patient assistance programs. "Some of my patients get one or all of their high cost medications for free," she says. Turn Back the Clock on Social Security If you're younger than 70 and started collecting Social Security within the last 12 months, "you can repay everything back to Social Security, and it'll be like you never claimed it," says Kenn Tacchino, a professor of financial planning at Widener University in Chester, Pa. "And then you delay claiming it until you're 70." It makes a lot of sense to wait, assuming you're in good health and will be around a while to enjoy that regular stream of income. Here's why: If you claim Social Security at age 62, you'll receive 75 percent of your retirement benefits. Hold off until age 66, and you get 100 percent. But if you wait until age 70, you'll receive 132 percent of your benefits. Every year you wait up until age 70, you'll receive 8 percent more. Earn Supplementary Income by Being a Landlord Sure, you could try going back to work full time or get a part-time job, but what about renting out a room or sharing your place? It wouldn't necessarily have to be with a stranger –- a friend or family member might know someone. Cut Financial Help to Adult Children It likely won't be a big money saver, but this is a good time to talk with adult children who are draining your resources, Tayne advises. "It's time to be frank with the kids," she says. "You have limited funds and while you love and care for them, you can only do so much for them while ensuring you still have enough to support yourself." Consider a Reverse Mortgage You've probably seen or heard the commercials. Reverse mortgages allow homeowners to leverage the equity in their house to get a stream of revenue flowing back in, right now. "They always get a bad rap because of the fees," Tacchino says. But he says reverse mortgages can still can be a good option for some retired people who want to maintain their lifestyle and remain in their home. You'd likely want to get a government-issued home equity conversion reverse mortgage, he says. There are essentially three ways you get income from your house, he says: "You can get a line of credit, receive your money in monthly payments or in the form of a lump sum." On the plus side, he says, it might be the perfect solution for an individual or couple who want to live in their house as long as they can and don't mind that there won't be a home to pass onto the children. Which isn't to say you should do this. "You're still having to maintain the house, pay taxes and utilities as well as other maintenance," Tayne says. "All of this is likely to make less sense further into retirement years." But it depends on the person. You may be in your 90s and find shoveling snow or mowing the lawn good, healthy exercise. You may think it's better to pay someone else to do it. Or you may be nodding your head in agreement with Tayne. If you like the idea of a reverse mortgage,you would be smart to consult a financial planner, which leads to the next bit of advice. Consult a Financial Planner -- or Another Professional If you have ample assets but are afraid of what's to come, Tacchino says, "I would always suggest looking for a planner. Retirement can get complicated, and the right planner can help you manage your money so it lasts longer." If you're truly broke, start getting into the habit of asking for advice from every service or organization you can think of. For instance, Nohavicka suggests that any retiree who has served in the armed forces ask about benefits from their local Veterans Administration office.

Why You Should Be Wary of Small-Cap Stocks

Alamy Stocks of small companies have defied gravity for years now. From the bottom of the bear market on March 9, 2009, through Feb. 14, the Russell 2000 index of small-capitalization stocks has returned an annualized 29.5 percent, trouncing the large-company-oriented Standard & Poor's 500 stock index by an average of 4.4 percentage points per year. What's more, the Russell 2000 (^RUT) has beaten the S&P 500 (^GPSC) every year since 1999, except for 2005, 2007 and 2011. Over that stretch it has returned an annualized 8.2 percent, compared with 4.7 percent for the S&P. That's the longest run of market-beating returns for small caps ever -- far eclipsing the old record set from 1973 to 1983. But that huge outperformance has made small caps "extremely overvalued" in the view of Steven DeSanctis, small-cap strategist at Bank of America Merrill Lynch (BAC). "This is the upper bound of absolute valuation," he says. (Biotech looks even more problematic; more on that in a minute.) Small caps are about as expensive as they've ever been. Their price-earnings ratio -- based on operating earnings over the past 12 months -- is 23 percent greater than the P/E of the 300 largest U.S. companies, reports the Leuthold Group, a Minneapolis-based investment research firm. That premium is the second-highest since Leuthold began tracking the measure in 1983. (It was slightly higher in 2011). Just look at the numbers. The 300 largest companies trade at a bit less than 16 times estimated 2014 earnings. In contrast, small caps -- which Leuthold defines as stocks with a market value (share price times number of shares outstanding) of less than $3.3 billion -- trade at an average price-earnings ratio of just under 20. What could spark a sell-off? DeSanctis voices several concerns aside from valuation. First, the small-cap earnings reports in the fourth quarter were "sloppy," he says. Year-over-year earnings growth has been a robust 12 percent, but more companies than usual have reported earnings below analysts' estimates. Second, he thinks the Federal Reserve's tapering of its bond purchases will lead to greater volatility in the stock market. "The pickup in volatility is bad for small caps," he says. Third, DeSanctis says, analysts are wildly over-optimistic about earnings for the coming 12 months. On average, analysts predict that small-cap earnings will rise 20 percent, he says, but those forecasts are "very unrealistic." He estimates 12 percent earnings growth. When companies report disappointing earnings, the market almost always punishes their stocks. Fourth, bargains in small-cap land are scant, DeSanctis says. "Every stone has been overturned." Only 10 percent of the stocks in the Russell 2000 sell for less than 10 times estimated earnings. Companies in the Russell without earnings -- which represented 12 percent of the index's market value -- led the index last year, an event DeSanctis calls "awfully strange." Anytime speculative stocks lead the market, you should be concerned. Just a bit more than one-third of the firms with no profits were in health care, mainly biotechnology. Small-cap biotech stocks have soared 72 percent from the start of 2013 through Feb. 17. Many, if not most, of these companies expect to remain unprofitable for years to come, are looking for more financing and have just one or two compounds in the early stages of testing. Most such compounds never even get close to being approved for sale. and if they do get regulatory approval, the process can take years. These biotech stocks trade at an average of 27 times revenues -- that's revenues, not earnings. That's about 50 percent more than average. The only time they were more richly priced was just before the popping of the tech bubble in 2000. The biotech industry may be approaching a turning point in drug development, and biotech companies are targeting major diseases, including cancer, dementia and heart disease. But as we learned during the tech meltdown, even if you invest in a company that is changing the world, you stand a good chance of losing money if you pay an insanely high price for its stock.

How will we watch TV in five years?

NEW YORK — How will we watch TV in five years?

It's an apropos question fresh off the International CES trade show in Las Vegas, where lust-worthy Ultra High-Definition 4K televisions were ubiquitous. CES is also where I moderated a panel on that very topic, with top TV executives from Starz, Twitter and Verizon.

The question goes beyond the physical TV that will anchor your home theater. It touches on how you'll find what to watch, how you'll pay to watch it, and how and where it will be delivered. The broadband pipe will be faster. Your social networks will remain major influences. And you can expect the usual mix of pricey-to-produce glitz and popular series, cheaper homegrown-type videos and everything in between — including, of course, live news and sports.

TV TECH: These Vizio sets could soon be the most advanced on the market

Take it as a given that by 2019, some of you, perhaps most, will own at least one big, beautiful 4K TV boasting four times the resolution of HDTV. It may well be a curved TV similar to those shown at CES, assuming curved TVs aren't some passing fancy. Your TV of the future might even "bend" from flat to curved and back, similar to TVs that Samsung and LG had on display. Maybe that centerpiece television will also let you watch 3D TV without the glasses, assuming anyone still gives a hoot about 3D on a home TV.

Let's also presume that five years hence, you won't have to pay an arm and a leg for a sterling television. Sure, you'll probably pay a premium for an OLED TV or another vibrant display tech that emerges, given how expensive OLEDs are today. But 4K TVs have already fallen to more relatively modest levels, with Vizio cracking the $1,000 barrier for a 50-inch 4K model.

TV TECH: Sharp looks to bridge the 4K-HD gap

Just as you can catch up on favorite programs on a tablet or smartphone today, you'll probably be more inclined to do so. You might also have the option of watching on a smart watch or wrist TV, or some type of hig! h-tech spectacles that will make Google Glass seem primitive.

"You're going to watch on all those things," says Fred Graver, who heads up Twitter's TV efforts. "You're going to want some great, cool, wonderful TV in your home for the kind of big immersive experiences. And then you're going to want something great to watch on your commute or when you're traveling."

Graver said the most interesting stuff he saw around CES was the way the industry is trying to rework the electronic programming guides that consumers have traditionally used to figure out what to watch. Instead of you finding the content, the content may find you. The trick, he says, is marrying Twitter data on shows you watch to your cable account so that you get recommendations that matter.

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Verizon's top TV executive, Shawn Strickland, says all the relevant players are trying to personalize the experience. He believes systems will deliver stuff you'll want to watch based on the context in which you use personal devices, from your cellphone to your Xbox One.

Twitter's Graver can envision a scenario in which you're wearing a device that monitors what you're thinking. "You're watching a comedy, and you're thinking to yourself, 'Oh, that's funny,' and everybody on your network is thinking that's funny. And then there's a speaker that translates it into a laugh track, an actual real laugh. You'd suddenly be re-immersed into the theater." Think modern-day I Love Lucy laugh tracks.

Adds Starz TV strategist John Penney: "Your personalized device — your phone or tablet — becomes the remote control for the cloud, delivering the content to you whether it's in that big screen, through socially enabled discovery, or to the back of a car seat or an airplane."

All the usual industry suspects have a stake in the future of television, of course, which is embodied by the fact, Graver says, that you have six re! mote cont! rols on your coffee table. "The last thing (stakeholders are) holding onto is what you use to change the channel."

Strickland says Verizon is having its own internal debate: "Do we even need a guide anymore that sits on a TV or gaming console?" It's not an easy answer. Such guides generate tremendous traffic, and half the people who sit down to watch TV don't actually know what it is they're going to watch.

In the future, that may matter less, when the content finds you.

Meanwhile, Strickland is willing to make one other tongue-in-cheek prediction about TV five years from now: "I think they'll kill off everybody in Downton Abbey by then," he quips.

E-mail: ebaig@usatoday.com; Follow @edbaig on Twitter.

Australia's Seek to buy Jobstreet

SYDNEY--Seek Ltd. (SEK.AU) said it would buy the remaining shares in JobStreet Corporation Berhad's (0058.KU) online employment business, continuing its push into Asia in a deal valuing the target at MYR1.730 million (US$523.5 million).

Australia's biggest online job ads company said its majority-owned subsidiary Seek Asia would acquire the 78% of the JobStreet business it doesn't already own, subject to regulatory approvals in Singapore and shareholder approvals. JobStreet operates in Malaysia, Singapore, Indonesia and Vietnam.

Seek made the announcement as it reported a better-than-expected 65% rise in its fiscal first-half profit, helped by higher earnings from China after it increased its stake in the Zhaopin employment website last year, offsetting weakness in domestic job volumes.

Net profit rose to 111.2 million Australian dollars (US$100.5 million) in the six months through December from A$67.5 million a year ago. That beat the A$75.5 million median of five analysts' forecasts compiled by The Wall Street Journal.

The result included a A$24 million gain on the sale of THINK Education Group to Laureate International Universities.

Seek said it will pay an interim dividend of 14 Australian cents a share, up from 10 cents a year ago.

Seek runs Australia and New Zealand's biggest employment websites by number of clicks, and has been expanding offshore to countries such as China where more employers are using the Internet to reach out to job-seekers.

In February last year, Seek paid US$132.8 million to increase its stake in Zhaopin from 55.5% to 78.2%. Seek expects Zhaopin to become the world's largest online jobs market as more Chinese move to cities and use the Internet. A month later, Seek completed the acquisition of the remaining 20% interest in JobsDB that it didn't already own. The JobsDB online website operates in seven countries across South East Asia.

Seek said Wednesday it plans to combine the JobStreet business with JobsDB to "unlock large growth opportunities."

-Write to Rebecca Thurlow at rebecca.thurlow@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Will earnings season give the bull new life?

NEW YORK — For Wall Street in 2014, it's all about the "E," as in earnings growth.

Indeed, the stock market boom of 2013 was fueled by a friendly Federal Reserve and investors' willingness to pay up for stocks despite sluggish earnings growth. In 2014, however, peppier profit growth will likely be needed to fuel the next leg up in stock prices.

The main investment thesis for stocks in the new year is that an expected acceleration in U.S. economic growth will offset less Fed support and boost corporate profitability. Growth, it turns out, is also good, if not necessary in 2014, in Wall Street's eyes.

That bullish combination, Wall Street hopes, will provide a fresh tailwind for a stock market that gained nearly 30% in 2013 and which is no longer cheap. The benchmark Standard & Poor's 500 index is now trading at 16.8 times its past 12-months earnings, says Thomson Reuters. That is in line with the 10-year P-E average, data from S&P Dow Jones Indices show.

MORE: Is slow start for stocks in 2014 a warning sign?

The profit-reporting season for the final quarter of 2013, which kicked off after Thursday's close with aluminum giant Alcoa posting results that missed expectations, could show if the growth pickup is already materializing. Also key: what CEOs say about the outlook and whether they think the economy will exert enough mojo in coming quarters to juice profits.

This earnings season "will help shape expectations for 2014," says Nicholas Sargen, chief investment officer at Fort Washington Investment Advisors. Analysts expect profit growth of 10.8% for 2014, vs. a rise of just 5.7% last year.

"The real issue for me on the profit story is that the stock market is pricing in an acceleration in profits in 2014," says Sargen. "Nobody was calling for the acceleration to start in the (final quarter of 2013). And if it is happening earlier, than I am more confident that I will see it in 2014. If it doesn't materialize, then maybe the market is vulnerable to dis! appointment."

MORE: Alcoa misses 4Q earnings estimates by 2 cents

Currently, Wall Street is expecting profit growth of 7.7% for the final quarter of 2013, which would mark the fastest earnings-per-share growth in almost two years. Earnings grew at a 8.4% pace in the second quarter of 2012.

Lance Roberts, chief strategist at STA Wealth Management, warns that profit estimates for the just-ended fourth quarter are "pretty aggressive" and that CEO guidance might not be as upbeat as investors expect.

MORE: Is a stock market correction looming in 2014?

In contrast, citing improving business fundamentals, a bullish John Stoltzfus, chief investment officer at Oppenheimer, expects "positive earnings surprises to overwhelm negative ones."

A better-than-expected earnings season, Stoltzfus adds, "has the potential to reinvigorate the stock market and inspire investors to continue to stay invested in equities."

The earnings season has been bullish for stocks since the bull market began in 2009. Nearly 80% of the S&P 500's gains in the bull have come during the six-week period spanning the two weeks before Alcoa's earnings report and the four weeks after it, according to LPL Financial.

3 Things to Expect From Universal Display Corp. in 2014

Hold on to your hats, Universal Display Corp. (NASDAQ: OLED  ) investors, because it's time to delve into what to expect from your favorite OLED technologist in 2014.

But first, a little background ...
Earlier this week, I took some time to explain how shares of Universal Display rose by 34.1% in 2013. While that was good enough to narrowly exceed the S&P 500's solid 32.4% total return last year, Universal Display investors endured more than their fair share of volatility in the process, in part a byproduct of the company's chunky revenue stream, which overwhelmingly relied on a twice-per-year, $20 million patent licensing payment from Samsung (NASDAQOTH: SSNLF  ) .

And wouldn't you know it, strong material sales growth last quarter propelled Universal Display to its very first profit without the aid of Samsung's payment -- that is, at least since the two companies signed their 6.5-year deal in mid-2011.

So what should we expect next year?

The Samsung license fee will increase
First, let's not kid ourselves: Just because Universal Display can make money without those big checks from Samsung doesn't mean they aren't great to have, especially considering each payment increased by a third from $15 million last year.

And make no mistake: That fee will go up again this year. When prodded for details on 2014's license revenue growth during last quarter's earnings conference call, Universal Display management responded, "2012 was $30 million and this year it's $40 million. [...] Just to look at the trend and that's what we expect from Samsung."

Now that could mean one of two things: (1) Either UDC's license payment from Samsung is pegged to increase by a flat $10 million each year, or (2) it's set to increase by one-third annually.

Why should we care? Even though the difference between the two would amount to "only" a few million dollars next year, investors should hope Universal Display's contract dictates the latter option, which would allow the magic of compounding to do its work over the course of the contract.

Unfortunately, management declined to provide any more details until their fourth-quarter report, saying, "We'll talk about it in the next call."

Another long-term licensing deal
Next, I think it's safe to assume a similar long-term deal will be signed in 2014 with LG Display (NYSE: LPL  ) .

And yes, I'm aware we've been waiting for the LG Display deal to happen for nearly a year. So why do I think it'll happen before the end of 2014?

For starters, consider that LG Display last April confirmed more than 50% of its 2014 capital expenditures budget is going toward OLED development.

What's more, last month The Korea Herald reported LG Display was nearing an agreement to supply small, flexible OLED displays to a little company we all know as Apple. And based on supply chain research from DisplaySearch in October, those screens are likely intended for use in Apple's iWatch device with a planned late-2014 launch.

Then earlier this week, LG Display lauded its latest large screen OLED television line-up to be featured at this year's Consumer Electronics Show, listing at least five new models including curved 55-inch, 65-inch, and 77-inch versions. At the same time, according to Tim Alessi, LG USA's director of new product development, while LG viewed 2013 as "kind of a positioning year," they now "see 2014 as the start of a rapid shift to these new technologies." 

LG Display's New 77-inch curved OLED TV. Image source: LG Display.

Steady material sales growth
Even so, given OLED TVs' prohibitively high cost and still-limited manufacturing output, LG estimates total industrywide sales of only 30,000 to 50,000 units this year -- a far cry from the roughly 227 million total TV units sold in 2013.

But that doesn't mean Universal Display investors should run for the hills.

If LG's increased presence in the OLED market wasn't enough, recent reports suggest Samsung Display is set to increase its already-enormous OLED production capacity in 2014 by 33%, largely the result of increased use of OLED materials planned in both mobile devices and TVs made by the company going forward -- a report bolstered by the fact both LG and Samsung also recently projected 40% of all smartphones sold could feature flexible OLED displays by 2017.

The end result for Universal Display, then, should be steady material sales growth in 2014 as their flagship technology continues to take hold.

Foolish final thoughts
These three items certainly don't represent an all-inclusive list of Universal Display's long-term catalysts, either. Remember, OLED lighting solutions remain in the very early stages of development, and the company is also working on an encapsulation solution meant to seal bezel-free flexible OLED displays from harmful outside elements.

For now, though, Universal Display has plenty of good news to fill its coffers, which is why I plan to hold on to my shares tightly in 2014.

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There's a huge difference between a good stock, and a stock that can make you rich. It's no mystery I believe Universal Display belongs in the latter category, but that doesn't mean it's the only great stock our market has to offer.

In fact, The Motley Fool's chief investment officer recently selected his No. 1 stock for 2014, and I'm convinced it's another stock that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Rise of Robots Brings Host of Labor Law Questions

How will the robotics revolution impact labor and employment law?

A just released report by Littler Mendelson, a firm specializing in such law, attempts to address problems that could creep up in 12 areas of labor law and discusses the potential regulatory and legislative stumbling blocks to implementing robotics and automation.

“Many of the labor and employment law issues are not intuitive,” said Gary Mathiason, co-chairman of Littler’s Robotics, Artificial Intelligence and Automation Practice Group, at a Wednesday roundtable in Washington.

The report, “The Transformation of the Workplace Through Robotics, Artificial Intelligence and Automation,” released by Littler’s Workplace Policy Institute, is preliminary. “We put this [report] out to legal scholars, industry experts and HR professionals to get their feedback,” Mathiason said.

In the financial advisory world, robo-advisors are taking the place of human professionals for some clients. An example of such an advisor is Wealthfront, which had no clients over 50 a year ago, though 10% of its clientele today is in that age group.

Mathiason noted that the preliminary report will form the basis of a more comprehensive report to be released in May.

The Think Leadership Roundtable held Wednesday is a starting point to “explore how workplace laws (many enacted decades ago) will likely be applied and then reinterpreted by courts and regulators,” Mathiason told ThinkAdvisor. “While attention has been directed to the effect of these technologies on jobs and the needed skills of the future work force, there are dozens of other legal issues that employers will face.”

The report looks at human displacement, union and non-union labor relations, anti-discrimination, wage and hour, health and safety, workers’ compensation, tort liability issues, privacy, trade secrets, eDiscovery, health care, and legislation and regulation.

The report cites the numerous indicators that show how robotics, which has varying definitions, is transforming the work force in many industries. It notes the 83% growth of iRobot stock in 2013 as reassurance of the robotics market’s potential. Also last year, Google announced that it would acquire eight robotics companies to form a new robotics division, the report notes.

The report cites research that says that by 2025, half of the jobs in the United States will be performed by “brilliant machines and intelligent systems.” States the Littler report: “Robotics is the next major innovation to transform the workplace, and will have as great — if not greater — impact on how employers operate than the Internet.”

The report notes the “human-like” robots that are being used for elder care, citing the Japanese government's estimation that the market for elder care robots will be valued at more than 400 billion yen ($4.09 billion) by 2035. For instance, a Japanese company has developed a “caring robot” to reduce the workload for nurses, while another innovation is a battery-operated suit that functions as a robotic exoskeleton to help workers lift patients. /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ In the recruiting world, all eyes are on a robot called Sophie developed by NEC that has been deployed and field tested and is programmed to not only ask and respond to questions, but also to measure an interviewee’s physiological responses. Mathiason noted that Sophie would be used in the “initial” step of an interview, with human interviews to follow. But Littler’s report notes that Sophie must be programmed “consistent with employment discrimination laws of the jurisdiction.”

In addressing where labor and employment law fits into the robotics revolution, the report cites the importance of creators and manufacturers of such technologies “to develop products that fall with the strictures of labor and employment laws.” Demonstrated compliance, the report states, “will be a competitive necessity for developers that wish to market their products to liability-conscious employers.”

As to the change in employment and labor laws that follow the robotic revolution, Littler notes in its report that “much of this change will come not from new laws, but from courts and regulatory agencies attempting to apply well-established labor laws to a work force and virtual workplaces that were unimaginable decades ago.”

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But in educating the judicial bar, regulators and legislators on the “new workplace and practical realities” associated with robotics, Littler says that it will “recommend against new laws and regulations unless and until the need for change is dramatic.”

Feds appeal sentence of Beanie Babies creator

CHICAGO (AP) — The U.S. attorney's office in Chicago said Thursday that it's appealing a sentence that included no prison time for the billionaire creator of Beanie Babies for hiding at least $25 million from U.S. tax authorities in Swiss bank accounts.

At H. Ty Warner's sentencing last month, Judge Charles Kocoras heaped praise on the toymaker for his charitable giving, declaring society was better served by letting him go free and giving him two years' probation instead of sending him to prison. Warner had faced up to five years in prison.

Warner, 69, of Oak Brook, Ill., was one of the highest profile figures snared in a long-running investigation of Americans concealing funds in Swiss bank accounts. Others convicted of squirreling away less money in Switzerland than Warner have done prison time.

Warner, who grew up poor, created the animal-shaped Beanie Babies in the mid-'90s, triggering a craze that made Warner spectacularly rich. Forbes recently estimated his net worth at $2.6 billion.

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A one-page notice of appeal signed by U.S. Attorney Zachary Fardon was filed with the U.S. 7th Circuit Court of Appeals, and a full brief will be submitted later. Justice officials in Washington still must OK the appeal, but that's usually considered a formality.

At a Jan. 14 sentencing hearing, Kocoras spent most of his 20-minute explanation of the sentence expressing admiration for Warner. He also said the businessman had already paid a price in "public humiliation."

In addition to probation, Kocoras ordered Warner to do 500 hours of community service at Chicago high schools. Earlier, Warner agreed to pay $27 million in back taxes and interest, and a civil penalty of more than $53 million.

A two-sentence statement released Thursday by a Warner spokesman didn't mention the government appeal. It said only, "We're working out the details of Mr.! Warner's community service" and he's "looking forward to beginning his work" at the schools.

During sentencing, assistant government attorney Michelle Petersen urged Kocoras to put Warner behind bars for at least a year.

"(Without prison time), tax evasion becomes little more than a bad investment," she told him. "The perception cannot be that a wealthy felon can just write a check and not face further punishment."

Follow Michael Tarm at https://twitter.com/mtarm

3 Bank Stocks That Are Prime Buyout Targets

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In a recent report titled Bleeders and Leaders: Redefining the 2014 U.S. M&A Banking Market, consulting firm Inviticus identified which banks should be sold and which one should be buying to expand their footprint and asset base.

The firm identified 828 banks that should be sold because they do not have an adequate capital base or sufficient earnings power. Because of their weak capital positions, these banks will be under increased regulatory pressure as well. The consultants think that banks in this classification should take advantage of the current pricing environment and high level of acquisition interest by regional banks and sell while they can.

It's a fairly easy matter to sit down and draw up a list of bank stocks that should put themselves up for sale right away. I simply looked for banks with below-average return of assets and equity-to-asset ratios of less than 10.

This creates a list of bank stocks where management should consider just selling the bank because raising new capital when you have a low return on assets doesn't make a lot of sense. It's highly likely that these bank will have trouble competing with more profitable, better capitalized institutions.

Metro Bancorp (METR) is one bank that might consider selling based on these metric. The company's return on assets has consistently been well below its peer group, and the equity-to-asset ratio is just 8.46 — well below the 11 average across the United States.

Two firms with a reputation for pressuring banks to achieve higher returns for shareholders by either improving returns or selling the bank outright, Castine Capital and PL Capital, have a position in the bank. The bank is a little rich for me at 1.2 times book, but if management could attract a higher price from a buyer interested in its market selling, the bank would be a strong option in my opinion.

QCR Holdings (QCRH) is another bank that has consistently had a lower return on assets than its peer group. The Illinois based bank has 9 offices and about $2.4 billion in total assets. The bank has an equity-to-assets ratio of just 7.4, which is well below the national average. The Illinois market has seen strong merger and acquisition activity in the past year, and this bank could become a target .

First Citizens Bank and Trust (FCNCA) is another bank that has seen its returns slipping in the past year. The return on assets and return on equity have both dropping for three consecutive quarters. The tangible equity-to-assets ratio is improving, and now stands at 9.46 but is still below the national averages.

The bank has 410 branches and is in one of the more attractive markets in the country in Raleigh, N.C. The bank just closed a merger with 1st Financial Services Corporation but could become a target itself if returns do not improve going forward.

We are starting to see bank merger activity accelerate as banks like Huntington Bancorp (HBAN) and  First Merchants (FRME) looking to expand and growth their asset base in the aftermath of the credit crisis. Banks with below-average capital and returns could quickly become buyout targets.

As of this writing, Tim Melvin was long HBAN and FRME.

Tesla Shares Zoom to New Record Highs

Tesla Motors Inc.'s(TSLA) stock price is back in record territory.

Shares of the upstart electric car maker set a new high on Monday, approaching $200 and extending this year’s strong start prior to next week’s earnings report.

Tesla appears to be back to surfing the wave of popular enthusiasm that enabled its share price to quadruple in 2013. Worries about the Model S’s batteries being prone to catching fire and last month’s “recall” of charging equipment have waned. The company once again is being viewed in a positive spotlight.

Tesla has now sold cars in all 50 U.S. states and has officially launched sales in China, an important growth market. The company also delivered 6,900 Model S electric sedans in the last three months of 2013, which was 20% higher than the estimate it gave when it reported third-quarter earnings in November.

Meanwhile, a pack of Teslas made a cross-country trip in the winter cold, recharging at Tesla supercharger stations along the way and cheered on via Twitter by Tesla's visionary chairman and chief executive Elon Musk, who says he plans a family transcontinental road trip of his own this spring.

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The feel-good vibes have translated into a 30% year-to-date rally for Tesla ahead of its quarterly results, scheduled for release on Feb. 19. Analysts polled by Thomson Reuters project estimate Tesla will report fourth-quarter profit of 19 cents a share, on revenue of $663 million.

UPDATE: The stock was recently up more than 6% and traded as high as $199.30.

Shares of Tesla initially took off last May after the company reported its first-ever quarterly profit. The rally gained momentum throughout much of the year, as the hype surrounding Mr. Musk and the company's long-term potential masked its sky-high valuation.

The stock peaked in late September at $194.50, at that point up 474% on a year-to-date basis. Shares slumped for the next two months after three of Tesla's battery-powered vehicles caught fire. By late November, the stock traded below $120.

Two-and-a-half months later, the stock has recovered those losses and reverted back to record levels. All that’s left is whether next week’s results will justify the rally, or take a chunk out of this year’s gains.

–Joseph B. White contributed to this report.

Lawsuit: Investors Harmed in Empire State Building IPO

John Moore/Getty Images NEW YORK -- Investors in the Empire State Building have filed a lawsuit accusing the real estate magnates who took it public of short-changing them $300 million by refusing to sell the iconic skyscraper at a premium price. According to a complaint filed Tuesday in a New York state court in Manhattan, Peter Malkin and his son Anthony put their own interests ahead of the building's investors by spurning all-cash offers of as much as $2.3 billion for the building and $1.4 billion for Empire State Building Associates, which held the title and master lease. Instead, the Malkins put the landmark building and 17 other properties into Empire State Realty Trust Inc., whose Oct. 1 IPO valued the property at just $1.89 billion and ESBA at just $1.1 billion, according to the complaint. The lawsuit by plaintiff Marc Postelnek seeks class-action status on behalf of more than 2,800 investors who hold shares in ESBA, which was created in 1961 and was supervised by a Malkin company, Malkin Holdings. It claimed the Malkins acted in bad faith by aborting a "bidding war" for the building, and instead enriched themselves by hundreds of millions of dollars through an IPO. "Given their positions of control and authority over the fate of the Empire State Building, the Malkins had a duty to act in the best interests of their investors," the plaintiffs' lawyer, John Rizio-Hamilton, a partner at Bernstein Litowitz Berger & Grossmann, representing Postelnek, told Reuters. "By failing to properly consider offers to maximize the building's value, the Malkins breached that duty." The lawsuit seeks to recover profit that building investors allegedly lost because of the Malkins' refusal to sell. Empire State Realty Trust, a real estate investment trust, is a successor to Malkin Holdings. "These claims are wholly without merit and we will respond to them in court," a spokeswoman for the REIT said Thursday. ESBA had been created by Lawrence Wien, the father-in-law of Peter Malkin, and the shares were sold privately. Postelnek oversees a trust for his grandmother, Mabel Abramson, one of the original ESBA investors. Opened in 1931, the 102-story Empire State Building was the world's tallest building for about four decades, until it was passed by the original World Trade Center's north tower. King Kong climbed the Empire State Building in a 1933 movie, and Tom Hanks and Meg Ryan finally met there in a climactic scene of the 1993 movie "Sleepless in Seattle." Empire State Realty Trust (ESRT) went public at $13 a share, the low end of the forecast range. In Thursday afternoon trading, the stock was down 5 cents at $15.30 on the New York Stock Exchange. The case is Postelnek v. Malkin et al., New York State Supreme Court, New York County, No. 654456/2013.

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Social Security to Run 12% Yearly Deficit: CBO

The Social Security Administration will run an annual deficit averaging 12% over the next decade and the funding gap will grow as more baby boomers retire, according to an analysis by the Congressional Budget Office.

For fiscal 2013, Social Security spending totaled $808 billion, representing about a quarter of all federal spending. Revenue added to the Social Security system in 2013 was $745 billion. The system makes payments to 58 million people, about 70% of them retirees or their spouses and children.

The Social Security deficit will rise to more than 30% by 2030, according to the CBO forecast, as more baby boomers retire, increasing benefits payments as a share of the economy.

At the same time, tax collections as a share of the economy will remain constant. About 96% of Social Security’s money comes from payroll taxes. The rest comes from taxes paid by those receiving benefits once they reach a certain income level.

The two trust funds for benefit payments – one for disability and the other for old age and survivors insurance – are in danger of being exhausted in the next 20 years. If that happens, benefit payments will be reduced because the only money available to make them will be from incoming tax collections. In that case, retirement benefits would be cut by 25%.

Various ideas to prolong the lifeof the Social Security trust funds have been proposed. One idea is to remove the wage cap from Social Security taxes. Currently, the tax is not paid on earnings above $113,700. That plan would increase revenue and, by some measure, eliminate the deficit. Other proposals have called for cuts in benefits or raising the retirement age. Those plans would decrease outlays.

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Check out 6 Things About Social Security Advisors Should Tell Clients on ThinkAdvisor.

Indonesia’s Upside Surprise

Indonesia has recently been lumped into a group of troubled countries dubbed the “Fragile Five” along with Brazil, India, South Africa and Turkey, thanks to large deficits, slow growth and volatile currencies.

Given the negative outlook such a moniker implies, most analysts were caught off guard when Southeast Asia’s largest economy grew by a better-than-expected 5.7 percent in the fourth quarter; the average 2013 growth forecast was just 5.3 percent.

It’s important to note that full-year gross domestic product (GDP) growth of 5.8 percent was the slowest annual rate since 2009. It’s also not a good sign that much of that growth was driven by a sudden jump in exports.

As we’ve frequently pointed out, Indonesia is keen to develop its own domestic capacity. For example, to foster the growth of a processing industry, the country banned the export of unprocessed metal ores. Much of the country’s 7 percent increase in fourth quarter exports was likely due to miners rushing to ship as much ore as possible before the ban took effect on January 12.

Unfortunately, given the surprisingly strong fourth quarter economic performance, the government probably has been emboldened and will cling to the export ban more tenaciously. That would prove a huge drag on the economy, because commodities account for about half of all exports with manufactured goods accounting for only about a third.

It also doesn’t appear that the government has considered the huge incentives it will have to offer to convince mining companies to develop a domestic ore processing industry. That will require the investment of hundreds of millions of dollars at a time when ore prices are relatively weak.

Investment growth and capital goods imports both slowed substantially in the fourth quarter, indicating a weaker growth outlook on the part of businesses and pessimism among foreign miners.

Credit growth is also likely to tighten in the coming months, because Indonesia’s central bank has boosted its benchmark interest rate by 1.75 percent since June. While the move has helped slow capital outflows as the US Federal Reserve continues its tapering program, it will also drive an increase in the cost of credit in coming months.

Despite the fact that Indonesia is still very much a resource-driven economy, it is similar to the developed world in that domestic consumption accounts for about two-thirds of GDP. Higher credit costs will further slow business investment, hampering job growth and dinging consumer spending.

So while the Indonesian government has taken positive steps to ease the fears of international investors, those very same steps are bound to weigh on future economic growth.

Upcoming elections in the country will further undermine investor confidence, because the economy is bound to be the cornerstone of the campaign. Indonesia’s ruling Democratic Party will push for maintaining the current status quo while opposition parties will certainly take a more populist stance, calling for more subsidies and a nationalistic approach to government. That will be especially true if the unexpectedly strong economic growth of the fourth quarter isn’t repeated.

The opposition is also likely to call attention to the fact that the Democratic Party has been the target of numerous corruption investigations over the past few years that prompted the resignations of the party’s chairman and treasurer.

Given these lingering uncertainties, we look for GDP growth in Indonesia of between 5 percent and 5.5 percent in 2014, though it will likely come in closer to the bottom of that range.

Sink or Swim? Three Small Cap Stocks That Jumped or Dove: NNAN, GOHE & BLUU

Small cap stocks Naturalnano Inc (OTCMKTS: NNAN), Global Payout, Inc (OTCMKTS: GOHE) and Blue Water Global Group Inc (OTCBB: BLUU) were either jumping higher or diving lower yesterday. To complicate matters for investors, two of these small cap stocks have been subjects of disclosures about paid promotion or investor relation campaigns. So what will these three small caps do for the rest of this week? Here is a closer look to help you decide on a trading or investing strategy:

Naturalnano Inc (OTCMKTS: NNAN) Announces an Acquisition and Paten Deals

Small cap Naturalnano Inc is involved in the development and commercialization of material additives based on proprietary nanomaterial technology utilizing Halloysite Nanotubes (HNTs). On Monday, Naturalnano Inc rose 15.38% to $0.0120 for a market cap of $3.84 million plus NNAN is up 445.45% over the past year and up 50% over the past five years according to Google Finance.

What's the Catch With Naturalnano Inc? According to various disclosures, transactions of $1.5k, $2k, $5k, $9k, $10k and $17k have occurred to mention Naturalnano Inc in various investment newsletters. Last Friday, Naturalnano Inc announced that it had reached an agreement to acquire 100% ownership of Syracuse based MJ Enterprises LLC dba General Silver Plating LLC which provides chrome plating services for products used in the automobile and household appliance industries. Earlier in the month, Naturalnano Inc announced that it had sold two US Patents relating to the creation and use of ultracapacitators formed by utilizing mineral Microtubes to GND Engineering, PLLC in exchange for an upfront payment and a royalty stream for any commercial applications developed by GND while in early December, the company was issued a patent covering its proprietary Halloysite NanoTubes (HNT) in NanoComposite Method of Manufacturing. A look at Naturalnano Inc's financials reveals revenues of $19k (most recent reported quarter), $104k, $19k and $122k for the past four quarters along with net losses of $45k (most recent reported quarter), $180k, $201k and $138k. At the end of September, Naturalnano Inc had no cash to cover $6,376k in current liabilities for rather ugly balance sheet – meaning investors might want to wait for more financials to appear.

Global Payout, Inc (OTCMKTS: GOHE) Predicts a Breakout Year

Small cap Global Payout, Inc is a B2B purveyor of electronic payment solutions such as prepaid debit cards and e-wallet solutions specifically suited to: large, medium and small sized businesses, member organizations, governmental and non-governmental organizations, institutions, religious organizations, network marketing companies, unions and recipients of various kinds of financial aid. On Monday, Global Payout, Inc fell 27.18% to $0.0801 for a market cap of $9.31 million plus GOHE is up 23.2% over the past year and down 93.9% over the past five years according to Google Finance.

What's the Catch With Global Payout, Inc? According to various disclosures, no transactions have occurred to mention Global Payout, Inc in various investment newsletters. Last Tuesday, Global Payout, Inc announced that they have launched the ability to transfer money to China UnionPay (CUP) bank cardholders as CUP is the only domestic bank card organization in China and is the second largest payment network in the world as it represents 70 banks. In mid-January, Global Payout, Inc announced it had received its first contract for 2014 from an international client called Younique GmbH of Switzerland. The press release said this would be the "first of many new contracts and many new international clients expected for both the first quarter of 2014, and throughout the rest of the year." Moreover, the company is expecting 2014 to become their "breakout year in number of new clients, the number of services sold, the number of payment cards issued and in the amount of revenues earned." A look at Global Payout, Inc's financials reveals revenues of $87k (most recent reported quarter), $14k, $2k and $145k for the past four reported quarters along with net losses of $617k (most recent reported quarter), $298k, $786k and $15k. At the end of last September, had $38k in cash and $13k in short term investments to cover $490k in current liabilities and $988k in total liabilities. So it remains to be seen whether 2014 will be a breakout year for Global Payout, Inc.

Blue Water Global Group Inc (OTCBB: BLUU) Recently Gave an Update

Small cap Blue Water Global Group is currently developing a chain of casual dining restaurants in popular tourist destinations throughout the Caribbean under the Blue Water Bar & Grill(TM) brand. Additionally, Blue Water is engaged in making strategic equity investments in promising businesses that are in the early stages of obtaining their own listing on the OTCBB. On Monday, Blue Water Global Group fell 10.61% to $0.0160 for a market cap of $3.63 million.

What's the Catch With Blue Water Global Group Inc? According to various disclosures, transaction of $5k and $15k have or will occur to mention Blue Water Global Group in various investment newsletters. A week ago, Blue Water Global Group announced the authorization of a one-time stock dividend of a portion of its equity holdings in Stream Flow Media, Inc after the latter's shares begin trading on the OTCBB. In mid-January, the Blue Water Global Group announced that it had finalized a Letter of Intent (LOI) with a family owned distillery located on the Caribbean island of Dominica; but due to a non-disclosure provision, the family and distillery name are being withheld until a Definitive Agreement which is expected to occur within the next 90 days. Under the agreement, the distillery would develop and distill three sugarcane based rums (White Rum, Spiced Rum and Holiday Spiced Rum) to be sold under the Blue Water label. Blue Water Global Group also gave an update which noted highlights for 2013, including the acquisition of 20 million shares of Stream Flow Media currently valued at $200,000, extensive due diligence and feasibility studies on several prime restaurant locations in St. Maarten and the establishment of a $5 million credit facility with Dutchess Capital. A look at Blue Water Global Group's financials reveals revenues of zero (most recent reported quarter), zero, $10k and zero for the past four reported quarters along with net losses of $92k (most recent reported quarter), $22k, $56k and $44k. At the end of September, Blue Water Global Group had $26k in cash to cover $216k in current liabilities. So while the Blue Water Global Group may have made some progress last year, that progress appears to not have trickled down to the top or bottom lines yet.

Can Aeropostale Climb Past American Eagle Outfitters and Abercrombie & Fitch?

Aeropostale (NYSE: ARO  ) will release its quarterly report on Wednesday, and investors have suffered greatly since mid-summer as the teen retailer's dismal results pushed the stock down sharply. Yet even as rivals American Eagle Outfitters (NYSE: AEO  ) and Abercrombie & Fitch (NYSE: ANF  ) have seen much the same challenges, Aeropostale is working hard to try to bounce back and avoid getting mired in losses for years to come.

Aeropostale has had to deal with fickle customers in the teen-retail space for years, and overall, it has done a good job historically of reading changing trends and responding accordingly. Lately, though, Aeropostale hasn't come up with an answer to its sagging share price. What's in store for the teen retailer, and can it regain the upper hand against Abercrombie and American Eagle? Let's take an early look at what's been happening with Aeropostale over the past quarter and what we're likely to see in its report.

Stats on Aeropostale

Analyst EPS Estimate	($0.24)
Year-Ago EPS	$0.31
Revenue Estimate	$520.04 million
Change From Year-Ago Revenue	(14.2%)
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Will Aeropostale avoid a big loss this quarter?
Analysts haven't been too excited about Aeropostale's earnings prospects in recent months, as they've widened their October-quarter loss estimates by $0.07 per share and made even larger negative adjustments to full-year fiscal 2014 and 2015 projections. The stock has suffered as a consequence, falling 22% since mid-August.

All of those losses came after the company reported its fiscal second-quarter results in late August, with a terrible report sending shares down 20% in a single day. Like Abercrombie and American Eagle, Aeropostale experienced major problems in the quarter, with comparable-store sales down 15%, pulling total revenue down 6% and posting a worse-than-expected loss. Guidance for a loss when analysts had expected a profit of roughly equal magnitude also weighed on investor confidence, especially as competition from newer chains became fiercer.

But Aeropostale stock fell so far that the company got attention from private equity investors. In mid-September, Sycamore Partners bought an 8% stake in the teen retailer, and with a reputation for trying to take companies private, shareholders lauded the move by sending the stock higher. The stock got another boost last month, when Hirzel Capital Management joined the private-equity party by increasing its holdings in Aeropostale to 6%. Yet without an improvement in fundamental business results, it's hard to get too excited about Aeropostale's future, especially with costs on the rise even as net sales decline.

The real challenge Aeropostale faces isn't from Abercrombie or American Eagle, both of which have also struggled. Rather, companies like Urban Outfitters (NASDAQ: URBN  ) and H&M have hammered on the retail segment, with Urban Outfitters in particularly having finally come back into style after a long period of relative stagnation. One secret to Urban Outfitters' success has been coming up with different store concepts that target several different lucrative demographic groups, helping it diversify and avoid the challenges that focusing on a single group can bring.

In the Aeropostale earnings report, watch for management to explain its recent decision to create a poison-pill defense against further takeover activity. The retailer needs to boost its results in the holiday season if it wants to avoid a big fight among activist investors to push Aeropostale in the right direction.

The future of retail goes beyond teens
Regardless of what happens to Aeropostale, the real innovation in retail will come from a different angle. To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Click here to add Aeropostale to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.