TIME stocks

U.S. Stock Market Sees Biggest Drop of the Week

Financial Markets Wall Street stock exchange
Seth Wenig—AP Trader Eric Schumacher stands under an electronic display on the floor of the New York Stock Exchange on July 9, 2015, in New York.

Mixed company earnings weighed on stocks as the week wore on

The U.S. stock market capped a four-day losing streak with its biggest drop of the week.

Disappointing quarterly results and outlooks from several companies pulled the major stock indexes sharply lower on Friday. New signs pointing to a slowing of China’s economy also added to investor jitters, bringing down the price of oil and other commodities.

While corporate profits have mostly exceeded Wall Street’s expectations so far this earnings season, investors have grown uneasy as many companies provided cautious outlooks or weak sales.

“The revenue numbers have been very shaky,” said JJ Kinahan, TD Ameritrade’s chief strategist. “After next week, we’ll have a much better picture overall how the earnings season was. But right now, that’s the theme that I’m seeing, and it’s not a healthy one.”

The mixed company earnings increasingly weighed on stocks as the week wore on. The Standard & Poor’s 500 index has now lost ground four out of the last five weeks.

The S&P 500 ended the day down 22.50 points, or 1.1 percent, to 2,079.65, while the Dow Jones industrial average slid 163.39 points, or 0.9 percent, to 17,568.53. The Nasdaq composite lost 57.78 points, or 1.1 percent, to 5,088.63.

Stocks kicked off the week on a strong note, driving the Nasdaq to its latest record high and bringing the S&P 500 close to a milestone of its own. But it’s been downhill since then. The Dow fell into negative territory for the year on Thursday. As of Friday, it was down 1.4 percent for 2015.

The tech-focused Nasdaq remains the best-performing index for the year. It’s up 7.4 percent, compared with 1 percent for the S&P 500.

Trading got off to an uneven start on Friday. The major indexes were all down by midmorning as traders sized up the latest corporate earnings.

Biotechnology company Biogen and pharmaceutical company AbbVie both reported a better-than-expected second-quarter profits, but their revenue fell short of Wall Street forecasts. Biogen plunged $85.02, or 22.1 percent, to $300.03. AbbVie declined $2.44, or 3.5 percent, to $68.08.

Capital One Financial, which announced quarterly results a day earlier that failed to live up to financial analysts’ expectations, sank 13.1 percent. The stock ended down $11.91 at $78.86.

Even a dash of merger news, which often puts investors in a buying mood, failed to impress.

Anthem agreed to buy rival Cigna for $48 billion in a deal that would create the nation’s largest health insurer by enrollment, covering about 53 million U.S patients. Anthem fell $4.35, or 2.8 percent, to $150.86, while Cigna lost $8.64, or 5.6 percent, to $145.72.

Investors did welcome Amazon’s latest quarterly report card. The e-commerce pioneer announced a surprise profit late Thursday. The stock vaulted $47.24, or 9.8 percent, to $529.42.

Nine of the 10 sectors in the S&P 500 ended lower. Health care stocks fell the most, 2.5 percent. Utilities edged higher.

Of the 187 companies in the S&P 500 that have reported earnings so far, about 72 percent of them have delivered results that beat Wall Street estimates, according to S&P Capital IQ. That’s better than the historical average of 66 percent.

“Generally most companies are seeing modest growth, but nothing to write home about,” said Brad Sorensen, managing director of market and sector analysis at Schwab Center for Financial Research.

Another 163 companies, or a third of the S&P 500, are due to report earnings next week, including Facebook, Twitter and Exxon Mobil.

In energy trading, the price of oil continued to slide Friday as the number of rigs drilling for oil in the U.S. rose. Benchmark U.S. crude fell 31 cents to close at $48.14 a barrel in New York. Crude fell 5 percent for the week, and is down 19 percent for the month. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 65 cents Friday to close at $54.62 a barrel in London.

In other futures trading, wholesale gasoline fell 2.4 cents to close at $1.828 a gallon, while heating oil fell 2.5 cents to close at $1.630 a gallon. Natural gas fell 4 cents to close at $2.776 per 1,000 cubic feet.

Precious and industrial metals futures closed broadly lower. Gold lost $8.60 to $1,085.50 an ounce, silver gave up 21 cents to finish at $14.48 an ounce and copper edged down less than a penny to $2.38 a pound.

The price of U.S. government bonds rose slightly. The yield on the 10-year Treasury note fell to 2.26 percent from 2.27 percent late Thursday.

TIME Money

The 7 Biggest Financial Mistakes to Avoid

money-spilling-hole-bag
Getty Images

Missing a student loan payment

As author and leadership guru Dale Carnegie once said, “discouragement and failure are two of the surest stepping stones to success.”

So, naturally, one of my favorite questions to ask guests on my daily podcast So Money is, “What was your biggest financial failure or mistake?”

Not because I want to embarrass them, but because those missteps inevitably reveal invaluable lessons and, in many cases, pave the way towards big wins.

Since launching the show, I’ve had the honor of interviewing everyone from top entrepreneurs to bestselling authors and entertainment personalities including Tim Ferriss, Ryan Holiday, and Margaret Cho.

Here’s what they — and four others — had to say about a personal financial failure.

David Pottruck: ‘Investing in startups.’

David Pottruck, the former CEO of Charles Schwab and now chairman of HighTower Advisors, says that after leaving Schwab, he began investing in small startup companies without any prior experience.

For example, remember Eos Airlines? Pottruck says investing in it was a big ol’ fail.

“… A good idea does not necessarily create a good business and a good business does not necessarily translate into a good investment,” Pottruck told me. “So, you have to look at something in terms of its idea value, its value as a business and then its value as an investment. All of those are different, and so I didn’t know that, and I had to learn that.”

Listen to the full interview with David Pottruck.

Tim Ferriss: ‘Failing to find my market.’

“You should not make a product and then find your market,” says Tim Ferriss. “You should choose your market and then make your product. You should know exactly who you’re making something for and not get stuck as a lot of engineers do, creating something with a bunch of features and then attempting to figure out who you’re going to sell it to.”

The multiple New York Times best-selling author learned this lesson the hard way, confessing that after teaching his speed-reading seminar he was eager to create a product that allowed him to offer seminars without always having to be physically present.

So, he created an audio-book, “How I Beat the Ivy League,” and invested in the project using most of his savings and a lot of his time. Ultimately, he sold only two copies — including one to his mom, he joked.

Listen to the full interview with Tim Ferriss.

Margaret Cho: ‘Not buying an apartment.’

Award-winning comedian Margaret Cho shared with me that one of her biggest mistakes was saying no to a friend who offered her a really great real estate deal back in 1994.

A friend had offered her the apartment in New York City from the movie “9 ½ Weeks” for less than $400,000. She declined the offer at the time, even though she had the money. Now she estimates it’s worth between $8-9 million.

Although it would have been a great real estate investment, Cho doesn’t look back. She says, “I was really scared to buy a house. And I really remained scared to buy a house until I bought a house … But to me, I live very, very comfortably now and really never took those kinds of risks.”

Listen to the full interview with Margaret Cho.

Rebecca Jarvis: ‘Missing a student loan payment.’

“When you don’t pay a student loan, it is a very big deal. And it can, in a very significant way, change your credit and have a major impact on your life moving forward,” ABC News chief business and economics correspondent Rebecca Jarvis recalls.

Jarvis says her biggest financial fail was missing a payment on her student loans. The missed payment not only affected her credit, but her parents’ credit as well.

“Everything ultimately worked out,” Jarvis says, “but to me, that was a pretty significant lesson, and I know it sounds, maybe to some people it doesn’t sound like that big of a deal. It is.”

Listen to the full interview with Rebecca Jarvis.

Dave Asprey: ‘Losing $6 million in 2 years.’

By age 26, Dave Asprey, author of “The Bulletproof Diet,” had earned $6 million dollars in equity at his company, Exodus Communications.

It was a $36 billion dollar company, and Asprey was the youngest person to attend board meetings. But $6 million wasn’t enough.

He was eager and hungry to make more. He wanted to reach the $10 million mark, so he pursued investment deals without seeking professional help. By age 28, he lost the $6 million and ended back at zero.

Looking back, he says, “… What I should have done was quit my job, [sell] all of my shares, and [retire].”

Listen to the full interview with Dave Asprey.

Ryan Holiday: ‘Applying for a mortgage while self-employed.’

Best-selling author and media strategist Ryan Holiday regrets initiating the home-buying process after he left his post as director of marketing at American Apparel.

“If I had just looked … two months earlier it would have probably saved me the biggest nightmare of my life, which was applying for a mortgage as a self-employed person,” he says.

The process involved mountains of paperwork and was incredibly arduous and time consuming. The bank was very demanding due to the fact that he was self-employed (i.e. “risky”) and they wanted more paperwork than usual.

He goes on to say, “When you’re self-employed … and then when you apply for a loan or you’re setting a business up … all of a sudden now your internal system is now being subject to somebody else’s system and those don’t match very well.”

Listen to the full interview with Ryan Holiday.

Dan Price: ‘Not being prepared for the recession.’

Dan Price, the 30-year-old CEO of Gravity Payments who raised his company’s minimum wage to $70,000 per year (and slashed his own from $1 million to $70,000), says that in 2008, the small nonprofit he was running was ill-prepared for the financial crash.

This resulted in him having to — ironically — give drastic 80% pay cuts across the board.

“We almost didn’t make it. And so, I promised myself that the next time I faced a recession, I would be prepared for it …” he says.

Listen to the full interview with Dan Price.

This article originally appeared on Business Insider

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TIME Money

The Long, Twisted History of Your Credit Score

Lewis Tappan
Hulton Archive / Getty Images Circa 1840: Lewis Tappan (1788-1873). American merchant and abolitionist who founded the first United States agency for rating commercial credit in 1841. Original Artwork: Engraving by J C Buttre

History’s lessons for surviving life in the age of the credit report

The credit score is a strange piece of financial alchemy. And yet many Americans see their scores—which claim to encapsulate everything from one’s credit history to one’s attitude toward debt—as normal, even natural.

But, of course, it is not. Credit reporting, in its modern sense, is fewer than 200 years old—invented as part of America’s transition to capitalist modernity. Already, however, its history has proved both alarming and empowering, helping millions realize the American Dream through access to credit, while integrating many more into surveillance networks rivaling the NSA’s. Just as importantly, it has saddled the majority of Americans with a lifelong ‘financial identity’: an un-erasable mark that reflects bad behavior in the past and compels good behavior in the future.

At a moment when credit reports are being used to inform a wide range of life decisions—from where people live and work, to how much they’ll pay for insurance and utilities—this history is more important than ever.

***

For much of debt’s 5,000-year history, credit reporting has been a deeply personal practice. In 18th-century America, for instance, country storekeepers secured loans by asking well-regarded neighbors to vouch for their character to bankers and merchants. And urban creditors mined far-flung rural acquaintances for rumors and hearsay regarding applicants for credit.

Beginning in the 1820s, however, credit reporting began to modernize, as the density of business transactions made the old system too cumbersome. New bankruptcy laws also made loans a riskier proposition. The result was a series of experiments in standardizing credit evaluation. Though these experiments were limited to commercial credit—loans to businesspeople—they would have important implications for the later history of consumer credit rating.

The most important of these experiments was the Mercantile Agency, founded in 1841 by merchant Lewis Tappan. Burned in the panic of 1837—a depression caused by merchants’ over-extension of credit—Tappan set out to systematize the rumors regarding debtors’ character and assets. Soliciting information from correspondents throughout the country, Tappan’s agency distilled these reports in massive ledgers in New York City.

These early reports were incredibly subjective. As such, they were colored by the opinions of their predominantly white, male reporters, as well as their racial, class and gender biases. One credit reporter from Buffalo, N.Y., for instance, noted that “prudence in large transactions with all Jews should be used.” And a reporter in post-Civil War Georgia described A. G. Marks’ liquor store as “a low Negro shop.”

The subjectivity of these reports had two important consequences. First, it reinforced existing social hierarchies, serving as an early form of redlining. Second, the jumble of rumors contained in early reports proved difficult to translate into actionable lessons. What was one to make, for instance, of reports like the following on Philadelphia merchant Charles Dull from Tappan’s Mercantile Agency: “there is a g[oo]d prej[udi]ce as among the trade—enjoys generally a poor reputation as a man, but is gen[erall]y sup[pose]d to have money”? Increasingly, then, subscribers to the Mercantile Agency and its rival, the Bradstreet Company, began to demand a simplified method of evaluation.

The result was a new thing under the sun: a pseudo-scientific sleight of hand that converted the (mis)information in borrowers’ reports into actionable financial ‘facts.’ Pioneered by Bradstreet in 1857, commercial credit rating would assume a more lasting form in 1864 when the Mercantile Agency, renamed R. G. Dun and Company on the eve of the Civil War, finalized an alphanumeric system that would remain in use until the twentieth century. (The companies later merged, becoming Dun & Bradstreet.)

Though intimately related to contemporary developments in population management, including espionage and statistical analysis, credit scoring was nevertheless novel in its own right. Its arrival meant that commercial borrowers now possessed what scholar Josh Lauer has called a ‘financial identity’: an identifier that not only purported to summarize one’s financial history, but which threatened to plummet, should one suffer a lapse in fortune or discipline. Reflecting on this development, one 19th-century commentator quipped that “the mercantile agency might well be termed a bureau for the promotion of honesty.”

Thus, by the end of the Civil War, the three pillars of modern credit reporting were in place: private-sector mass surveillance that made credit reports possible, bureaucratic information-sharing that made them widely available and a rating system that made them actionable.

It would take nearly a half-century, however, before all three of these pillars would be transferred from commercial to consumer credit evaluation.

***

Consumer credit reporting, like consumer debt, was unnecessary in early America. Production and consumption were so thoroughly blended that a loan to a farmer for agricultural supplies would inevitably help him or her purchase clothing and furniture as well.

By the second half of the 19th century, however, many Americans conceived of production and consumption as distinct realms. Just as importantly, the success of the labor movement meant that many were working less and making more. Eager for these workers’ hard-earned dollars, many retailers—including America’s newfangled department stores and auto industry—extended generous credit lines. Though prone to abuses (auto and consumer-goods financing were deeply implicated in the Great Depression) these credit lines nevertheless helped put the trappings of middle-class life in the hands of many Americans.

The men and women in charge of evaluating consumer credit were not organized into a single dominant firm, as they were in commercial credit rating. More often, they were employed as credit managers for retailers. But that did not stop them from adopting techniques pioneered by firms like Dun & Bradstreet. Forming a national association in 1912, these credit managers used their professional organization to perfect practices for collecting, sharing and codifying information on retail debtors.

This is not to suggest, however, that there were no important pioneers in the consumer credit-reporting sector. While many early agencies were short-lived, firms like Atlanta’s Retail Credit Company left an enduring impact. Founded in 1899, RCC developed files on millions of Americans over the next 60 years. This information included not just data on credit, capital and character, but information on individuals’ social, political and sexual lives as well. Already a magnet for criticism, the outcry against RCC reached a fever pitch in the 1960s when the firm revealed plans to computerize its records.

The backlash was swift and heated. “Almost inevitably,” argued privacy advocate Alan Westin in a 1968 New York Times article, “transferring information from a manual file onto a computer triggers a threat to civil liberties, to privacy, to a man’s very humanity because access is so simple.” Say goodbye to second chances, Westin claimed: digitized files would make it impossible to outrun one’s past.

Knowingly or otherwise, Westin was echoing critiques that had haunted credit reporting since its earliest days. Writing in Hunt’s Merchant Magazine in 1853, a contributor lamented that, “[g]o where you may to purchase goods, a character has preceded you, either for your benefit or your destruction.” And in 1936, TIME exposed credit bureaus’ astonishing surveillance powers. Chronicling an unfortunate woman’s flight from Chicago to Los Angeles, the story showed how quickly reporters discovered her debts and dark past.

But while Westin’s comments may have drawn on a deeper history, their impact was novel. Indeed, the outcry against the computerization of credit-reporting data resulted not only in congressional investigations, but also in the passage of the Fair Credit Reporting Act in 1970—a landmark piece of legislation that required bureaus to open their files to the public; expunge data on race, sexuality and disability; and delete negative information after a specified period of time.

However, far from halting credit reporting, FCRA helped usher in its golden age. RCC, for instance, came away from congressional hearings with a black eye, but did not disappear. Instead, it changed its name to Equifax in 1975 and continued on its course of computerization. In time, it was joined by Experian and TransUnion. Together, they constitute the ‘Big Three’ of consumer credit reporting.

Despite expanding demand for their services, however, all three firms continued to be hamstrung by problems that had long afflicted the industry: namely, the difficulty of interpreting and comparing their reports. To resolve this, they began working with a tech company to develop a credit-scoring algorithm. The company’s name was Fair, Isaac and Company—though it is known today as FICO.

Fair, Isaac and Company was well positioned to take on this task. Founded in 1956, the firm had already been selling credit-scoring algorithms for decades when the Big Three began their quest for an industry-standard credit score. The result, which hit the market in 1989, was remarkably similar to the algorithm still in use today.

Quickly implemented throughout the consumer credit industry, the FICO score represented the final consummation of a process that began with the Bradstreet Company’s first credit-rating manual. Its arrival meant that, thenceforth, nearly everyone in America would have a codified financial identity. No longer the sole province of commercial borrowers, financial identity had become a fact of life in modern America.

***

History reminds us that, common as it now seems, credit scoring is anything but universal. People in the past rightly worried about the concentration of power in the hands of secretive, privately-held organizations—firms that Lewis Tappan regularly had to defend against charges of espionage, and that at least one outraged antebellum commentator described as a new Inquisition. Even today, worries remain. As in the past, credit reporting can function as a way of maintaining social hierarchies. Especially among poorer Americans, low credit scores often translate into larger down payments and higher interest rates on purchases—terms that place an undue strain on household budgets and that often result in high rates of bankruptcy and default, which in turn lower credit scores even more.

Not all of history’s lessons, however, are so unflattering. Credit reporting was essential to opening financial opportunities to a broader cross-section of Americans—allowing them to buy not just baubles, but life-changing goods as well.

The alternative to credit reporting, moreover, is a dismal one. Before the modern era, credit was anchored in personal relationships. These relationships could be nurturing. But often they were predatory. Now, obviously, financial ne’er-do-wells have not disappeared. But FICO scores do at least allow individuals to move easily between lenders.

Most of all, knowing the history of credit reporting shows us why it’s important to pay attention to the institution as a whole, and not just to our own scores. Today, credit reports are used to inform decisions about housing, employment, insurance and the cost of utilities. But errors on credit reports are common. And many of the consumer protections in FCRA are being circumvented by opaque, in-house rating systems under development at major financial institutions.

Though cloaked in algorithmic objectivity, the raison d’être of the modern credit score is the same as the scrawled reports in Tappan’s massive ledgers: to determine not just who can repay their debts, but who will choose to do so. To answer this essentially moral question—and to compel ‘good’ behavior—credit bureaus have developed surveillance and information-sharing techniques rivaling anything in the arsenal of the state. These have brought benefits, true. But they have also inscribed Americans’ financial histories in the indelible digital ledgers of modern capitalism—for the mighty to see, and the majority to glimpse.

In the face of power like this, what choice do we have but vigilance?

The Long ViewHistorians explain how the past informs the present

Sean Trainor has a Ph.D. in History & Women’s, Gender, and Sexuality Studies from Penn State University. He blogs at seantrainor.org.

TIME College

Parents Are Shelling Out More Money For Kids to Attend College

Proposed Budget Cuts Threaten Funding For California Universities
David McNew—Getty Images Students go about their business at University of California, Los Angeles (UCLA).

More financing from the Bank of Mom and Dad

Parents opened their wallets more generously in the 2014-2015 school year, a report shows, reclaiming their place as the primary source of college funding for the first time since 2010.

Parental income and savings now cover 32% of college costs, surpassing scholarships and grants as the largest share of college funding, according to the How American Pays for College 2015 survey, released by Sallie Mae. The percentage of college funding contributed by parents’ savings and income had hovered at and below 30% since it nosedived from 37% in 2010.

Parents are paying more for college in part because it’s costing more. The amount that families spent on college rose to an average of $24,164 this year — a 16% gain from $20,882 in 2014.

But the increased wallet-opening isn’t just linked to rising tuition. Parents are less worried about a volatile economy impacting their ability to pay for college. Only 17% of parents reported extreme concern that losing a job would impact their income, compared to 23% in 2014. In 2015, 62% of families eliminated potential colleges because of the cost, down from 68% in 2014 and the lowest percentage since 2009. The financial worries of parents — which were at record levels in 2010 as loan rates rose and the value of savings diminished — had eased significantly by 2015. Whereas a quarter of parents in 2010 recorded “extreme worry” about college costs because they were concerned about the value of their homes, only 6% said the same in 2015.

In addition to parental income and savings, 30% of college funding, on average, came from grants and scholarships in 2015, while 16% came from student borrowing, 11% from student income and savings, 6% from parental borrowing, and 5% from friends and family.

Despite the widespread coverage of student loan burdens, the majority of families did not take out loans to pay for college. When they did, the students were the ones who signed the dotted line three-quarters of the time. Families with students enrolled at private four-year colleges were far more likely to borrow (with 56% taking out loans) than those in four-year, or two-year public schools, where 43% and 22% of families took out loans, respectively.

TIME Parenting

How to Raise Kids Who Actually Understand Money

child-piggy-bank
Getty Images

Allowance should not be given in exchange for chores

There are parenting books you should read but can’t because you’re too busy parenting, and then there are … pretty much no other kind. So, use our Crib Notes to make sure you always sound like you know what you’re talking about. Next up, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money, from New York Times money columnist Ron Lieber. The book explores ways to think and talk about money with children, and offers some best practices for bringing up kids who are financially savvy without being entitled or avaricious.

Sign up here for TIME for Parents, a weekly roundup of the most interesting parenting stories.

1. Start talking to your kids about money early and often

An understanding of money is no longer optional Your kid will likely grow up in a world where college loans are massive, health insurance is self-provided and retirement savings are ill-defined. At the same time, social media will amplify wealth disparities amongst them and their peers, so they’re at risk of developing animosity or self-esteem issues. On the plus side, there might be hover boards.

Traditional objections to discussing finances with kids are misguided — Talking to your kids about family finances won’t steer them toward greed. To the contrary, money is a great tool to encourage positive traits like curiosity, patience, thrift, modesty, generosity, perseverance and perspective. And, no, that doesn’t mean you should just spend a bunch of it on a life coach for your kids.

What you can do with this

  • Your kids will naturally start to express curiosity about money at some point. When they do, don’t evade them; engage them.
  • Whatever their questions — and the most common are “Are we poor?”, “Are we rich?” and “How much money do you make?” — respond with “Why do you ask?” This will give you and your kid context to explore the more complex answers, and it’s a better response than, “Yes, no and less than that jagoff Alan in accounting.”
  • With older kids, go over some facts and figures about your income and the family’s expenses. This gives them an understanding of the difference between what you make and what’s actually in your wallet, and it keeps them from Googling “How much does that jagoff Alan in accounting make?”, which will lead to all sorts of misconceptions (not to mention an understanding of what jagoff means).

2. Yes, you should give your kid an allowance; No, it shouldn’t be in exchange for chores

Allowances are about teaching kids how to save and spend — A work ethic is something kids should learn outside the home, in school or at a part-time job. Chores are how they gain an understanding of the family unit and the role they play in maintaining it (since Mommy will leave both of you if those Legos don’t get cleaned up).

What you can do with this

  • Start them with $.50-to-$1 per year of age, which means they get a nice raise each birthday and will distract them when you forget to buy them a present.
  • Give them 3 money jars: a “Spend” jar for impulse buys, a “Save” jar for big-ticket items and a “Give” jar for charitable donations. Help them establish how much goes in each, and as they get older give them increasing control over that decision. Establish incentives for saving (like interest) and encourage them to research the charities that they’ll donate to before doing so.
  • When they inevitably want to spend their own money on something stupid, don’t feel obligated to give them a detailed explanation of why you won’t allow on the spot. As the parent, it’s your prerogative to think it over carefully before explaining why sex-worker Barbie doesn’t jibe with the family values.

3. Both spending and giving present opportunities to teach money smarts

Set spending guidelines and model sensible tactics — Your kids are unmolded lumps of clay in their understanding of how money really works, so go beyond simple rules that dictate “what” and provide explanations of “why” you do the things you do with your money, from a practical standpoint but also a values standpoint.

What you can do with this

  • Introduce the “Hours-Of-Fun-Per-Dollar” test. Which purchase will bring your kid more long-term bang for the buck — a $2 deck of cards or a piece of plastic that blares catchphrases from the latest animated blockbuster? And if your kid doesn’t like cards, now’s the perfect time to teach them poker so you can get some of that allowance back.
  • Introduce the “More Good/Less Harm” rule. Does the t-shirt with the fart joke that’s made in an Indonesian sweatshop for the brand with discriminatory hiring practices do more harm than good? Could you buy something from a local business that’s just as awesome and also helps the neighborhood in a tangible way?
  • Explain to them what charitable causes you give to and why. Let them select their own charities for their “Give” jar and always make sure the donation is made in their name. You’ll forfeit the tax deduction, but they’ll establish a personal relationship with the charity that encourages future giving. Also, why do you care about a 2-digit tax deduction, you cheap bastard?

4. Put the kid to work

Little kids like to have jobs to do — Encourage their innate industriousness before they get old enough to realize that work is work. You might change the trajectory of their lives (or you might just get a few more months of room cleaning out of them).

Employment looks good on a resume — There’s a strong correlation between teenagers with part-time jobs and good GPAs and college expectations. Furthermore, college admissions officers are often as impressed by evidence of a work ethic as they are with academic or athletic accolades.

What you can do with this

  • In little kids, the usual: Lemonade stands and collecting and redeeming recyclables. But, also, look around the house and figure out what labor they can subcontract from you — small hands can be surprisingly adept at certain cleaning tasks (like car detailing).
  • With older kids, don’t always prioritize academics over employment. Of course a balance needs to be struck, but recognize the value to their long-term prospects that a good part-time job provides. Also, it will save you money.

5. Don’t let your kids be ungrateful

Foster an understanding of different circumstances — Even if your kids want for nothing, it’s important that they’re exposed to other situations.

What you can do with this

  • If you don’t live in a socioeconomically diverse community, make the effort to ensure they meet kids from other backgrounds through sports, play dates and other activities.
  • Even if you’re not religious, make a ritual of articulating thankfulness at family meals. A secular version of grace isn’t going to assuage the wrath of any vengeful gods, but it’s just as good as a religious one for encouraging kids to reflect on their family’s good fortune.

This article originally appeared on Fatherly

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TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Economics

These Were the 6 Major American Economic Crises of the Last Century

From the Great Depression to the Great Recession, these events changed the economic world

A recent popular (and highly debatable) meme among economic observers is that financial crises now come every seven years. If that’s the case, we could be hit by a new one any day now. Whether or not the seven-year theory is strictly accurate, many economists are warning that another crisis is coming soon—and we’ve definitely been through the cycle before.

Here’s a look at how TIME covered six of the worst crises to hit the United States in the last century, at the moments when things looked their bleakest:

 

  • 1929: The Crash of ’29

    The Great Crash
    Hulton Archive / Getty Images Oct. 29, 1929: Workers flood the streets in a panic following the Black Tuesday stock market crash on Wall Street, New York City.

    Nobody knew, as the stock market imploded in October 1929, that years of depression lay ahead and that the market would stay seized up for years. In its regular summation of the president’s week after Black Tuesday (Oct. 29), TIME put the market crash in the No. 2 position, after devastating storms in the Great Lakes region. TIME described the stock-swoon this way: “For so many months, so many people had saved money and borrowed money and borrowed on their borrowings to possess themselves of the little pieces of paper by virtue of which they became partners of U.S. Industry. Now they were trying to get rid of them even more frantically than they had tried to get them. Stocks bought without reference to their earnings were being sold without reference to their dividends.” The crisis that began that autumn and led into the Great Depression would not fully resolve for a decade.

    Read the Nov. 4, 1929, issue, here in the TIME Vault: Bankers v. Panic

  • 1973: The OPEC Embargo

    Drivers Push Cars To Gas Station During 'Oil Crisis'
    Spencer Grant—Getty Images Drivers push cars to gas station during oil crisis, in Boston, 1973.

    Here’s proof that the every-seven-years formulation hasn’t always held true: The OPEC oil embargo is widely viewed as the first major, discrete event after the Crash of ’29 to have deep, wide-ranging economic effects that lasted for years. OPEC, responding to the United States’ involvement in the Yom Kippur War, froze oil production and hiked prices several times beginning on October 16. Oil prices eventually quadrupled, meaning that gas prices soared. The embargo, TIME warned in the days after it started, “could easily lead to cold homes, hospitals and schools, shuttered factories, slower travel, brownouts, consumer rationing, aggravated inflation and even worsened air pollution in the U.S., Europe and Japan.”

    Read the 1973 cover story, here in the TIME Vault: The Oil Squeeze

  • 1981: The Early-’80s Recession

    JUN 17 1980, JUN 19 1980; Unemployment - Denver; David Barrett passing through Denver lets it be kno
    Ernie Leyba—Post Archive/Getty David Barrett, passing through Denver lets it be known that he is looking for work, on Jun. 17, 1980

    The recession of the early 1980s lasted from July 1981 to November of the following year, and was marked by high interest rates, high unemployment and rising prices. Unlike market-crash-caused crises, it’s impossible to pin this one to a particular date. TIME’s cover story of Feb. 8, 1982, is as good a place as any to take a sounding. Titled simply “Unemployment on the Rise,” the article examined the dire landscape and groped for solutions that would only come with an upturn in the business cycle at the end of the year. “For the first time in years, polls show that more Americans are worried about unemployment than inflation,” TIME reported. A White House source told TIME: “If unemployment breaks 10%, we’re in big trouble.” Unemployment peaked the following November at 10.8%.

    Read the 1982 cover story, here in the TIME Vault: Unemployment: The Biggest Worry

  • 1987: Black Monday

    Black Monday
    Maria Bastone—AFP/Getty Images A trader on the New York Stock Exchange on Oct. 19, 1987.

    If the meaning of the Crash of ’29 was underappreciated at the time it happened, the meaning of Black Monday 1987 was probably overblown—though understandably, given what happened. The 508-point drop in the Dow Jones Industrial Average on October 19 was, and remains, the biggest one-day percentage loss in the Dow’s history. But the reverberations weren’t all that severe by historical standards. “Almost an entire nation become paralyzed with curiosity and concern,” TIME reported. “Crowds gathered to watch the electronic tickers in brokers’ offices or stare at television monitors through plate-glass windows. In downtown Boston, police ordered a Fidelity Investments branch to turn off its ticker because a throng of nervous investors had spilled out onto Congress Street and was blocking traffic.”

    Read the 1987 cover story, here in the TIME Vault: The Crash

  • 2001: The Dot-Com Crash

    Dow Jones Average Down
    Chris Hondros—Getty Images A trader rubs his brow on the floor of the New York Stock Exchange Jan. 5, 2001, in New York City

    The dot-com bubble deflated relatively slowly, and haltingly, over more than two years, but it was nevertheless a discrete, identifiable crash that paved the way for the early-2000s recession. Fueled by speculation in tech and Internet stocks, many of dubious real value, the Nasdaq peaked on March 10, 2000, at 5132. Stocks were volatile for years before and after the peak, and didn’t reach their lows until November of 2002. In an article in the Jan. 8, 2001, issue, TIME reported that market problems had spread throughout the economy. The “distress is no longer confined to young dotcommers who got rich fast and lorded it over the rest of us. And it’s no longer confined to the stock market. The economic uprising that rocked eToys, Priceline.com, Pets.com and all the other www. s has now spread to blue-chip tech companies and Old Economy stalwarts.”

    Read the 2001 cover story, here in the TIME Vault: How to Survive the Slump

  • 2008: The Great Recession

    Wall Street Reels As Major Financial Companies Face Crisis
    Spencer Platt—Getty Images A trader works on the floor of the New York Stock Exchange September 15, 2008 in New York City. protection

    On Sept. 15, 2008, after rounds of negotiations between Wall Street executives and government officials, Lehman Bros. collapsed into bankruptcy. And so did AIG. Merrill Lynch was forced to sell itself to Bank of America. And that was just the beginning. TIME pulled no punches in its September 29 cover story, titled “How Wall Street Sold Out America” and written by Andy Serwer and Allan Sloan. “If you’re having a little trouble coping with what seems to be the complete unraveling of the world’s financial system, you needn’t feel bad about yourself,” the men wrote. “It’s horribly confusing, not to say terrifying; even people like us, with a combined 65 years of writing about business, have never seen anything like what’s going on. They advised readers that “the four most dangerous words in the world for your financial health are ‘This time, it’s different.’ It’s never different. It’s always the same, but with bigger numbers.”

    Read the 2008 cover story, here in the TIME Vault: How Wall Street Sold Out America

TIME Earnings

Netflix Hits 65 Million Subscribers in Strong 2nd Quarter

Netflix is still racking up subscribe numbers at an impressive pace, but its profit is not what it once was

Netflix’s overseas push helped make for a blockbuster second quarter as the streaming movie service added 2.5 million new subscribers.

The company said Wednesday that it had more than 65 million subscribers, in total. Of those, 42 million are in the U.S. and another 23 million were international. Netflix predicted it would have 69 million subscribers by the end of the third quarter.

The strong results helped lift Netflix’s shares more than 10% in after-hours trading to around $107. The earnings came a day after Netflix went ahead with a 7-1 stock split that may tempt more average investors to take a position by reducing the share prices from above $700 to closer to $100.

The company reported a 6 cent per share profit (based on the post-split share price). This would be equivalent to 42 cents prior to the split, which beat the 28 cents analysts predicted. But the amount fell well short of the 16 cents EPS (post-split) the company posted in the same quarter a year ago. Revenue for Q2 was $1.481 billion which compares to $1.223 billion last year.

Netflix, which has a more volatile stock than many companies, has seen its share price tumble after every one of its second quarter earnings reports in the last six years – even though most of those reports likewise beat expectations.

Prior to the earnings release Greenlight Capital’s David Einhorn’s groused about Netflix’s original programming efforts, saying the popular House of Cards “appeared to be scripted to compete with Ambien.”

Netflix executives, including CEO Reed Hastings, discussed the numbers via a live YouTube conference on Wednesday afternoon. Hastings credited a strong launch in Australia and the popularity of Netflix’s Spanish language content with subscribers as some of the reason’s for the successful quarters.

This article originally appeared on Fortune.com

TIME Economy

Avian Flu Outbreak Nearly Doubles Egg Prices

healthiest foods, health food, diet, nutrition, time.com stock, eggs, breakfast, dairy
Photograph by Danny Kim for TIME; Gif by Mia Tramz for TIME

The price jump marks the largest increase recorded since the government began tracking producer costs in 1937

(WASHINGTON) — Prices for the producers of goods and services rose modestly in June, a sign that broader inflation is being kept in check. But an outbreak of avian influenza caused the cost of eggs to nearly double, as prices soared at the fastest pace ever recorded.

The Labor Department said Wednesday that its producer price index increased 0.4 percent in June. Inflation remains tame as producer prices have fallen 0.7 percent over the past 12 months due to lower oil and gasoline costs. Wholesale gas prices rose 4.3 percent last month but are down 30.3 percent from a year ago.

Chicken egg prices jumped 84.5 percent last month, the largest increase recorded since the government began tracking producer costs in 1937. More than 49 million chickens and turkeys died or were euthanized in 15 states this spring as the flu virus spread from the Pacific Northwest into Midwest farms.

Core prices, which exclude energy and food, rose 0.3 percent in June.

Relatively cheap oil has limited inflation across much of the U.S. economy. The cost of Brent crude oil in the markets barely budged for much of June, after climbing at the start of May to nearly $68 a barrel.

Gasoline prices have stayed relatively flat so far in July, dropping to a national average of $2.78 a gallon from $2.80 a month ago, according to AAA. Average retail gas prices have fallen nearly 23 percent over the past 12 months.

Federal Reserve officials are monitoring measures of inflation as they weigh whether to raise a key short-term interest rate. They have kept the federal funds rate at a record low near zero for more than six years, making it cheaper to borrow, spend and invest in ways that aid economic growth.

Fed officials have said they want to be “reasonably confident” that inflation is headed toward their 2 percent target, which would signal a stronger economy.

The Fed will meet for two days starting July 28 to consider interest rates. Still, most private economists believe that September will be the earliest that they will hike rates.

Analysts say the Fed wants assurance that the economy is strong enough to raise rates without disrupting growth. But even once the Fed starts raising rates, Fed Chair Janet Yellen and other officials have said that any increases will be gradual.

TIME Crime

This Woman Blamed Obama When She Was Arrested Trying to Spend Counterfeit Bills

Pamela Downs is no master forger

A 45-year-old Tennessee woman had a novel excuse when she was arrested on Sunday for trying to use crude, counterfeit dollar bills at a local grocery store — blaming her actions on U.S. President Barack Obama.

Pamela Downs, of Kingsport, Tenn., was detained by police after two bills printed in black and white on regular copy paper were recovered from her person along with a receipt for a new printer and said copy paper. She claimed that a new law passed by Obama permitted her to print her own money since she was on a fixed income, reports the Kingsport Times News.

The police were first alerted after she tried to pay a local grocer with a homemade $5 bill. After searching Downs’ purse, police recovered a second $100 bill printed on computer paper with the two sides stuck together with glue (though one upside down).

During her police interview, Downs reportedly said, “I don’t give a ****, all these other bitches get to print money so I can too.” She also told officers that she read about the new law on the Internet.

The Times News reports that counterfeit bills totaling between $30,000 and $50,000 plus paper, scissors, glue and a printer were seized after her apartment was searched.

Downs was charged with criminal simulation and counterfeiting.

[Times News]

TIME Money

4 Roadblocks You Can Overcome for Your First Million Dollars

one-hundred-dollar-bills
Getty Images

Learn and understand how money works

Relaxing vacations on the French Riviera, huge donations to your favorite charity and an early retirement. These are the kinds of things people think of when they hear the word “millionaire.”

It’s unlikely you’ll ever experience that. Sorry.

Unless, of course, you can overcome the following four roadblocks stopping you from achieving millionaire status. Each roadblock below also offers an “immediate action step” to help you overcome the things holding you back. Let’s get started.

1. You don’t understand how money works.

Money is not a complicated topic, but still, few seem to really understand how it works. Do you? Sure, you can blame the school system or your parents, but the responsibility is still on you to figure out how money is made, how it is held, how it is invested and how it is preserved.

Millionaires understand that money is not something that is discovered, won, or created by chance.

As I stated in my previous column, 5 Powerful Books That Changed the Direction of My Life, wealth is not an accident, but an action. Building wealth is the world’s largest game, and if you want to win, you need to learn the rules. So start studying.

Immediate action step: Start by reading several great money books, such as:

  • Rich Dad, Poor Dad by Robert Kiyosaki
  • The Total Money Makeover by Dave Ramsey
  • The Richest Man in Babylon by George Clason

But don’t just read, internalize the knowledge. Debate it. Talk about it with your spouse, grandma and mail carrier. Personal finance can be learned, and by mastering it, you might discover that wealth is much easier to build than you previously thought.

2. You don’t value your education.

I get it: you are busy.

You have 25 hours of work to do every day and there simply isn’t enough time to get it all done. That’s the life of an entrepreneur, so something needs to be sacrificed. Chances are, you are sacrificing your continuing education, and it’s severely hurting your chances of becoming a millionaire. Wealthy people never stop learning, despite the business in their life.

In a recent interview on The Tim Ferriss Show, Noah Kagan says he takes time every morning to read, as well as setting aside time every Tuesday morning to simply learn.

When is the last time you scheduled “learning time”? Do you just try to “fit it in” when everything else is caught up?

Follow the advice of Kagan, Ferriss and other incredibly successful entrepreneurs: never stop learning, no matter how busy you are.

Immediate action step: Listen to the interview with Noah Kagan on The Tim Ferriss Show. Trust me — it’ll get you far closer to millionaire status than those TPS reports you were planning on working on today.

3. You live to your means.

What are you doing with your extra money each month?

I know, you probably don’t have any left over. Your boss doesn’t pay you enough. Your company hasn’t taken off yet. Or whatever other excuse you have. But let’s face it: you are spending too much money. I don’t care how much you make — it doesn’t matter. Everyone lives to their means. You could make $2,000 per month or $20,000 per month and you’ll still be broke.

The millionaires I know have made a conscious decision to live on less than they make. Instead of upgrading their life every time they make more money, they choose to put that extra cash to work for them through various investments, such as their business, stocks, real estate or other assets, which I’ll talk about next.

Immediate action step: Pull out your bank account statements for the past three months. Figure out where every single dollar went, organizing the entire list into categories. Then, create a solid budget for your future. If budgeting is difficult for you, I’d recommend YouNeedABudget. Also, read The Simple Action No One Does That Will Make You A Millionaire. That blog post alone might just make you a millionaire, someday.

4. You don’t collect assets.

A job will never make you rich. Neither will saving all your cash in a coffee can. So how can you build that wealth?

Start collecting assets.

An asset, as defined by Investopedia.com, is “a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.”

Millionaires collect assets. It’s as simple as that. Do you?

An asset could be a profitable business, a growing stock portfolio orinvesting in the right piece of real estate (not all real estate is a good investment. It’s what you do with it that matters.)

Your car is not an asset. That shiny new electronic gadget on your arm is not an asset. Your home might not even be an asset. These are allliabilities that are robbing you of future wealth.

Stop collecting these, and start collecting things that will make you money in the long term.

Immediate action step: Make a detailed list of all the assets in your life, as well as their current value. Are you comfortable with this list? Then, make a detailed plan to acquire more assets and make a pact with yourself to NOT buy so many liabilities.

Becoming a millionaire is not impossible. In fact, it’s relatively easy when you have time on your side and the knowledge to do so.

However, it does require overcoming hurdles, which can be tough. If you want to achieve a million dollars in net worth, or more, continue to learn about the game of money, value your education, live below your means and start collecting assets. You’ll get there soon enough!

This article originally appeared on Entrepreneur.com

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