After a brief holiday break, Credit Karma Blog is back and ready to jump right back into financial action!

First thing to tackle is three important financial tasks, courtesy of The Chicago Sun-Times, to check-off your to-do list before 2009 comes to a close. Read ahead for more information to keep you up-to-date on your personal finances, plus tips and advice on maintaining healthy credit into 2010.

Personal Finance News

• CNN Money lists 10 jobs that will get a raise in 2010. Careers in the information technology, finance, and administrative fields made the top of the list.
  
• With rates so low, where should you put your cash?, The Miami Herald reports. “The short answer: Don’t expect much for now from those traditional cash deposits”; read on to find out more of how to make the most of your money.
• This blog post plays devil’s advocate on whether automating your finances is an expensive mistake, written by Bargaineering. It will make you think twice about paying your bills automatically online or linking your checking account for automatic transfers.
• Personal finance planning for the next year, brought to you by The Digerati Life.
• For more steps to steer in you in right financial direction in 2010, check out SmartMoney’s 10 ways to save money in 2010, which kicks off with tip #10: Pick a friendlier credit card.

Credit Report & Credit Scores News

• You can and should check your credit profile for free reports USA Today, and mentions Credit Karma as an important resource!
• The Dallas Morning News writes on how the recession gives parents opportunity to teach financial lessons to kids, such as keeping up a good credit history for future financial opportunities.
• Keep watch on your credit score reports Philly.com, with a special Q&A on how to prevent holiday damage to credit scores.
• If you thinking about home loan modification, read Freep.com’s report on how modifying your home loan can damage your credit score and potentally tighten your access to credit.
• Another article detailing the effects of loan modifications is CNN Money’s Mortgage rescue: credit score killer, which explains how Obama’s foreclosure rescue plan is reportedly hurting homeowners’ credit.

1. Begin paying attention. How much stimulation can you handle comfortably? Walk away from the TV or computer, phone or book when you notice that you can no longer adequately concentrate.
2. Take your level of interest seriously. Monitor it regularly. When it drops, ask why and experiment to find out what will help you regain it. Avoid those tasks and activities that you have no interest in if at all possible. Pushing yourself to learn or do something uninteresting only drains mental and physical energy. And when you must learn or do something uninteresting to you, don’t waste emotion complaining about it.
3. Make sure you are getting enough sleep. Walking through the world sleep-deprived makes everyday noise seem more excruciating. It will also contribute to. short-sighted decisions when we are trading.
4. Limit the amount of gratuitous stimulation-bombardment that you subject yourself to. Watching violent shows on TV; overdosing on negative and violent news; spending too much time around highly anxious, depressed, and negative people; and indulging in violent adventure films with special effects will all take their toll over time. Limit the amount of time you spend in loud restaurants, theaters, or concert arenas. Limit the amount of time spent listening to talk radio or senseless television shows.

5. Listen to soothing music. Do other activities that you know will calm your body and quiet your mind, such as slow walks in a natural setting, taking a bubble bath, lovingly preparing a meal, or giving and receiving a message with a loved one.
6. Learn to meditate. Become more aware of your inner world and quiet the body as a preventative against stress and burnout. We offered a beginning meditation.
7. Establish a meaningful, consistent, and satisfying sexual relationship. This will be nourishing, supportive and promote a deepening emotional connection. It will also help in relieving physical stress. Consciously learn to extend the pleasant halo effect (the time you feel more relaxed and open) after sex for longer periods of time.
8. Establish a regular exercise routine. This will help cope with stress, fight off low energy, depressive tendencies, and tone the body and strengthen the heart. This is especially important if you are spending a number of hours daily in front of the monitor trading.
9. Make friends and acquaintances. This will promote mutual sharing of activities, ideas, experiences, and problem solving. Others help us understand that we are not alone and may provide needed support when we are under stress. Try to share interests with others that have nothing to do with trading, investing, or the business and financial world.
10. Take complete breaks from trading, watching the market, and from even turning on the computer. See what it’s like to be disconnected from the Web for at least a full day. Don’t call for automated phone quotes or watch television business programs. Give yourself a one-day withdrawal from the market. Not only does this give you a necessary break from the action, it also shows you that you can live without constant attention to the market and your portfolio without anything terrible happening.
11. Take periodic vacations. Go to a different environment than you are used to. Go to the mountains, desert, seashore, or to another state or country. This is necessary to clear your mind of habitual problems and routines that are easy for us all to get stuck in. See if you can resist the temptation to turn on CNN if you travel to another country.
12. Seek professional help. Take advantage of psychological counseling or psychotherapy when needed. Do not wait until you are miserably depressed or climbing the walls with anxiety before reaching out. If things get bad enough, medication from an M.D. is always available and a psychologist can help determine if you need it.

Remember that psychologists are too good at what they have to offer to be limited to helping disturbed people. They can help you overcome obstacles that block you from higher-level work performance and more intimate love relationships. They can assist you in coping with the pain of loss and adjust to the developmental stages and changes that are part of life. Don’t be afraid to seek help when you need it.

Synta Pharmaceuticals (NASDAQ: SNTA) is a development-stage bio-pharmaceutical company. Currently the company has 3 candidates past pre-clinical studies. STA-9090 is what is known as an Hsp90 inhibitor, which for those of us without medical degrees means that the drug is targeted to prevent and possibly reduce the spread of cancerous tumors.

This drug is just now entering Phase 2 clinical trials. The second drug is Apilimod, a treatment targeting rheumatoid arthritis, also just entering Phase 2. Finally there is elesclomol, an “oxidative stress inducter” for cancer treatment, specifically metastatic melanoma, a form of skin cancer. Synta has other compounds under development, but as most are in pre-clinical stages, there is no reason to discuss them at this point.

Elesclomol is a sad story for Synta, despite it being the reason why the stock perked up on my Magic Formula radar. The company entered a joint development agreement with GlaxoSmithKline (NYSE: GSK) in 2007, and the drug progressed well through Phase 1 and 2 clinical trials, and Phase 3 (the final stage before submission) was scheduled to complete in 2009. In February, Synta received results that showed elesclomol was producing lower overall survival rates than no treatment, causing the FDA to put the drug on clinical hold. Glaxo saw this result as a death sentence for the compound, and terminated the joint venture in September.

With the termination, Synta recognized nearly $115 million of previously deferred revenue on the income statement in the just-completed Q3 (deferred revenue is cash already received but not yet recorded on the income statement). This has pushed the company’s trailing 12-month operating profits way, way past anything sustainable and has led to an earnings yield over 60%, and return on capital over 1,300%!

Clearly, this is a one-time event and not something we can rely on.

Looking at Synta’s results absent this windfall, they are grim. The company started operations in 2001 and has never produced any marketable drugs. The only way they continue to operate is through financing such as the 2007 IPO and preferred stock offerings, as well as a few minor licensing milestone payments and government grants. In 2005 and 2006, there was no revenue at all!

As a result, Synta has been unprofitable for its entire existence, accumulating a deficit of over $400 million dollars. With elesclomol a failure, the future is even darker. Speculating on anything before Phase 3 is risky business.

The disappointing thing is that until this one-time payment falls 4 quarters behind, it’s likely that Synta will continue to occupy a space in stock screens as a stock worth looking at. Avoid this one at all costs – it might even make an interesting short candidate right now: typical annual cash burn is near $50 million and that’s about all the company has left in its coffers.

Don’t get burned by this unattractive pharma stock…

Sincerely,
Steve Alexander
MagicDiligence.com

December 11, 2009

Synta Pharmaceuticals: Stay Away from This Hopeless Pharma Stock was originally featured in the Penny Sleuth.

Reasons You Should Cook More

Before we get into the how, let’s talk a little about the why. You don’t need scientific studies to tell you that it’s much healthier to eat a home cooked meal and it’s far cheaper too. Restaurant food is designed to taste great, not make your body feel great. It’s chock full of fat, sodium, and other ingredients that taste wonderful but can wreak havoc on your body over long periods of time. Portion control is also non-existent as plate sizes are huge and portions of generous to make you feel like you’re getting the most out of your dining dollar.

As for the dining dollar, you certainly get decent value out of it but it’s far more than what you’d pay if you made it yourself. We used to eat out at least half a dozen times a week at a cost of several hundred dollars a month. Since cutting back and shifting some of our spending to groceries, the amount we spend on food has dropped significantly. You automatically save 15-20% from the tip alone, so it’s not all that stunning to learn that eating at home will save you money.

We’ve also saved in terms of entertainment since cooking can, if you make it an event, take longer than eating at a restaurant. Make date night something fun like making a fancy dish, pop open a bottle of wine, and enjoy the process as much as the product. You can skip the movies, where you sit like a zombie for a couple hours, and actually spend quality time together.

Finally, it’s great to develop cooking as a skill. There’s something very cultured about being able to prepare food without needing to bury your face into a cookbook. Food is the universal language and being able to cook, to understand the concepts as well as the recipes, helps make you into a more rounded individual.

If You Don’t Cook…

Start. There is no cooking gene, there’s no cooking talent (at this level), and there’s no reason why anyone “can’t” cook. Recipes remove all ambiguity in the cooking process and if you can follow instructions from a GPS, you can follow a recipe. You do step 1, then step 2, then step 3, etc.

Usually when I hear that line, I think it’s an excuse for something else, which is totally fine. I’m not here to convince people who don’t want to cook that they should be cooking, you should do whatever makes you happy. Maybe you don’t want the hassle of preparation or of cleanup or you don’t want the risk of spending all that time and eating something horrible. I get it.

However, I’d just like to say that if we all subscribed to that logic, no one would be riding bicycles… or doing much of anything else.

Don’t Buy Cookbooks

We have about a dozen cookbooks and I don’t believe we bought any of them. Here’s why you shouldn’t buy any cookbooks:

• The internet has tons of free recipes: You can get the recipe to almost anything by searching the web and it’s free. In addition to recipes, many sites offer visitors the chance to give feedback on a recipe so you can learn if perhaps it contains too much of any one ingredient (too salty? too oily?). You can’t get feedback in a cookbook.
• You’ll receive them as gifts: Eventually someone will give you a cookbook as a gift, especially if you start cooking and talking about cooking.
• Borrow them from the library: If you really want a cookbook, borrow it from the library first. See often often you use it before you go out and spend money on something that might just collect dust on the shelf. Be careful not to get it dirty though, it’s a library book after all.
• Joy of Cooking: The only exception to this rule is if you want to buy a copy of The Joy of Cooking. The New York Times called it the Swiss Army knife of cookbooks and I think it’s a valuable tome to keep as a reference in the kitchen.

Learn Techniques & Theory

When I was younger, I played the piano for a dozen years. Each week I would pick another song, play and play and play. Then another… then another. It was boring. It was boring because I never learned music theory, I just played a song and moved on. In fact, I never knew there was music theory.

Don’t be like me and the piano, learn the various techniques and cooking theory so that you can build recipes yourself using basic ideas. For example, there are four basic “mother” French sauces from which all other sauces are built from. Antonin Carême, in the 19th century, classified them into four mother sauces – Béchamel, Espagnole, Velouté, and Allemande. Mornay sauce is Bechamel with Gruyère or some other type of cheese.

Learning theory makes the process a lot more fun!

Make It Fun

Cook with your significant other or with close friends. Skip dinner and a movie and just do dinner, at home. You can try to replicate your favorite dishes at your favorite restaurants, just search for imitation or copycat recipes, and make a night of it and some board games. If things turn out well, fantastic! If they don’t, figure out what you did wrong and try it again. Cooking is like anything else in life, you won’t get everything perfect on the first try but you only fail if you quit. By cooking, you kill two birds with one stone – dining out and entertainment – at a fraction of the cost (plus you’re learning something!).

Build Up Your Recipe Repertoire

As you cook more and repeat recipes over and over again, they become familiar and you memorize the preparation and its ingredients. You want to build up a set of recipes that you can make competently without much preparation and much angst at the eventual product, since you’ve made it so many times. The only way to do that is practice, practice, practice. We have about a dozen different dishes we can make without any prior preparation and whose ingredients we, for the most part, have completely memorized. It makes for an easy trip to the grocery store when we see things on sale.

Malcolm Gladwell, in Outliers, repeats the claim that you need 10,000 hours of practice in something to become an expert. If you spend an hour of cooking each night, that’s still over 27 years of cooking… you better get started!

How to Cook More, Eat Out Less from personal finance blog Bargaineering.com.

This post is part of the Bargaineering Annual Financial Review week series where we take a closer look at the four major facets of personal finance and see if we can do better. This post is part of day three – taking a closer look at your investments.

SEC’s Guide to Asset Allocation

The first thing you should do is read what the SEC has to say about asset allocation and diversification. The page doesn’t have any big revelations but it does give you a basic understanding of the importance of proper asset allocation, why you need to diversify, and how you need to revisit these issues at least once annually to rebalance.

The guide itself doesn’t talk about specific allocations. It says you need to establish your goals, think about your time horizon and risk tolerance, then pick investments that have the best chance of getting you there. They are very general when it comes to discussing asset classes (stocks, bonds, cash) and avoid making any specific recommendations. They do point to an Asset Allocator calculator by the Iowa Public Employees Retirement system.

This post is part of the Bargaineering Annual Financial Review week series where we take a closer look at the four major facets of personal finance and see if we can do better. This post is part of day three – taking a closer look at your investments.

The big takeaway from all this is that regardless of what you decide for your asset allocation, the most important thing is that you actively make the decision. Don’t just accept your 401k’s default allocation, make an educated decision and you will be much better off.

So, in light of that, let’s talk about some common allocations.

Lazy Portfolios

Lazy portfolios aren’t portfolios that lack pep in their step, they’re portfolios designed for the investor who doesn’t want to spend too much time analyzing and allocating. The lazy investor, if you will.

There are several lazy portfolios but the classic “couch potato” portfolio is a 50% allocation in the Vanguard 500 Index Fund (VFINX) and a 50% allocation in the Vanguard Total Bond Fund Index Fund (VBMFX). The idea is that you want something simple, you know Vanguard funds are cheap (and it takes just a few seconds to confirm this), so why not set an allocation like 50-50, set it and forget it?

The risk is that while setting an allocation is better than taking what your plan gives you, you haven’t actually made an active decision based on your goals. You simply chose a plan that has gotten some ink in the papers. Of course, keeping things simple means you’re more likely to stay on top of it (it’s easy to rebalance a portfolio of two assets!) so being lazy does have its merits.

120 Minus Age

This is a classic investment rule of thumb. You should take 120, subtract your age, and put that percentage of your retirement assets in stocks. The rest should be in bonds. So if you’re 20, all of your investments should be in stocks and none should be in bonds. As you age, the asset allocation adjusts from risky (stocks) to safety (bonds).

While it’s better than settling for the default, this rule may be riskier than you are willing to stomach. It also almost too basic a rule because it only sets allocation between stocks and bonds. There’s no discussion of what kind of stocks (domestic vs. international, large cap vs. small cap, etc.) and its one-dimensional nature seems to be its downfall. Of the three “easy” approaches, this one is probably the weakest.

Target Retirement Funds

Target Retirement funds, made popular in the last five years or so, are mutual funds that adjust their holdings as the years pass. Also known as Lifecycle and Target Date funds, they are typically named with a target “year.” So a Target Retirement 2040 fund is designed for someone looking to retire in 2040. They invest in a mix of assets with the mix becoming more conservative as the target retirement date draws closer.

Target retirement funds are easy because they set the allocation for you but they can cause you to become complacent. Since you don’t have to rebalance, the fund takes care of that for you, you may forget to rebalance your other assets. In fact, target retirement funds work best when you invest all of your retirement in the funds. If you don’t, your other assets throw your allocation out of alignment since the funds assume 100% of your assets are in that fund. Again, it’s an easy solution that’s better than nothing, but nothing beats careful planning.

I’ve offered up three different options, none of which are ideal but all of them are better than sticking to your 401(k) default allocation. It’s up to you to decide which one works best for you because there’s no magic allocation that will always work for everyone, as this last year’s stock market performance has shown. In the end, it’s about creating a plan and sticking to the plan. If things go awry, they go awry, but at least it was because of careful planning and not haphazard guessing (sometimes, it’s the best you can do).

If you have any recommendations on how to set an asset allocation, what you do to help planning, please let us know because I think most people have difficulty with this topic.

(Photo: bullionvault)

How to Determine Your Asset Allocation from personal finance blog Bargaineering.com.