$293 million: Ed’s Daily Notes for March 30th   2 comments

Fox News: Mega-long odds for winning record jackpot

There is a lot of talk about the Mega Millions lottery tonight, which is worth $540 million. However, the true number is a bit less than that:

A $540 million jackpot, if taken as a $390 million lump sum and after federal tax withholding, works out to about $293 million.

And that doesn’t include what you will pay in state taxes, so we could even call it as low as $270 million. Still, that is nothing to sneeze at.

My own view? Comparable to the baby in this commercial:

But I won’t go so far as to say “don’t buy a lottery ticket”. For me, buying a lottery ticket is an exercise in mental investing. It forces me to consider the question of what would I do if I came into that much money.

The first thing I would do is find a lawyer who specializes in financial matters. I have heard that setting up a corporation to handle the money is a good idea, and I like it. From the corporation, I could then direct the investment of the winnings. I would be far more conservative investing such a large amount. Consider that a 1% annual return on $250 million is still $2.5 million. Bonds and secure dividend stocks make great investments.

You may have noticed that still leaves about $20 million unaccounted for. That is my “change of lifestyle” fund, which is a nice way of saying “the money I am blowing”. New house, new car, better school for the kids, and a few other frivolous expenditures.

Let us not forget that I will be quitting my job. Managing $250 million is a full-time job. But don’t worry: I plan to keep blogging my investments.

By the way, I did buy one ticket.

Wall Street Journal: Audit Faults Apple Supplier

Apparently, Foxconn, the Apple supplier in China, isn’t as squeaky clean as they say they are:

A top Apple Inc. AAPL -1.27% supplier agreed to change its labor practices after an outside audit of its Chinese factories found widespread breaches of work rules…

The investigation of manufacturer Hon Hai Precision Industry Co., 2317.TW -1.29% known as Foxconn, was conducted by the Fair Labor Association and is the latest to document workers-rights violations in Apple’s supply chain.

The audit was based, in part, on surveys of 35,500 workers building products like iPods, iPads and iPhones at three Foxconn facilities in Shenzhen and Chengdu. Apple, whose own audits have found similar violations, requested the investigation.

The nonprofit labor group found at least 50 legal or code violations or policy gaps, according to its report. The findings prompted Foxconn and Apple to agree to new reforms.

FLA found that during some periods over the past 12 months, workers at all three facilities worked an average of more than 60 hours per week, exceeding the FLA code and Apple’s own standard. The audits found there were several months in the past year in which the majority of workers exceeded China’s legal maximum of 36 overtime hours a month.

The association said Foxconn agreed to bring its factories within China’s legal limits of 40 hours of work per week and 36 hours maximum overtime per month by July 2013. That would require more than halving the average hours of overtime, which the report pegged at 80 hours a month. FLA said Foxconn would need to recruit tens of thousands of extra workers to comply.

I won’t go so far as to say Apple’s competitors are all squeaky clean. This is what you get when you use emerging markets for your production. However, I think this will be a good thing in the long-term for both American companies and China, as it shines a light on the problems with labor abuses.

Bloomberg: Japan Production Decline Undercuts Signs of Recovery: Economy

Keep an eye on Japan:

[Japan’s factory] output slid 1.2 percent from the previous month, the Trade Ministry said in Tokyo today, after a 1.9 percent gain in January. The median estimate in a Bloomberg News survey was for a 1.3 percent increase. The unemployment rate fell to 4.5 percent and consumer prices excluding fresh food unexpectedly rose 0.1 percent, government reports showed.

We have a tendency to look at the U.S., Europe, and China as the main economic drivers in the world. But keep in mind that Japan is the world’s 3rd largest economy, 4th largest if you consider the EU as a whole.

Bloomberg: Consumer Spending in U.S. Probably Rose on Autos

Watch today’s Consumer Spending and Personal Income report today:

Purchases rose 0.6 percent, the most in five months, after a 0.2 percent gain in January, according to the median estimate of 83 economists surveyed by Bloomberg News.

However, the impact of these reports may be short-lived, as today is still the last day of the quarter. Markets will need to stay up in order to give the market pros a good quarter to report.

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Posted March 30, 2012 by edmcgon in Economy, Market Analysis

2 responses to “$293 million: Ed’s Daily Notes for March 30th

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  1. About Japan: a one-year old enemy is gaining strenght again: a core at Fukushima is getting worse, as radiation is getting too strong for even robots to work. If the needed repairs and water-hosing cannot continue, the cores will probably worsen. Seems like Fukushima is getting out of control anyhow …

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