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======================== THE MOTLEY FOOL ======================== INVESTING BASICS Tuesday, October 16, 2001 benjamin.rogers@enron.com ================================================================= IN THIS ISSUE --------------------- - Q&A: What Is a Hostile Takeover? - Q&A: Is a Strong Dollar Good or Bad for Stocks? - LESSON: The High Cost of Smoking ================================================================= SPONSORED BY: MBNA MBNA offers a preferred yield of 5.11% on 5-year CDs for Fools. Make your savings work for you with the security of FDIC-Insurance up to $100,000 per depositor. Other terms available. http://www.lnksrv.com/m.asp?i=518561 ================================================================= YOUR QUESTIONS ANSWERED Q. JUST WHAT IS A HOSTILE TAKEOVER? A. Well, a friendly takeover involves one company agreeing to be bought by another. Managers from each firm will typically meet with each other and freely share information about themselves. As you might imagine, in a hostile takeover, the acquisition target is not too thrilled or cooperative. In a hostile takeover, a would-be acquirer typically sees some strategic value in another company. It may make friendly overtures and be rebuffed. If so, it may then move on to dealing directly with the target's shareholders, by offering to buy their shares from them for either a certain amount in cash, or an exchange of stock. If enough shareholders respond, the acquirer can gain control. In order to entice shareholders, the offer will certainly be for a price significantly higher than the target's current stock price. Note that companies whose share prices have slumped are extra-vulnerable to takeovers. Some high-profile hostile takeover bids have included IBM for Lotus, Johnson & Johnson for Cordis, and Hilton for ITT. For more info on the basics of investing, get on over to our Fool's School area. http://www.fool.com/m.asp?i=518562 Q. IS A STRONG DOLLAR GOOD OR BAD FOR STOCKS? A. A strong dollar can cause trouble for companies with extensive international operations, such as Procter & Gamble or McDonald's. That's because they'll get fewer dollars for their rubles and pesos and francs when they exchange currency -- and fewer dollars means lower earnings. ----------------------------------------------------------------- THIS WEEK'S LESSON THE HIGH COST OF SMOKING It might seem strange to see an article on quitting smoking in a financial feature. But in many ways, smoking is a very financial enterprise. For example, companies obviously profit from the tobacco business. We're also used to hearing about all the health risks associated with smoking -- such as the fact that smoking accounts for at least 30 percent of all cancer deaths (according to the American Cancer Society, at cancer.org). The Centers for Disease Control and Prevention estimate that health care expenditures caused directly by smoking totaled $50 billion in 1993, $10 billion paid by Medicare. http://www.lnksrv.com/m.asp?i=518563 A more Foolish way to address the cost of smoking, though, is to examine its immediate price tag. Imagine that you're 35 years old, you smoke one pack a day, and each pack costs you, on average, about $3. Multiply $3 by 365 days, and you're looking at an annual cost of $1,095. Let's see what would happen if you took this $1,095 and invested it in the stock market, earning the historical average return of 11 percent per year. In 30 years, you'd have $25,067. If you invested $1,095 in the market *each year* for 30 years, you'd end up with a whopping $241,900. Yowza. Those who would like to quit should know that there are more resources available to you today than ever before, most notably online. For example, we recently opened a "Quitting Smoking" discussion board. In less than a year, it's received roughly 8,000 posts from people who have quit or are interested in quitting. These folks are continually supporting and encouraging each other, and many end their posts with this unique kind of signature: "Matt. Two days, 4 hours, 23 minutes and 19 seconds. 43 cigarettes not smoked, saving $7.09. Life saved: 3 hours, 35 minutes." And "Helen. Eight months,two days, 16 hours, 41 minutes and 10 seconds. 9,867 cigarettes not smoked, saving $1,480.17. Life saved: 4 weeks, 6 days, 6 hours, 15 minutes." http://www.fool.com/m.asp?i=518564 For more information and support on quitting smoking, visit silkquit.com. Other resources include quitnet.org, quit-smoking.com, and quitsmokingsupport.com. http://www.lnksrv.com/m.asp?i=518565 http://www.lnksrv.com/m.asp?i=518566 http://www.lnksrv.com/m.asp?i=518567 http://www.lnksrv.com/m.asp?i=518568 ================================================================= SPONSORED BY: MBNA MBNA offers a preferred yield of 5.11% on 5-year CDs for Fools. Make your savings work for you with the security of FDIC-Insurance up to $100,000 per depositor. Other terms available. http://www.lnksrv.com/m.asp?i=518569 ================================================================= My Portfolio: http://www.fool.com/m.asp?i=518570 My Discussion Boards: http://www.fool.com/m.asp?i=518571 WANNA TAKE THE SHORTCUT? Check out our new Crash Courses, the fastest way to get your finances in order. Get results in less than an hour, for just $10. Try one today! http://www.fool.com/m.asp?i=518572 PERKS FOR FOOLS ONLY Get free stuff and special offers, just for you! http://www.fool.com/m.asp?i=518573 CUSTOMER SERVICE Ask our staff for help with email delivery problems. http://www.fool.com/m.asp?i=518574 UNSUBSCRIBE Here's how to unsubscribe or change your settings. http://www.fool.com/community/freemail/freemaillogin.asp?email=benjamin.rogers@enron.com _________________________________________________________________ Copyright © 1995-2001 The Motley Fool. All rights reserved. Legal Information: http://www.fool.com/m.asp?i=518575 MsgId: msg-20579-2001-10-16_12-29-00-4494069_5_Plain_MessageAddress.msg-12:32:11(10-16-2001) X-Version: mailer-sender-master,v 1.84 X-Version: mailer-sender-daemon,v 1.84 Message-Recipient: benjamin.rogers@enron.com
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