Look who's buying now

Fortune asked 13 money managers about the current downturn, and what they're buying (or not buying) now.
By Katie Benner, Eugenia Levenson and David Stires

John Neff
Former Manager, Vanguard Windsor FundI don't see a recession. The decline of the dollar has made American industry quite competitive in the world, and ordinary manufacturing will help the economy. I've always been a low P/E investor, because low P/E gives you the benefit of a decent company's growth, plus the chance to move the P/E up. That's how I ran Windsor fund successfully for over 31 years. In late January I started buying new stocks. I bought ConocoPhillips (COP), which I had sold at about $85 to $89, when it was suddenly below $70. I bought more shares of Seagate (STX), which I already owned. It got unduly pummeled, in part because it's a tech company, and it got down to seven times earnings. It's the only tech stock I've owned in the past 12 years, and I wouldn't buy it if it was 13 times earnings. I also bought a small-cap company, Georgia Gulf (GGC). It's a decent chemical company. It's overleveraged right now because it made an acquisition and used debt, and the stock got down to $3.50. So I bought in. The following week the stock was at $5.90. Not a bad percentage gain.
Leon Cooperman
Founder, Omega Advisors; former head of investment research at Goldman Sachs Unequivocally the economy is slowing, but until we see some data to the contrary we think there's only a 50% chance of recession. And barring a very serious recession, many parts of the market are still attractively valued. The market will go lower because there are legitimate issues facing the financial system, so if you're going to invest now keep cash reserves for dry powder. Stick with blue chip companies whose fundamentals you understand and that are trading inexpensively. Right now we like 3M (MMM), energy names like Anadarko (APC) and Apache (APA), and pipeline companies like Atlas Pipeline (APL). We think Merck (MRK) is an inexpensive good company, and it also pays a dividend. Dividends are important because, historically, they provide almost half of all stock market returns. And we also like Boeing (BA) because it is less sensitive to economic cycles and has a five-year order backlog.
Christopher Ailman
CIO, CalSTRSWe'd been underweight in U.S. securities since the summer, but with the recent sell-offs we decided there's a buying opportunity. As everybody else is selling off in these panic waves, we come in and buy. For individual investors, the key is not overreacting. Flip it around and think of it as the stock market is a bit on sale. The bull market we had through 2007 was getting very long in the tooth, so this is actually a healthy retrenchment. International diversification, unfortunately, is dead. The risk-return tradeoff of U.S. versus international stocks is tighter than it's ever been. They're really just one asset class. If you're looking for that extra spice of risk in your 401(k) the place to put a little bit of money to work is emerging markets. The caveat is that they've been extremely strong. China is very overpriced in its own domestic market, for example, but there are opportunities like Brazil and Eastern European nations that look like they will have fairly decent GDPs no matter what the U.S. does.
Michael Steinhardt
Chairman of WisdomTree Investments When I managed a hedge fund, I cared about one thing: Performance. I had an arsenal of tools that I could use to maximize performance, and I spent all of my time doing nothing but thinking about markets. Individual investors are at a disadvantage when they're up against professional investors, which is why I would recommend that they use index products like index mutual funds and ETFs. They get low costs, transparency, great liquidity, and wonderful tax treatment; and they can do as well as the market, after fees. There are also ETFs that use strategies to maximize market returns by doing something as simple as weighting an index based on fundamentals like earnings and dividends, rather than market cap. This means that the index will be less likely to buy when stocks are cheap and sell when they are dear. It's instant value investing, which is a great idea when stock markets are falling.
Whitney Tilson
Founder T2 PartnersIf you want to sleep well at night, you could put your entire portfolio in Berkshire Hathaway, not look at it for five years and likely beat the market, but during periods of panic you can make more money on beaten down, more volatile stocks. This is only a strategy for people who can withstand a lot of ups and downs. As an example, we recently added to our position in Sears Holdings (SHLD), which we think the market misunderstands. We think intrinsic value is upwards of $250 per share versus the current price around $110. But it's hard to pick a bottom here. Our analysis hasn't changed since we first started buying late last year with the stock near $130 and we had to endure a drop below $85 only a few weeks ago -- which gave us an opportunity to buy more.
Jeff Mortimer
CIO, Charles Schwab Investment ManagementBull and bear markets end with volatility, which is why you see 600-point stock market swings. This triggers a lot of emotional investing, even though underlying company fundamentals haven't changed all that much. You have to remember that 10% to 20% corrections are simply the price of admission for being a stock investor, and that your portfolio should always include defensive strategies for this reason. If your allocation forces you to sell in a down market, take a deep breath and look within because you've probably taken on too much risk. If you're creating a defensive strategy, make sure you have exposure to healthcare stocks like Cigna (CI) and Aetna (AET), as well as consumer staples like Coca-Cola (KO). Also, IBM (IBM) hasn't disappointed anyone and the company pre-announced great earnings. Even so, it got caught in the downdraft. Now is a time to get this sort of solid performance at a discount.
Nouriel Roubini
Economics professor at New York University and chairman of RGE Monitor.comThe debate is no longer about a soft vs. a hard landing, but how hard will the hard landing be. The recession train left the station in December. The recession will be severe because the U.S. consumer - whose spending makes up 70% of our GDP - is shopped-out, saving-less, and debt-burdened.There is a rising risk of a systemic financial crisis. Avoid risky assets like equities, which could suffer a sudden market crash. You want to buy protection against this by buying options on the CBOE volatility index, known as the VIX, or on the S&P 500. Be careful with money market funds. Some could have meaningful exposure to securities backed by risky mortgages, or even auto loans or credit card loans, which are also high risk. Finally, do not buy a home. The housing recession is not near the bottom and prices could fall by another 20% over another year and a half. If you buy now, you'll have a massive capital loss.
Bill Stone
Chief Investment Strategist, PNC Wealth Management We talk about psychology a lot with clients. Studies show that the pain of loss is felt more than twice as much as the joy of gains. So it is important to not be shaken out of the market by fear when things are going down. Typically, if you sold into or after a market decline you probably lost money. Doing something as simple as increasing your 401(k) deduction will allow you to take advantage of this sale on stocks, and the money disappears from your paycheck, which makes it easier to invest in a down market. It also means that you're thinking long-term, which is good. Right not we like healthcare companies like Baxter (BAX) and Pfizer (PFE), which pay dividends, and Gilead (GILD), which has a great HIV franchise. A defensive stock we like that is in the industrial space is Lockheed Martin (LMT), since defense spending will be robust.
Bob Rodriguez
CEO, First Pacific Capital and portfolio manager, FPA Capital and New Income Funds I have 43% in cash. I'm looking to see what other shoes start to fall. The credit crisis is still unfolding, and all we've had are tactical, not strategic solutions. High interest rates didn't cause this credit crisis, so why should interest rate cuts solve it? Congress is hoping the stimulus will help kick start the economy, but single-event tax cuts have been shown to be highly ineffectual.Several retailers with strong balance sheets have gotten hit pretty hard. Foot Locker (FL) is down in the $10 range, and Jo-Ann Stores (JAS) got down to $9 from about $25. Under normal circumstances, they'd be buys. But I don't believe we're in a normal environment. I want to see more pain and suffering before I think it's safe to start buying in a big way.
Ron Muhlenkamp
Founder and President, Muhlenkamp & Co., portfolio manager, Muhlenkamp Fund Our holdings reflect the change in market leadership. We have decreased our holdings in homebuilders, financials, and consumer cyclicals, and have increased our holdings in capital goods and technology. For instance, we bought Cisco ( CSCO) and Oracle (ORCL). It's been a long time since you could buy these stocks so cheap. We do a seminar twice a year, and people had been asking us, "When do you think technology will come back?" The answer we gave them was, "Not until you quit asking." April 2007 was the first time nobody asked. Will we have a recession? From an investment standpoint, we won't know until it's too late to do anything about it. And from an investment standpoint, it probably doesn't matter. There's going to be a long-term workout of these credit instruments, measured in months or quarters. If we're right that the investment climate is good and the business cycle continues, we are now once again at the beginning of a business-investment cycle, giving us opportunities we haven't seen in six, seven years.
Ken Heebner
Co-founder, Capital Growth Management and portfolio manager, CGM Realty FundIt's time to be positive. While the American economy is a little weaker than I thought it was going to be, I don't think a recession is going to happen. Whatever degree of weakness we experience, the global economy is going to continue to move ahead. Agricultural and industrial commodities will continue to show strength. The Fed has shown that they are going to take aggressive action to minimize the impact of the mortgage problem on the U.S. economy, and if there is any side effect, it will weaken the dollar and stimulate commodities prices. If you look at the fundamental underpinnings for the contraction of economies in developing countries, those factors are no longer present. Until recently, they were dependent on imports of capital to provide for investment into their economies. At the same time they tended to have significant current account deficits. When they had current account deficits it was the inflow of capital that provided the stimulus for growth. Today, they have large current account surpluses, and they don't need an influx of capital to cause their economies to grow. In terms of stocks, I think the long-term potential for Petroleo Brasileiro (PBR) continues intact. The company recently discovered the Jupiter field of natural gas--a major discovery off Brazil. So the pattern of favorable news continues.
Mustafa Sagun
Chief investment officer, Principal Global InvestorsHave discipline when you construct your portfolio, and stick with it when the market swings up and down. Right now we like healthcare stocks like Express Scripts (ESRX) and Medco (MHS), which manage prescriptions benefits. It's a play on the aging population and it's defensive because drug demand stays fairly steady even when consumer discretionary spending falls. We like to look for global trends because that is a defensive strategy. This is why we like companies that produce potash, which goes into fertilizer. There is a real supply constraint here and growing demand because food demand is increasing and ethanol demand means more agricultural production. We like Mosaic (MOS), Potash Corp (POT), and Agrium (AGU). In these times of high volatility, stock exchanges will benefit. Their business is soaring. Those stocks include Deutsche Bourse, the Hong Kong Stock Exchange, and the Nasdaq.

Don't try to invest like the pros

The way some finance wizards manage their money offers valuable lessons - in what not to do.

(Money Magazine) -- Investing has a few simple rules that everyone knows are true yet most people find amazingly hard to live by. Diversify; don't chase hot returns; don't think you can outsmart the market. If you did nothing more and nothing less, your success would be all but ensured.
Turns out regular folks like you and me aren't the only ones who struggle to live by these precepts. A new survey shows that finance professors - the experts who analyze markets and teach future mutual fund managers how to build portfolios - have the same willpower problems as the rest of us. We can learn something about how to address our own shortcomings if we study theirs.
Colby Wright, a young scholar at Central Michigan University, surveyed more than 600 finance professors at major U.S. universities to find out how they invest their own money. It turns out that most keep things simple and smart: They do little or no stock picking, and they avoid investing in options, futures contracts or other more esoteric securities.
About two-thirds of the professors, in fact, have the bulk of their assets in index funds, the low-cost baskets that essentially own the entire market. These academics more or less practice the basic lesson of modern portfolio theory: Diversification is the key to holding down your risk and maximizing your returns. That leaves a third who have gone astray, however.
So much for theory
In their classrooms, these professors lecture on complex theories of how markets balance risk and return. In their portfolios, the profs who trade ignore that mumbo jumbo. How do they decide when a stock is a buy? By doing a discounted cash flow analysis? Or consulting the capital asset pricing model? Nope. Like any CNBC junkie, they zero in on how much the price has risen lately. To heck with theory - that sucker's going up!
Worse still, among the 44 percent of professors who believe that the market is efficient - meaning that whatever is knowable is already priced into stocks - nearly a quarter nevertheless agree with the statement "When I invest my own money, my goal is to beat the market." In other words, having spent their careers studying the stock market, these experts have concluded that it can't be beaten by anyone - except them.
"Professors' perceptions of market efficiency have little, if any, influence on how they invest," says Wright. "What really drives their investing behavior is their confidence in their own abilities."
In this, the professors are just like the rest of us. Although everybody knows how hard it is to beat the market, nobody stops trying. Let me rephrase that: Everybody knows how hard it is for everybody else to beat the market. So you and I are always honest about each other's chances of success but never about our own.
The real lessons
There are two important bits of learning embedded in Wright's survey data.
First, whenever anyone tells you that research "proves" a novel method of investing is a market beater, bear in mind that the professor behind the paper is most likely an indexer who has never road-tested his theory in the real world of trading costs, taxes and other expenses.
Second, remember that even many of the people who know best can't resist chasing hot stocks, so you have to control your behavior in advance. Put 90 percent of your money in low-cost index funds and lock yourself in by adding a fixed amount every month through an electronic transfer from your bank.
Speculate - if you must - with just the remaining 10 percent, and use a checklist of buying criteria to make sure you never buy a stock purely because it has been going up. You can buy a stock only from someone who doesn't want it anymore. You don't have to be a finance professor - in fact, maybe you shouldn't be one - to realize that the seller may know something you don't. The less you fool with your portfolio, the less often you'll play the fool.

Bush unveils $3.1 trillion budget

The proposed budget would be the largest one-year expenditure in history; seeks increase in military spending and protection of tax cuts.

WASHINGTON (AP) -- President Bush unveiled a $3.1 trillion budget on Monday that supports sizable increases in military spending to fight the war on terrorism and protects his signature tax cuts.
The spending proposal, which shows the government spending $3 trillion in a 12-month period for the first time in history, squeezes most of government outside of national security, and also seeks $196 billion in savings over the next five years in the government's giant health care programs - Medicare for the elderly and Medicaid for the poor.
Even with those savings, Bush projects that the deficits, which had been declining, will soar to near-record levels, hitting $410 billion this year and $407 billion in 2009. The all-time high deficit in dollar terms was $413 billion in 2004.
Bush's final full budget is for the 2009 fiscal year, which begins on Oct. 1. It proposes spending $3.1 trillion, up 6% from projected spending of $2.9 trillion in the current budget year.
Part of the deficit increase this year and next reflects the cost of a $145 billion stimulus package of tax refunds for individuals and tax cuts for business investment that Bush is urging Congress to pass quickly to try to combat a threatened recession.
Bush projects that the deficit will decline rapidly starting in 2010 and will achieve a $48 billion balance in 2012.
But Democrats said that forecast was based on flawed math that only included $70 billion for the wars in Iraq and Afghanistan in 2009 and no money after that and also failed to include any provisions after this year for keeping the alternative minimum tax, originally aimed at the wealthy, from ensnaring millions of middle-class taxpayers. The Congressional Budget Office estimates that fixing the AMT in 2012 would cost $118 billion, more than double the surplus Bush is projecting for that year.
Even some Republicans faulted Bush's budget sleight of hand.
"They've obviously played an inordinate number of games to try to make it look better," Sen. Judd Gregg, the top Republican on the Budget Committee, said in an interview with The Associated Press.
"Let's face it. This budget is done with the understanding that nobody's going to be taking a long, hard look at it," said Gregg, R-N.H.
Bush's spending blueprint sets the stage for what will probably be epic battles in the president's last year in office, as both parties seek to gain advantages with voters heading into the November elections.
The 6% overall increase in spending for 2009 reflects a continued surge in spending on the government's huge benefit programs for the elderly - Social Security and Medicare, even with the projected five-year savings of $196 billion over five years. Those savings are achieved by freezing payments to hospitals and other health care providers. A much-smaller effort by Bush in this area last year went nowhere in Congress.
While Bush projects that total security funding in the areas of the budget controlled by annual appropriations will go up by 8.2%, he projects only a 0.3% increase in discretionary spending for the rest of government.
To achieve such a small boost, Bush would hold hundreds of programs well beyond what is needed to keep up with inflation. He also seeks to eliminate or sharply slash 151 programs he considers unnecessary.
Bush targeted many of the same programs last year but Congress rejected the effort.

4 candidates, your paycheck

How the leading Democratic and Republican presidential candidates' tax proposals could affect your take-home pay.

NEW YORK (CNNMoney.com) -- Regardless of how much money you make, you have skin in this game.
The four leading presidential candidates say they're concerned about the taxes that Americans pay out of their paychecks. And they all vow to do something about it if elected.
Now with the economy at the forefront of the presidential campaign, the leading candidates' tax proposals will come under increasing scrutiny in the coming weeks.
Here's a look at some of the ways that Hillary Clinton, Barack Obama, John McCain and Mitt Romney would realign tax policies and how those changes could affect your take-home pay.
Keeping the tax cuts in place
One of the central questions is what to do about a series of tax cuts passed in 2001 and 2003 set to expire in three years.
The four candidates seem to agree on one thing: They want to preserve the cuts for low- and middle-income earners. Those tax cuts include lower rates, reduced taxes paid by married couples and a higher standard deduction.
But the Democratic and Republican candidates part company when it comes to upper-income earners.
Both McCain and Romney have said they would preserve the tax cuts for high-income earners - typically defined as households that make $250,000 or more. Clinton and Obama want to repeal them for taxpayers in that group.
Clinton also would reduce the value of some personal exemptions and itemized deductions for big earners.
Part of the rationale given for restoring higher taxes on upper-income households is that they benefited the most from the 2001 and 2003 tax cuts, and that continuation of the tax cuts for those at the top of the heap may force the government to raise taxes on everyone else or cut spending.
Those who oppose taxing the rich more note that the top 1% - taxpayers making more than $250,000 - already account for 40% of all federal income tax revenue. Taxing them more, proponents of extending the tax cuts say, may lower tax receipts because high-income filers will seek more ways to shelter their money from taxes.
New tax breaks
The candidates also have somewhat different ideas about what kind of new income tax breaks to offer.
On the Republican side, Romney has said he wants to permanently lower the rate on the lowest tax bracket to 7.5% from 10%. Currently that tax bracket applies to roughly the first $8,000 for single filers and the first $16,000 for married couples filing jointly.
And he has proposed permanently exempting workers over 65 from having to pay payroll taxes, which are used to fund Social Security.
McCain hasn't yet offered up any individual income tax breaks beyond proposing to make the 2001 and 2003 breaks permanent.
On the Democratic side, Obama would offer a tax break to seniors by eliminating their income taxes if they make less than $50,000.
Obama also would create a credit worth up to $500 per working person ($1,000 per family) to offset Social Security tax on the first $8,100 of earnings. The credit would start to phase out for people with incomes between $150,000 and $200,000.
Both he and Clinton have said they want to expand the earned income tax credit for low-income workers. And they want to offer an expanded saver's tax credit although in somewhat different ways.
Clinton would offer a savers' credit equal to 100% on the first $1,000 saved by married couples making less than $60,000, and a 50% matching credit for couples making between $60,000 and $100,000.
Obama would match 50 percent of the first $1,000 of savings for families that earn under $75,000.
New retirement tax bites
The candidates' tax proposals aren't all sugar. There are notable differences, for instance, in how they would might treat payroll taxes in a bid to shore up Social Security over the long haul.
Obama would consider increasing the amount of wages subject to the payroll tax. Currently, the first $102,000 of wage income is subject to the 12.4% tax, half of which is paid by workers and half by their employers.
Obama has indicated he might favor lifting that cap but only after imposing a "donut." A donut would protect from the payroll tax a certain portion of wages above the current cap - for instance, wages between $102,000 and $202,000. But any earnings above that ceiling would be taxed.
It's not clear yet whether a payroll tax increase would be in the offing under Clinton or McCain, because both candidates have been spare on details.
Clinton has said she doesn't want to eliminate the cap on the income subject to the Social Security tax. But that doesn't necessarily rule out an increase in that cap or a higher tax rate.
McCain, meanwhile, has said he would prefer Social Security funding to be shored up by reducing growth in benefits rather than by raising the payroll tax.
Romney doesn't want to raise payroll taxes, but instead favors the idea of letting workers have individual investment accounts and fund them with money from the surplus paid into the system.
Clinton and Obama oppose the notion of diverting payroll taxes - whether from the system's surplus or direct from your paycheck - to fund accounts.
Don't rearrange your budget yet
Of course, campaign promises are often easier to make than they are to keep. A lot can come between a newly elected president and his or her ideas about taxes.
Political reality, for one. Just look at President Bush and Congress. Their inability to come to agreement has stymied decisions.
Then there's deficit reality. The budget that Bush submitted Monday projects a deficit of more than $400 billion. That could tie the hands of the next president to make tax changes.
Or consider the Alternative Minimum Tax (AMT). Everyone in Washington says they want to do something about the outmoded tax scheme, which was originally aimed at the rich but is increasingly hitting the middle class. But no one has an appealing way to pay for fixing it. The price tag for reform or repeal ranges between $500 billion and $1 trillion over 10 years.
"No one has really staked out a credible claim at fiscal responsibility," said Len Burman, director of the Tax Policy Center. "They'd just devote deficits to different purposes."

Busting out of the boutiques

Fashion Week descends on New York City's Bryant Park this week and next. Amid tents filled with those who have already made it, a small band of entrepreneurial designers are claiming lucrative deals. Here are five creative small-business owners who, insiders say, will soon be global brands.
By Faran Krentcil

New York City
Chris Benz
If Marc Jacobs and J. Crew collaborated, the result would look a lot like Benz's clothes. That's appropriate, because the 25-year-old worked at both places before launching his own line last year.
Though he has produced only two full collections, the critical praise for the Seattle native has been loud and unanimous, from the New York Times to Women's Wear Daily. On the horizon is an eyewear collection and a jewelry partnership with Lulu Frost. Can a Target line be far behind?
Los Angeles
Katy Rodriguez
For 11 years Rodriguez ran the famed Resurrection boutiques in New York City and Los Angeles, and selling vintage clothing inspired her to create her own line replicating the look and quality of those classics. Her dresses often feature voluminous hemlines that make them look as if a wind machine is hidden underneath. Stylist Rachel Zoe and actresses Sarah Jessica Parker and Liv Tyler count themselves acolytes. This month Rodriguez, 34, hosts her second Fashion Week runway collection, which is generating heavy buzz.
New York City
Rachel Comey
The show must always go on: Just two days after 9/11, Comey, 35, had to present her first collection to buyers. Despite the tragedy, she snagged orders from influential boutiques, partially because one of her designs had been worn by David Bowie on the David Letterman show, and shop owners were eager to see what else the new men's wear designer would create. A few seasons later the Vermont native decided her men's designs had "plateaued," and she is now focusing exclusively on women's clothing and shoes.
Los Angeles
Band of Outsiders
Scott Sternberg not only designs for his own men's wear label, Band of Outsiders, but also uses it to shelter sprouting sublabels, such as Boy, a collection of women's clothing debuting this month, and the BOO range of men's handmade wool suits.
"I have a collection that started very focused on two key items shirts and ties. Shirts were revenue-driving, and ties were a marketing item," explains Sternberg, 33, a former Holly wood agent at CAA. "The ties are what end up in magazines because you can pair them with an advertiser's suit. And those ties have afforded me the creativity to expand. I built them to afford me a lot of freedom."
Suits now provide 42% of Sternberg's revenue, and both Jason Schwartzman and Beck wear Band of Outsiders' hip and preppy classics.
Miami
Red Carter
Minutes before a Carter swimwear show in Miami, the models are sprayed with glitter and lined up on the catwalk for a final pep talk from the boss: "You are luscious. You are delicious. Those boys are gonna eat you all up. Go!"
Luxury shops such as Barneys and Intermix are also eating up designs by Daniel "Red" Carter, 35, who began his career as a water polo player and a ready-to-wear designer at Oscar de la Renta. The entrepreneur is successfully challenging huge swimwear brands such as Roxy and Speedo and recently pulled off the ultimate bikini coup: getting picked up by Victoria's Secret.

Your kids don’t need life insurance

Don’t be misled by advertisements promising a high cash value for a small premium. There are better steps you can take to secure your child’s future says Money Magazine’s Walter Updegrave.

Question: I received an offer in the mail to buy a life insurance policy for my 18-month old daughter for a small monthly premium. As I understand it, the policy would not only build cash value, but double the amount of insurance coverage when my daughter turns 21. Do you think this is a good plan to build for my daughter’s financial future or is there a better way? –R.K.
Answer: Let me put it this way. I think almost anything you would do with your money, outside of buying lottery tickets or playing the ponies, would be better than sinking it into a life insurance policy for your daughter.
As I’ve noted before, life insurance generally makes a lousy investment, in large part because of high fees that drag down returns. This view doesn’t make me anti-insurance; quite the contrary. I believe life insurance coverage plays a crucial role in any family’s financial plan.
But that role isn’t to provide an investment opportunity. Rather, the reason you buy life insurance is because it’s the one financial product that can replace income if a breadwinner dies, which allows surviving family members to maintain their standard of living.
But this principle rarely applies to children. After all, unless your daughter is an incredibly precocious entrepreneur or making big bucks doing commercials for disposable diapers, you’re not relying on earnings from her to support your family. So while your daughter’s death would obviously be a personal tragedy, it wouldn’t be a financial one.
In short, it makes little sense for you to devote your money to something that doesn’t make it as an investment and that provides life insurance protection for someone who doesn’t require it.
So what should you be doing to give your daughter a leg up financially?
Plan for your future
Well, the single most important thing you can do is to make sure your own finances are in shape. After all, the more precarious your financial situation is, the more difficult it will be for you to give your daughter all the things I’m sure you want her to have: a good education, a nice home, a chance to experience the wider world and, perhaps most important, a sense of security and stability.
You can begin building that solid financial foundation by stashing away enough money in a money-market fund or savings account to cover about three months’ worth of living expenses. This sort of reserve will allow you and your family to weather emergencies such as unexpected medical problems or financial setbacks like a layoff with minimal disruption to your lifestyle.
Beyond that, you also want to start putting away money for your retirement. If you’ve got a 401(k) or similar plan at work, contribute at least enough to collect any matching funds your employer may offer. If you don’t have such a plan, do an IRA. If you can, do both. And let’s not forget about life insurance - not for your daughter, but for you and/or your spouse. The idea is to have enough coverage so the family can carry on as normally as possible should you or your spouse die, but not so much that paying for it would prevent you from saving for the future. Deciding on the right amount is as much art as science, but you can arrive at a reasonable estimate of what you need with a “life insurance needs” calculator like this one.
Whatever amount of coverage you decide on, you’ll want to get it through bare-bones term insurance. This type of policy pays a death benefit but has no investment component. As a result, you get more insurance protection for your premium dollar. You may already receive some of this type of coverage at no charge through your employer. If that’s not the case - or if what you get isn’t enough - you can check out the cost of coverage from different insurers by going to sites such as IntelliQuote and Insure.com.
Educate your children
If you can manage all this and you still have money left over, then you can begin looking into more direct ways of providing for your daughter’s future, such as saving for her college education via a 529 savings account or other plan. And, of course, at some point when your daughter is older, it wouldn’t hurt to teach her the basics about managing money, so she’ll be better prepared to handle her finances when she goes out on her own (although, as my colleague Stephen Gandel pointed out in a Money article last year, teaching kids about finances is easier said than done.)
But as for that life insurance pitch you got in the mail, I’d say you should just ignore it. Your daughter doesn’t need the policy, and you don’t need to waste your money paying the premium.

Super Bowl ads you can't refuse

Audi pays homage to 'The Godfather,' Bud has a dog and pony show and Go Daddy gets racy (again). Here are the Super Bowl ads you'll be talking about on Monday.
By Ben Rooney, CNNMoney.com staff writer

Anheuser-Busch
Anheuser-Busch is regularly the largest buyer of Super Bowl spots and usually ranks well in the post-game polls. This year, the Bud brewer has purchased six 30-second spots that will be dedicated to Bud Light and one 60-second spot for good old Budweiser.
The 60-second spot tells the tale of a discouraged horse that doesn't make the cut for the brewer's trademark team of Clydesdales. But a spunky Dalmatian, another familiar Budweiser character, helps the horse stage a Rocky-esque comeback.
In one 30-second spot, three cavemen struggle to move a Stone Age ice chest filled with Bud Light and bicker in caveman talk. Another caveman appears with a gigantic stone wheel. What happens next? Well, the dawn of civilization comes another day.
Other ads Anheuser-Busch has in store will feature x-ray vision, fire breathing, wine & cheese and comedian Carlos Mencia.

Audi of America
Audi will return to the Super Bowl after a 20 year hiatus with a 60-second spot based on an iconic scene from the classic mafia movie "The Godfather." Alex Rocco, who played the character of Moe Greene, will star in the ad.
"We chose 'The Godfather' to anchor our Super Bowl ad because, at its core, the film is about a struggle between old and new power. In precisely that fashion, Audi represents the rise of a new force in luxury," said Scott Keogh, chief marketing officer, Audi of America in a statement.
The ad will promote the Audi R8 sports car, a sleek two-door that sells for more than $100,000, and was filmed outside a multi-million dollar mansion.
Audi's focus on targeting the luxury market is in stark contrast to concerns expressed by another automaker advertising in the Super Bowl. Hyundai of America said earlier this month that it was reviewing its decision to advertise during the big game because of softness in the U.S market. Ultimately, Hyundai decided to stay in the game with two 30-second spots.

Careerbuilder.com
CareerBuilder.com takes the phrase "heart-wrenching" to a literal extreme in one of its two 30-second spots in this year's Super Bowl.
The online job source plans to target disgruntled employees with an ad showing a woman who is stuck in a dissatisfying job but can't muster the confidence to quit. So, her heart does it for her.
In the past, CareerBuilder.com ads have used humor to reach their target audience but this year's approach will be more inspiring than funny.
"This year's campaign is more poignant and urges the sense of empowerment," said Richard Castellini, CareerBuilder.com's Vice President of Consumer Marketing.
The ads will be punctuated with motivational catch-phrases like, "Start Building" and "Self-Help Yourself."

Cars.com
Next time you go to buy a car, be sure to bring along an angry tribal warrior in case you need back up. That's the message behind one of Cars.com's Super Bowl spots.
In this commercial we see someone successfully close the deal on a new car, without having to resort to "Plan B," thanks to insight from Cars.com. What was "Plan B" you ask?
"I was going to have you fight Glandor," the buyer tells an unsuspecting car salesman.
Enter angry warrior.

FedEx
This year, it's FedEx's turn to show us how animals can cause havoc in the workplace.
Monkeys have been featured prominently in Super Bowl ads before, often running amok in an office environment. But the parcel delivery company decided to go with a more product-appropriate animal for this year's spot.
The ad depicts a well-meaning office clerk who tries to handle his company's shipping needs with carrier pigeons. Chaos ensues and we are reminded of how FedEx's portfolio of services can help small businesses.

General Motors
Last year, GM was one of the advertisers experimenting with user-generated ads during the Super Bowl. This year, however, the company ditched that idea, which most experts said was unsuccessful, in favor of a more simple approach to promote the hybrid version of its GMC Yukon SUV.
The ad will be animated in black-and-white and will depict a climber pushing a boulder uphill with a voice-over asking a number of rhetorical questions.
"Why push? Why change? Why grow? Why dream?"
These are some pretty deep questions for a Super Bowl ad. Not to mention the heady reference to Sisyphus. Thankfully, the voice-over answers them for you:
"Questions you don't have to ask yourself, when you never say `it's good enough.'"
This stripped-down approach is a bit of a departure from typical SUV ads. But the more philosophical tone may be designed to appeal to hybrid buyers.

Godaddy.com
Go Daddy has a reputation to consider.
Last year, the Internet domain name registrar was rejected three times by CBS for proposing commercials that were deemed inappropriate. This year, Fox denied ten of Go Daddy's submissions before settling on one, entitled "Spot On," which features Indy race car driver and "Go Daddy Girl" Danica Patrick.
But the ad was not the company's first choice, according to Bob Parsons, Go Daddy's CEO. So, Parsons decided to use Go Daddy's spot to show viewers how to see, "Exposure," the ad he wanted to air during the game.
"We are going to have to make lemonade out of lemons on this one. It's risky, but we've changed our whole marketing plan so we can leverage something out of this smokin' hot spot," Parsons said in a statement.

PepsiCo
The beverage maker has purchased two minutes of Super Bowl ad time this year but one spot promises to be slightly different from the others. Pepsi announced last week that its pregame ad "Bob's House" will be a silent ad.
"If a television commercial airs on Super Bowl Sunday and no one hears it, does it make a sound?" asks a Pepsi press release. Judging by the amount of buzz this ad has generated already, the answer is yes.
The 60-second commercial was created by Pepsi employees who are deaf and features dialogue in American Sign Language with written subtitles. The spot is based on a popular joke in the deaf community that involves a quiet street and loud horn honking.
In addition to advertising soft-drinks and potato chips, Pepsi's hope is to use the Super Bowl as a platform to create awareness of issues concerning the American deaf community.
"By bringing the world an ad performed by deaf employees in ASL, we feel like we've already scored the upset on Super Bowl Sunday said Clay Broussard, a PepsiCo employee and project lead on Bob's House.."

Salesgenie.com
After making what was widely considered to be the worst ad of last year's Super Bowl, salesgenie.com is planning a follow-up that it hopes will be even worse.
The company, which generates online sales leads and mailing lists, says that last year's ad was "a huge money maker," despite being a failure in most media polls, according to a salesgenie.com press release.
This year's ad features an animated salesman named Ramesh whose boss threatens to fire him if he doesn't double his sales. In the end, Ramesh finds salesgenie.com and becomes the salesman of the year.
Vin Gupta, chief executive officer of infoUSA, the publicly traded parent company of salesgenie.com, came up with the idea and wrote the copy for this year's ad, as he did last year.
"If it [the ad] positively impacts business like it did last year, we'd be thrilled to be the worst again," Gupta said in a statement.

White House ONDCP
The White House Office of National Drug Control Policy will use its first Super Bowl ad in four years to warn parents about the dangers of prescription drug abuse among teens.
"Though overall teen drug use is down nationwide, more teens abuse prescription drugs than any other illicit drug," the ONDCP said in a statement.
The Super Bowl spot is part of a larger campaign that will include print, online, community outreach and other advertising platforms.