By that definition, Dan Prescher is a sophisticated arbitrageur. The 58-year-old makes a decent living as a special projects editor for International Living magazine. But by residing in the village of Cotacachi in the Ecuadorian Andes, he has leveraged his income into a better lifestyle than he would ever enjoy stateside.

“That’s the way we look at it,” says Prescher, who lives with his wife, Suzan Haskins, in an apartment with a view of Mount Imbabura. “If you can cut your cost of living in half, it automatically makes your income twice as big. You have instantly doubled the value of your savings.”

That kind of equation can be a game changer. Consider that at the end of 2012, the average 401(k) balance of those ages 60 to 64 was $133,100, according to Boston-based Fidelity Investments. Now factor in that an American man turning 65 can expect to live to age 83, and a woman to 85, according to the Social Security Administration. Your money might have to last a long time.

That is where retirement arbitrage can help. You can exploit price differences by earning money in some countries and spending it in others. You can, for example, make money in the United States by collecting Social Security, pension or annuity payments. You can pick up fatter dividends by investing in mutual funds that buy foreign stocks, and boost interest earnings by investing in foreign bond funds. Then you could crank up the purchasing power of all those income sources by living abroad for at least part of the year.

“It certainly seems to be happening more … especially early on in retirement,” says Olivia Mitchell, a retirement expert and director of the Pension Research Council at the University of Pennsylvania’s Wharton School. “A lot of people are living abroad for at least a few months, because it can be so much less expensive than living in the U.S.”

Currently about 350,000 retired Americans get their Social Security checks sent abroad, according to the Social Security Administration. And 3.3 million baby boomers are actively considering the possibility of retiring abroad, according to the trade publication Travel Market Report. Americans have been setting up outposts everywhere from Uruguay to Spain to Thailand, where the cost of living is considerably lower than it is in the United States.

Living abroad can present its own set of difficulties. You may have to navigate foreign bureaucracies, cope with foreign languages and customs, and live far from family and friends at a time when you are slowing down. And it’s not a perfect financial solution: You can’t dodge your U.S. income tax responsibilities, unless you give up your citizenship.

And it probably won’t be forever. “Realistically, there will probably be a later period of reverse migration, when mom eventually comes back and will need loved ones nearby to help out,” says Mitchell.

So think of it as an early retirement or seasonal interlude, and stretch your money to the max. Here’s how:

FOREIGN HEALTHCARE IS CHEAP

An American couple retiring now will need roughly $220,000 to cover healthcare costs throughout their retirement, even with Medicare coverage, according to estimates from Fidelity.

Compare that with those who have residency visas in Costa Rica and who participate in the national healthcare system, which can run as low as $50 a month for full coverage, according to Prescher.

But foreign healthcare systems may not always be accessible. “You can’t just show up in a place with universal coverage and say, ‘Fix my heart,’” says Don Whalen, a planner with Versailles Financial in Alpharetta, Georgia, who has many expatriate clients. “The rules vary by country.”

Alas, you can’t take your Medicare benefits abroad with you. But retirees can take out private policies abroad that will cover them across country lines. Prescher and Haskins have a policy through U.K.-based Bupa (www.bupa-intl.com), which secures them annual, global coverage for $5,600 for the two of them.

REAL ESTATE

The U.S. housing market is looking increasingly robust again. That means the era of the screaming real estate bargain, as the market bottomed out around 2010, is largely over.

That is not necessarily so abroad. Thanks to the European debt crisis, for instance, Spanish real estate prices have dropped by around 40 percent since their 2007 peak. Greece is now offering long-term residency (including the right to work) to real estate buyers, in order to revive its housing market. And Prescher and Haskins bought their condo in Ecuador for the princely sum of $47,000 four years ago.

Renting is cheaper abroad, too. A couple retiring to Mexico could expect to rent a two-bedroom home for $800, according to a rough estimate by International Living magazine. Prices vary by region, of course, but popular Mexican towns for American expats include San Miguel de Allende, Cancun and Puerto Vallarta.

LOWER COST OF LIVING

As of March 2013 the average Social Security benefit being paid out was $1,155, according to the Social Security Administration. That may not go far in Miami or Manhattan, but in some popular expat locales it could cover monthly expenses very nicely indeed. In Nicaragua and Malaysia, for example, a couple can live comfortably for around $1,000 a month, according to International Living. Food, clothing, transportation and everything else may be cheaper abroad, depending on where you look.

Says Versailles Financial’s Whalen: “If you can move somewhere where suddenly everything is 75 percent off, it means your retirement savings will last that much longer.”

(The writer is a Reuters contributor. The opinions expressed are his own)

(Follow us @ReutersMoney or here Editing by Linda Stern and Douglas Royalty)

By that definition, Dan Prescher is a sophisticated
arbitrageur. The 58-year-old makes a decent living as a special
projects editor for International Living magazine. But by
residing in the village of Cotacachi in the Ecuadorian Andes, he
has leveraged his income into a better lifestyle than he would
ever enjoy stateside.

“That’s the way we look at it,” says Prescher, who lives
with his wife, Suzan Haskins, in an apartment with a view of
Mount Imbabura. “If you can cut your cost of living in half, it
automatically makes your income twice as big. You have instantly
doubled the value of your savings.”

That kind of equation can be a game changer. Consider that
at the end of 2012, the average 401(k) balance of those ages 60
to 64 was $133,100, according to Boston-based Fidelity
Investments. Now factor in that an American man turning 65 can
expect to live to age 83, and a woman to 85, according to the
Social Security Administration. Your money might have to last a
long time.

That is where retirement arbitrage can help. You can exploit
price differences by earning money in some countries and
spending it in others. You can, for example, make money in the
United States by collecting Social Security, pension or annuity
payments. You can pick up fatter dividends by investing in
mutual funds that buy foreign stocks, and boost interest
earnings by investing in foreign bond funds. Then you could
crank up the purchasing power of all those income sources by
living abroad for at least part of the year.

“It certainly seems to be happening more … especially
early on in retirement,” says Olivia Mitchell, a retirement
expert and director of the Pension Research Council at the
University of Pennsylvania’s Wharton School. “A lot of people
are living abroad for at least a few months, because it can be
so much less expensive than living in the U.S.”

Currently about 350,000 retired Americans get their Social
Security checks sent abroad, according to the Social Security
Administration. And 3.3 million baby boomers are actively
considering the possibility of retiring abroad, according to the
trade publication Travel Market Report. Americans have been
setting up outposts everywhere from Uruguay to Spain to
Thailand, where the cost of living is considerably lower than it
is in the United States.

Living abroad can present its own set of difficulties. You
may have to navigate foreign bureaucracies, cope with foreign
languages and customs, and live far from family and friends at a
time when you are slowing down. And it’s not a perfect financial
solution: You can’t dodge your U.S. income tax responsibilities,
unless you give up your citizenship.

And it probably won’t be forever. “Realistically, there will
probably be a later period of reverse migration, when mom
eventually comes back and will need loved ones nearby to help
out,” says Mitchell.

So think of it as an early retirement or seasonal interlude,
and stretch your money to the max. Here’s how:

FOREIGN HEALTHCARE IS CHEAP

An American couple retiring now will need roughly $220,000
to cover healthcare costs throughout their retirement, even with
Medicare coverage, according to estimates from Fidelity.

Compare that with those who have residency visas in Costa
Rica and who participate in the national healthcare system,
which can run as low as $50 a month for full coverage, according
to Prescher.

But foreign healthcare systems may not always be accessible.
“You can’t just show up in a place with universal coverage and
say, ‘Fix my heart,’” says Don Whalen, a planner with Versailles
Financial in Alpharetta, Georgia, who has many expatriate
clients. “The rules vary by country.”

Alas, you can’t take your Medicare benefits abroad with you.
But retirees can take out private policies abroad that will
cover them across country lines. Prescher and Haskins have a
policy through U.K.-based Bupa (www.bupa-intl.com), which
secures them annual, global coverage for $5,600 for the two of
them.

REAL ESTATE

The U.S. housing market is looking increasingly robust
again. That means the era of the screaming real estate bargain,
as the market bottomed out around 2010, is largely over.

That is not necessarily so abroad. Thanks to the European
debt crisis, for instance, Spanish real estate prices have
dropped by around 40 percent since their 2007 peak. Greece is
now offering long-term residency (including the right to work)
to real estate buyers, in order to revive its housing market.
And Prescher and Haskins bought their condo in Ecuador for the
princely sum of $47,000 four years ago.

Renting is cheaper abroad, too. A couple retiring to Mexico
could expect to rent a two-bedroom home for $800, according to a
rough estimate by International Living magazine. Prices vary by
region, of course, but popular Mexican towns for American expats
include San Miguel de Allende, Cancun and Puerto Vallarta.

LOWER COST OF LIVING

As of March 2013 the average Social Security benefit being
paid out was $1,155, according to the Social Security
Administration. That may not go far in Miami or Manhattan, but
in some popular expat locales it could cover monthly expenses
very nicely indeed. In Nicaragua and Malaysia, for example, a
couple can live comfortably for around $1,000 a month, according
to International Living. Food, clothing, transportation and
everything else may be cheaper abroad, depending on where you
look.

Says Versailles Financial’s Whalen: “If you can move
somewhere where suddenly everything is 75 percent off, it means
your retirement savings will last that much longer.”

(Follow us @ReutersMoney or here
Editing by Linda Stern and Douglas Royalty)

The companies in the Standard & Poor’s 500 Index
doled out a record $281.5 billion in dividends in 2012, and
payouts in 2013 are slated to rise even higher.

Investors adore them: Dividend-paying companies best
nonpayers by 8 percent a year in total returns, according to Ned
Davis Research Group. Furthermore, the S&P 500 is yielding 2.02
percent, more than the 10-year U.S. Treasuries’ 1.66 percent.

But before you snap up the fattest dividend you can find,
take a look behind the curtain. Do not just consider yield, but
also the payout ratio, which is the percentage of earnings that
a company is forking out in dividends.

The companies in the S&P 500 are currently paying out 36
percent of their earnings in dividends. That is well below the
long-term average of 58 percent, according to Ned Davis.

But some companies go much higher, borrowing money or
dipping into savings to protect their dividends even when they
exceed earnings. Once a company starts paying out more than 80
percent of earnings in dividends, analysts become concerned.

Currently, 49 companies in the S&P 500 are above that 80
percent mark, according to Chicago research firm Morningstar.

“A payout ratio above 100 percent is more than a red flag,”
says Sam Stovall, chief equity strategist for S&P Capital IQ.
“It is a red flag combined with a blinking strobe light combined
with an airhorn, to indicate that there is something wrong
here.”

After all, a company paying out more in dividends than it
earns raises serious questions about how sustainable that payout
really is.

Rural telephone operator Windstream Corp, for
instance, is wrestling with a dividend equivalent to 357 percent
of its earnings, according to Morningstar. A company spokesman
says free cash flow is a better metric than earnings, to gauge a
company’s ability to pay.

AT&T Inc is paying out a generous 141 percent of its
earnings to shareholders. A spokeswoman says the company’s
balance sheet remains among the strongest in the industry.

If a payout ratio rises too high, however, it might indicate
a potential dividend cut is in the offing, to free up more cash.

Experts stress there are no foolproof ways to predict a
dividend cut, since every company possesses a unique financial
outlook and earnings projections. But just look at two prominent
companies that recently opted to trim future payouts: utility
Exelon Corp, which has a trailing 12-month payout ratio
of 148 percent, and rural telecommunications service provider
CenturyLink Inc, whose ratio is even higher at 232
percent.

A modest payout ratio, on the other hand, indicates that a
company should have no trouble paying the dividend and probably
has room to increase it. Some blue-chip companies that marry an
attractive yield with a reasonable payout ratio, according to
S&P’s Stovall: Chevron Corp, General Electric Co
and McDonald’s Corp.

“Over the past 10 years, companies with payout ratios lower
than 50 percent have performed better than those with higher
ratios,” says analyst Michael Amenta of Norwalk,
Connecticut-based financial research firm FactSet Research
Systems. “That is a nice guideline to follow.”

Companies that paid out less than 50 percent of earnings
racked up 0.68 percent monthly gains over the past decade, while
those that paid out between 75 percent and 100 percent trailed
with a 0.53 percent monthly increase. Those whose payout ratios
rocketed above 100 percent lagged even more, with just 0.51
percent monthly gains over the 10-year period, Amenta said.

So how should payout ratios affect your own investment
choices? Some guidelines for doing the math:

- Look at multiyear trends. A company might pay out more
than 100 percent of earnings on a temporary basis because it had
a big one-time charge or due to depressed earnings during a
recession.

“A multiyear trend is a more useful way to get some
context,” says Amenta. “For instance, telecom companies recently
had some one-time charges related to Hurricane Sandy that sent
their payout ratios higher than usual. But I wouldn’t look at
that as a long-term indicator of their inability to pay.”

- Consider the sector. A relatively high payout ratio may
not be horrible if it is the industry norm, but the outliers
should be cause for concern. “Utilities and telecoms have higher
payouts, and information technology has traditionally had the
lowest,” Amenta says. “Payout ratios tend to be consistent
across certain industries.”

As of the end of 2012, for instance, utilities had an
average payout ratio of 141 percent, according to Howard
Silverblatt, S&P’s senior index analyst. That compares with more
restrained sectoral averages like consumer staples, at 47
percent, and IT, at 26 percent.

- Don’t be seduced by an above-average yield. “If you reach
for a dividend that is 5 or 6 percent … you could find out
that yield is going to be cut,” says Stovall. “That is why if
you get a payout ratio over 100 percent, some people start
waving that red flag very aggressively.”

Nothing personal. It is just that the 29-year-old operations consultant from Waterloo, Ontario, is tapped out. Last year she attended six weddings — some of which actually had two ceremonies, because of different faiths involved — and was a bridesmaid three separate times.

It added up to spending $7,000 on everything from gifts to travel, from bridal showers to bachelorette parties. On top of the personal debt Anwar was trying to pay off, the mounting wedding costs made her feel like a hamster on a wheel.

And that was just as a guest. So she made the decision: no mas.

“It adds up really quickly,” says Anwar, who has turned down about five invites since instituting her no-go policy. “Girls can be very extravagant with their weddings, but not everyone can afford to drop a few hundred dollars as a wedding guest or a member of the bridal party multiple times a year. It’s just too much.”

Anwar is not alone in rejecting society’s expectation that you tick the “yes” box on all those wedding invites. In an era when young adults are loaded with record student debt and jobs for new graduates seem scarce, many invitees cannot sustain the financial burden of attending multiple weddings in quick succession.

In fact, according to the wedding site TheKnot.com, the average bridesmaid could be facing a bill for $1,385 when adding all potential costs. Add to the mix that more couples than ever are opting for destination events — almost a quarter of all weddings in 2012, up from 20 percent in 2008 — and the price of celebrating your friend’s big day can be dear indeed.

“Look at all the spending involved in being in the bridal party,” says Anja Winikka, site director for TheKnot.com. “There is the dress, there are accessories, there are flights and hotels for out-of-town guests.”

“Then there is all the pre-wedding activity, like bridal showers, bachelorette parties, even engagement parties. It can very easily add up to $1,000 or more for a single wedding.”

The financial burden can be especially heavy for those whose friends are all getting married at roughly the same time. In the United States, men are getting hitched at an average age of 28, and women at 26, according to Census data. For young graduates in their late 20s, that can mean getting swarmed with invitations just when they can least afford it.

Hedge fund manager and author James Altucher has a simple method for dealing with those invitations: He turns them down. It does not matter who and it does not matter when. The answer is no.

“If you say yes to one wedding, you have to say yes to them all,” says New York City-based Altucher, 45, whose upcoming book “Choose Yourself” is about entrepreneurship in a rapidly changing world. “You should not rip everyone out of their lives, make them wear a whole new wardrobe, and fly to another location, just so they are forced to hang out with people they do not like and be totally uncomfortable for an evening.

“If you added it all up, it would be tens of thousands of dollars — and probably a whole year of your life,” he says.

Of course, not everyone thinks weddings are such horrific events. And friends do not tend to take such refusals lightly, especially for a day that is supremely important to them. “I have lost friends because of it,” admits Altucher. “People do not get it. And there is no easy way to break it to them.”

So how can you put the brakes on out-of-control wedding costs and restore some sanity to your budget without damaging friendships? A few tips from the experts:

- Be honest. If you are in financial straits and just cannot afford to attend a wedding or be a bridesmaid or groomsman, just admit that upfront. “Speak up as early as possible,” says Winikka of TheKnot.com. “That way brides and grooms have enough time to deal with the situation. Maybe they will go with someone else in their wedding party- – or maybe they will even offer to help out financially.”

- Get creative with the costs, suggests Elaine Swann, a San Diego-based etiquette expert.

Instead of buying the happy couple a solo gift — which costs an average of $79, or $146 if you are a family member, according to TheKnot.com — go in on a present with other members of the wedding party. “Instead of purchasing everything straight retail, make something memorable and authentic, like putting together a CD of photos of the couple and the time you have spent together.” Or instead of buying a seafoam taffeta monstrosity that will never see the light of day again, check out sites like LittleBorrowedDress.com, which allows you to rent couture for the big event and send it back afterward.

- Decline being in the wedding party, but attend the wedding. The most punishing costs for wedding guests come with being a bridesmaid or groomsman. If you eliminate those specific expenses, like Las Vegas bachelor parties, then the costs of simply attending can be more affordable. This way you can still be a part of your friend’s special day, without racking up a gigantic credit-card statement that will take ages to pay off.

If you’re asked to be in the wedding party, stall your answer until you get all the details of what is expected, says Swann. “If you look at your budget and you really cannot be a bridesmaid or a groomsman, offer to serve in another capacity, like being an usher or handling the guestbook.”

All of these little savings can help, unless you’re someone like Altucher.

“Weddings are the worst events imaginable,” he says. “I don’t want to subject myself to one boring event after another. Life is too short.”

(The writer is a Reuters contributor. The opinions expressed are his own.)

(Follow us @ReutersMoney or here Editing by Linda Stern and Leslie Adler)

Just take a look at the numbers. Home values are on the
rise, with a year-over-year price increase of 11.6 percent,
according to the National Association of Realtors. Inventory has
cratered to levels not seen since 2005.

Irvine, California-based RealtyTrac, an online marketplace
for foreclosure properties, says that flipping – defined as
buying and selling a property within six months – rose for the
second year in a row, up a slight 0.33 percent in 2012 after
logging a 12 percent increase in 2011. Those deals were churning
out real gross profits, at an average of $37,375 per transaction
for all of 2012.

Today’s flippers have learned some hard lessons. The housing
crash of 2006-2011 wiped out more than $7 trillion in household
wealth across the nation, according to data from the Federal
Reserve. The fallout left countless speculators holding
properties they could no longer move.

This time, homebuyers are being more selective – putting
more money down and making calculated bets on smart renovations.

“There are fewer real estate investors now, compared to
during the boom. But this time, they have really done their
homework,” says Andy Heller, author of “Buy Low, Rent Smart,
Sell High: Real Estate Investing for the Long Run.”

Here are a few tenets to hold close, as you tiptoe back into
this dangerous game:

1. Pick your spots

The best places to flip in 2012 included Orlando, Florida;
Richmond, Virginia; Tucson, Arizona; and Charlotte, North
Carolina, according to RealtyTrac. Flipped homes in Orlando, for
instance, were bought for an average of $100,397 and sold for an
average of $174,895, for gross profits of almost $75,000.

Jon Maddux, a San Diego-based house flipper and founder of
the site AfterForeclosure.com, also found luck in Atlanta,
Georgia – far beyond his local region. The one-year average
price increase there stands at 13.4 percent, according to the
S&P/Case-Shiller Home Price Indices, 2 percent above the
national average.

Last year, Maddux, 39, and a business partner bought two
single-family homes. The first they bought for $62,900, put in
about $28,000 of renovations, and sold for $139,000. The second
house they purchased for $79,000, chipped in $25,000 to rehab,
and sold for $149,000.

A caveat: Since home prices are not exactly secret
information, it means if you find a promising area to invest,
other flippers will likely be there, too.

2. Cash is king

During the housing boom, late-night infomercials blared
about how anyone could flip a home without putting in a dime of
their own.

But this time, banks have tight restrictions, and that means
real estate investors coming in with all-cash deals have the
upper hand. They can move faster and offer quicker closes than,
say, first-time homebuyers who are constantly having to wrangle
with their bank.

Even better, having cash on hand “can actually generate you
some significant discounts on the deal,” says Heller.

3. Renovations matter, but stick to a budget

In today’s market, you will likely only get a bargain if the
house is in truly rough condition. There is no shortage of homes
that need upgrades, though. In 2012 there were 1.8 million
properties in America with foreclosure filings, according to
RealtyTrac, many of them in poor condition.

While every property is different, Maddux suggests spending
up to around 25 percent of your expected sale price on necessary
upgrades. Exceed that level, and the economics of your flip
start to get riskier, with scant room for error if buyers do not
show up.

The renovations that offer you the most money back upon
resale, according to Remodeling Magazine’s 2013 Cost vs. Value
Report: Unsexy projects like window replacements, minor kitchen
remodels and fixing garage doors.

Heller likes to focus on the basics – doing a fresh paint
job, installing gleaming new floors, fixing any problems like
leaks – and then providing an additional “improvement
allowance,” so the new buyer can tailor the home to their
personal specifications.

With his latest project in Marietta, Georgia, he bought a
single-family home for $205,000. Heller put in $17,000 worth of
upgrades, most of it for a paint job and new flooring. He got an
offer within a few weeks for $270,000.

4. Be prepared to hold

Back in 2003 the Federal Housing Administration (FHA)
instituted anti-flipping regulations, prohibiting insuring a
mortgage on a property owned by the seller for less than 90
days.

Those rules have been waived since 2010, in a bid to support
the housing market. But a quickly-flipped home requires
documentation on renovations, as well as additional appraisals,
to justify a much higher resale price if the deal involves an
FHA-insured loan. And in practice, many skittish banks still
adhere to the 90-day rule, says Maddux. That is why the average
flipping time from purchase to resale is just over that level,
at 106 days, according to RealtyTrac.

“That seems to be the sweet spot for a profitable deal,”
says Daren Blomquist, vice president at RealtyTrac. “Back in the
housing bubble, many flippers were solely relying on price
appreciation, sitting back and selling for big profits within a
month or two.” Now, real improvements are needed, he says.

Do not expect to flip the property within days and realize
lightning-quick profits. You may want to rent it out for a while
as the housing market continues to recover, says Heller, in
order to cover some costs and eventually secure an even higher
resale price.

“In some ways, this is a dream environment,” Heller says.
“You would be crazy to be on the sidelines.”

Even Alan Greenspan, the former Federal Reserve Board
chairman who coined that description of market sentiment before
the dot-com bust, has mused publicly that stocks are
undervalued.

But at least one group has been actively selling into the
rally: corporate executives in the best position to know about
their companies’ prospects. In February, officers and directors
sold $35.30 worth of shares in their own companies for every
dollar they put into stocks.

That is the highest monthly ratio since TrimTabs Investment
Research began tracking the data in 2004, says David Santschi,
chief executive of TrimTabs, based in Sausalito, California. A
more typical ratio is around 8 to 1 of selling over buying.

“It is a sign that company officers and directors think the
market is richly valued,” Santschi said.

Looking at price-to-earnings ratios, a common metric for
valuing companies, they may have a point: The SP500 is
now trading at 18.35 times trailing earnings, up from 16.26 a
year ago. The long-term average for the index is 15.49.

Indeed, the trend since May 2012 has shown company insiders
selling rather than buying by a larger-than-usual margin. In the
first quarter of 2013, insiders sold $11.86 billion worth of
shares, compared with barely $1 billion in purchases.

For retail investors who are finally getting over their fear
of the market, it is a worrisome indicator – though not
necessarily a “race for the exits” signal. Companies that have
high and rising levels of insider selling often follow that up
with share price underperformance, market studies show.

But company officers and directors – who must file records
of their purchases and sales with the U.S. Securities and
Exchange Commission – have many personal reasons for selling
that don’t necessarily point to a market or individual company
collapse.

Executives sell for a range of reasons: Sometimes they just
want to cash out some options to pay a tuition bill or put a
down payment on a vacation home. Others want to reduce their
dependence on any single company’s future – or pull money out at
an opportune time.

The list of insiders involved in large sales in early April
includes Google Inc. co-founder Sergey Brin ($67.5
million worth of shares); LinkedIn Corp. co-founder
Reid Hoffman ($14.5 million); Gilead Sciences Inc. CEO
John Martin ($13.6 million); and Dollar General CEO
Richard Dreiling ($12.3 million).

A Dollar General spokesman said Dreiling’s stock sale was
part of a “planned diversification program,” and LinkedIn
offered that Hoffman’s “automatic stock sales are part of a
personal investment diversification strategy.”

Gilead Sciences had no comment on Martin’s transaction.

Google Executive Chairman Eric Schmidt sold over $191
million of company stock in one February week – after a stellar
year that left the share price hovering around $800.

As the sale amounted to about 42 percent of his stake, the
company released this statement: “This is a routine
diversification of assets, and Eric remains completely committed
to Google.”

A RED FLAG?

Even so, when so many insiders sell instead of buy, it
becomes an intriguing clue to their collective take on the
market – and not an upbeat clue.

“Rising selling to net buys is a net negative for the
market,” said Kristen Hendrickson, an analyst with The Leuthold
Group, a Minneapolis-based institutional research firm.

Leuthold analysts have seen unusually high selling patterns
among the so-called “big-block” insider stock transactions they
track – transactions of at least $1 million in total value, or a
minimum of 100,000 shares.

At the end of 2012, there were 150 more big-block sales
transactions than purchases over a 10-week period. That compares
with a 10-week moving average of 60 more big-block sales than
purchases since 1982, when Leuthold began tracking that data.

“It is a critical indicator of the sentiment of corporate
executives, and what they are seeing in the future,” said
Hendrickson.

The ratio of insider selling to buying has reached sky-high
levels two other times: In mid-2000 as the dot-com bubble burst,
the average spread of big-block sales over buys crested close to
250. In 2006, before the financial crisis hit, the same average
hit a peak of 220.

Recently it has hovered around 125 – not quite as high, but
still more than double the long-term average.

Of course, insider selling is just one indicator of market
direction. Leuthold’s Major Trend Index tracks 130 different
components, only two of which measure insider activity (number
of transactions and total dollar volume involved).

Leuthold analysts say they remain bullish about the market’s
prospects as a whole, thanks to other positive indicators, such
as market momentum.

That said, the negative signal that insider buying throws
off is often company-specific as well as market-specific.

Stocks with significant insider selling tend to underperform
the market, particularly after one to 12 months, said Jonathan
Moreland, research director at InsiderInsights.com.

“The ultimate situation you are looking for is three or more
insiders at a company, all of whom have great track records at
trading company shares, all selling big dollar amounts that add
up to a large percentage of their holdings,” Moreland said.

Stocks with significant insider buying rose 87.1 percent
between the beginning of 2009 and April 2010, more than double
the 36.8 percent gain recorded by companies with big insider
selling, according to InsiderInsights.com.

ADVICE FOR INDIVIDUAL INVESTORS

Insider sales in the aggregate are much like national
home-price averages: they don’t offer enough specific detail.
Just as real estate prices in one area could be rising or
falling, so too will insider buying and selling vary with each
individual company.

For that kind of granular information, useful websites
include GuruFocus.com, InsiderInsights.com, FINVIZ.com and
InsiderCow.com.

You can also search for activity on individual firms at the
website of the U.S. Securities & Exchange Commission ()
or on the Reuters.com website.

The best advice for individual investors is to use insider
selling data in conjunction with other indicators, TrimTabs’
Santschi said. Buy-back programs paired with significant insider
buying is a positive signal, while buybacks combined with
insider selling might mean it’s time to take some profits.

Okay, pencils down. Not so easy, is it? After all, when you are thinking about 2043, you are not just evaluating metrics such as current price-earnings ratios or 52-week trading ranges. You have to ponder whether a company is even going to exist in three decades’ time.

And that is not a lock, even with giant corporations. Investors from 30 years ago no doubt assumed iconic brands such as Eastman Kodak, Lehman Brothers, Oldsmobile and Tower Records would still be thriving today.

Maybe we should forget about whether a stock’s most recent earnings matched the Wall Street buzz and do some extreme buying-and-holding instead. That is a strategy in the vein of Berkshire Hathaway Inc’s Warren Buffett, who has been holding positions in sturdy companies such as Coca-Cola Co for decades.

After all, since human nature makes many of us downright terrible at investing – buying high and selling low, guided by deeply set emotions such as greed and fear – it only makes sense that a lengthier time horizon might do us some good.

“I am a proponent of buying-and-holding, since very few people have uncovered the secret of successful market timing,” says Sam Stovall, chief equity strategist for S&P Capital IQ, a unit of McGraw-Hill Cos Inc.

Such ultra-long-term prognostication is tricky, though. We popped this tough question to three managers whose funds fared well at the 2013 U.S. Lipper Fund Awards: If you had to hold a single stock for 30 years, what would it be?

Here are their picks.

David Giroux, Portfolio Manager, T. Rowe Price Capital Appreciation:

Danaher Corp

Price: $62.60

One-year revenue growth (2011-12) of 21.87 percent

You have to invest in something that is not going to be obsolete in 10 years. Danaher is an industrial company that makes everything from fuel pumps to water-testing equipment, businesses that should be of very long duration.

You also want a company that is not just about one person. CEO Larry Culp has surrounded himself with a very strong bench of high-caliber people.

It is very important how a company deploys capital. Danaher has done a tremendous job in buying good businesses such as Beckman Coulter and ChemTreat, making them better, and getting excellent returns on that capital. Very few companies can do that.

Marsh & McLennan Cos Inc

Price: $37.05

One-year revenue growth of 9.25 percent

The company is a kind of middleman between insurance companies and their clients. They provide incredible insights and analytics to their customers. It is a valuable resource and there is no secular risk attached to that.

Marsh & McLennan has a very strong management team, not only the CEO, but the people who run all the different divisions such as the consulting business. It is a high-performance culture, which you like to see. They do a very good job making fill-in acquisitions, buying back stock and paying a handsome dividend yielding 2.5 percent.

In 30 years Marsh & McLennan is still going to be here and be more valuable than it is today.

Will Nasgovitz, Co-Portfolio Manager, Heartland Select Value Fund

Hospira Inc

Price: $31.74

One-year revenue growth of 3.57 percent

This pick falls right in line with long-term thinking, because over the next few months, Hospira might be an underperformer. But we see incredible intrinsic value there. It is a company that was spun out of Abbott Labs back in 2004 and is now the number-one player worldwide in injectable pharmaceuticals. If you have ever been hooked up to an IV in the hospital, it was probably a Hospira product.

They have had some issues with manufacturing facilities recently, which have been under the microscope of the Food & Drug Administration and it has impacted the bottom line. But long-term, they have a dominant market share and a tremendous path for growth.

Internationally, their footprint is still small and the use of generic drugs globally is continuing to go up. We think the intrinsic value is 30 percent higher than the current stock price – and that is being conservative.

Josh Stewart, Co-Portfolio Manager, Wasatch World Innovators Fund

MarketAxess

Price: $38.12

One-year revenue growth of 23.85 percent

It is easy to go to a site like TD Ameritrade and buy stocks online, but this is one of the only electronic trading platforms for bonds.

A lot of that market is still conducted in old-fashioned ways, like old buddies using the telephone. This business has a great tailwind, and is slowly taking more and more market share. A few years ago the company had around a 6 percent market share, now it is already up to 13 percent.

MarketAxess takes the inefficiency out of the bond market because anyone can be connected and get a full inventory of everything that is out there. There is a ton of leverage in the business model because they take a small commission on everything that is traded. Every year more volume is going over their platform – $52.1 billion in February alone.

That makes for a growing amount of free cash flow – $71 million for 2012. In fact, the biggest question they get asked on conference calls is: ‘What are you going to do with all this cash?’ That is a nice problem to have.”

(Reporting by Chris Taylor; Editing by Lauren Young and Andre Grenon)

On second thought, don’t call him.

That’s because in his former NCAA basketball tournament
pool, the professor of biostatistics at the University of
Minnesota crushed his opponents three times in five years.
Carlin was so successful, in fact, that organizers shut down the
pool entirely.

“Now I can’t get a game of jacks in this town,” he says.

Too bad, because there is plenty of money to be won.

The site Pregame.com estimates that wagering on this year’s
March Madness tournament will exceed $12 billion, more money
than was riding on the Super Bowl. Of that, $3 billion will be
put into office pools of tournament brackets.

Much of this is not exactly, well, legal. Sports betting is
against the law in almost all states, so when you are handing in
your picks to the guy in the next cubicle, money is not really
supposed to be changing hands.

But with the President himself making an annual show of
filling out his bracket, and legal or tax authorities showing no
inclination to go after small-fry deals like office pools, it
has become an annual rite of passage to have a little cash
riding on college hoops.

“It blows my mind how big March Madness has gotten over the
years,” says Chris Hehman, a former Nortel Networks
engineer who set up the website PickHoops.com 16 years ago so he
wouldn’t have to score pool results by hand. Now the site
handles around 100,000 brackets a year, for office pools around
the country.

And that’s just the tip of the iceberg: Last year alone,
ESPN.com’s national contest had an astonishing 6.45
million brackets filled out for the NCAA men’s tournament.

With such widespread interest in March Madness, the nation’s
bosses tend to turn a blind eye to gambling concerns.

A 2010 poll by the Society for Human Resource Management
found that 67 percent of American workplaces had no formal
gambling policies in place, and that a whopping 57 percent have
a March Madness pool every year. That’s behind only the Super
Bowl, and well ahead of other events like the World Series or
the Oscars.

ALL ABOUT THE MATH

So how did Brad Carlin do it? After all, he’s not a Phil
Jackson-level basketball savant.

As his experience suggests, there are ways to discern key
patterns, and the results are not as hard to predict as you
might think.

“It’s like Billy Beane in Moneyball, or Nate Silver with the
federal election,” says Carlin, who actually wrote an academic
paper on the subject. “These are standard statistical tools.
It’s not rocket science; anybody can do it.”

Okay then, but how?

There are two answers to that question, says Carlin.

One involves probability modeling, which crunches numbers to
figure out expected point spreads when two teams face one
another. Sites like Poologic.com will do that math for you once
the NCAA selection committee sets up the tournament brackets on
March 17.

The second involves what other bettors are going to do. You
could bet all the favorite teams, but even if your picks win
every game you are hardly going to win any money, because
everyone will be sharing the same pot. If you pick some unlikely
victors, on the other hand, you increase the chances of having a
big jackpot all to yourself.

As Carlin says, “You’re not just playing against the house -
you’re playing against other people.”

Here are some general principles to keep in mind when making
your picks:

TAILOR PICKS TO THE SIZE OF THE POOL

The tournament favorites are favorites for a reason; they’re
proven winners who have a legitimate shot at the title. So if
you’re in a relatively small office pool of 10 or 15 people,
stick largely with the teams that are highly seeded.

But if you’re in a large corporate pool of hundreds of
entrants – or huge national competitions like those of Yahoo!
or CBSSports.com – “you have to go out on a
limb” and pick some longshots, says Chris Hehman. “A bracket
picking all the favorite teams is just not going to get it
done.”

NOT ALL UPSETS ARE CREATED EQUAL

It’s always fun to pick a Cinderella team among the 15th or
16th seeds. Indeed, some pools feature upset incentives, which
give you added points for selecting victorious underdogs. But be
realistic. An unknown team from a lower-tier conference is not
going to go all the way.

With that in mind, be judicious with your upset calls.
“Between 8th seed vs. 9th seed teams, 9s actually do a little
better,” says Hehman. “With 7s vs. 10s and 6s vs. 11s, upsets
happen with regularity. Fives upsetting 12s happens once in a
while. Anything more than that, you’re really going out on a
limb.”

AVOID THE LOCAL FAVORITE

It’s human nature to root for your hometown team. It’s also,
generally speaking, a losing strategy.

“We all tend to advance our local team to the Final Four,”
says Tom Adams, a systems analyst from Cary, North Carolina and
creator of Poologic.com, which uses advanced mathematical
calculations to help people make their picks.

“If you live in Kentucky, everyone in your office is
probably rooting for Kentucky. But that means that other seeds
in that bracket are probably underbet, and are a smarter way to
go.”

PICK A CONTRARIAN CHAMP

In many March Madness pools, the scoring is heavily weighted
towards the later rounds, so that picking the eventual champion
is key to winning the whole thing. But historically, the
prohibitive national favorite has trouble pulling it off
(except, notably, this past year with Kentucky).

“Look at the bigger online pools like ESPN or Yahoo!, to see
how people are betting this year,” says Adams. “Then avoid the
top champ, and go with a weaker one- or two-seed. That will give
you a key advantage for winning it all.”

Harsh, an IT professional from Tuscola, Illinois, is 62, around the age at which a lot of people start actively planning to retire to a white-sandy beach with a frozen margarita in hand.

Harsh’s debt snuck up on her as she helped her two daughters with college and living costs. She went back to school after a divorce and dealt with unexpected expenses such as big dental bills. Now she has about $300 a month in minimum payments, spread across three credit cards, and the balance never seems to go down because of all the interest she is paying.

“I totally did not think this was what my future held,” says Harsh. “I don’t want to leave debt to my daughters. I guess I’m going to have to work until I die at my desk.”

Harsh is not alone in her predicament. According to new figures from the New York City-based policy research organization Demos, Americans over 50 are struggling with a surprising amount of credit-card debt. Low- and middle-income households of older Americans who owed credit-card companies for three months or more have racked up an average of $8,278 in debt, according to Demos.

“What was surprising was older Americans were carrying so much more credit-card debt than younger people,” says Amy Traub, a senior policy analyst at Demos, noting that those under 50 who had debt for at least three months had accumulated an average of $6,258. “It’s a troubling development, and it says that the tough economy has been taking a toll on American households.”

SPENDING AGAINST TYPE

The stereotype of typical consumers drowning in credit-card debt is decidedly younger. Perhaps they are recent grads who are coping with college bills, unable to find a decent-paying job right out of college, or maybe they are young parents coping with a mortgage and a couple of kids. Indeed, the last time Demos conducted this survey back in 2008, it was households under 50 that bore more debt.

But these new findings reveal something else: Workers who should be in their prime earning years, stockpiling assets for retirement, are often turning to credit cards to deal with everyday expenses.

Indeed, according to Demos, it was not splashy big-ticket items for which boomers were whipping out the plastic. Half of older households surveyed used credit for basic stuff like groceries or utilities, and half for medical expenses such as prescription drugs. And they were not paying off the credit they incurred every month.

If the trend continues, the 79-million-member boomer generation could find themselves in serious financial straits in coming years. Especially in an era when a cash-strapped federal government may look at trimming Social Security benefits or raising the age of benefit eligibility to help cover massive budget holes.

“The problem with boomers is that they’ve always wanted a very comfortable lifestyle, and are willing to take on debt to get it,” says Fred Brock, author of “Retire on Less Than You Think: The New York Times Guide to Planning Your Financial Future”. “Old habits die hard. But it’s just dumb to approach retirement with a bunch of credit-card debt. That group of boomers could be in real trouble.”

Indeed, Brock calls boomers “masters at juggling debt”, and figures from the Washington, D.C.-based Employee Benefit Research Institute seem to support that. From 1992-2007 the average overall debt of households 55 and over more than doubled to $70,370. That was even before the Great Recession struck with full force.

For members of the 50-plus crowd who have accumulated credit-card debt, rebounding from financial troubles is not easy. Demos found that a quarter of those over 50 blamed job loss for their credit-card quandary, since they were often unable to find replacement work after being laid off.

Of course, while these debt figures are worrying, they are not insurmountable, notes Brock. In many cases, people over 50 do have financial resources, but the assets are difficult to tap.

For instance, they may have significant sums in their 401(k) accounts, but are loath to access that cash early and pay withdrawal penalties. Even so, Demos found that 18 percent of survey respondents 50-64 had done just that.

Wealth may be largely invested in boomers’ homes, but they may be cash-poor. In that case, that equity stake may need to be unlocked before they can wipe out their mounting credit-card debts.

“I will say this about boomers: Unlike their own parents, who tended to be very rigid, they’re willing to move and they’re willing to change,” says Brock. “So they may sell their homes and move where the cost of living is lower. They may not retire yet, so they can continue to earn.

“Their credit-card debt is not a good sign, but it’s wrong to think a whole generation of boomers is going to be eating cat food. They’re more resourceful and flexible than that, and whatever they need to do to face reality, they’ll do it.”

Despite the alarming credit-card statements, Harsh maintains a sunny disposition and plans to forge ahead, paying off whatever she’s able. “I live a very frugal life, and I do what I can,” she says. “But I certainly didn’t anticipate this, in any sense.”

(Editing by Heather Struck and Dale Hudson)

Alvin is a beagle.

Not just any beagle. Alvin is a champion of his breed, the
recipient of three Best in Show ribbons at dog shows around the
United States. His handler hopes he will compete for the overall
crown at New York City’s famed Westminster Kennel Club Dog Show,
starting this Monday. But being a champion doesn’t come cheap.

“I’ve heard of some owners taking out second mortgages or
going bankrupt because of their dog,” says Lindsay Bryson,
Alvin’s handler, who says expenses for a typical show dog run
between $2,000 and $4,000 a month. “Most show dog owners know
their financial limits – but some don’t.”

It’s not just the Westminster best-of-breeds that cost
Americans serious money. Indeed, not even the brutal economy of
the past few years could reverse people’s spending on Fluffy and
Fido. Total pet industry expenditures are now estimated at
almost $53 billion annually, according to the American Pet
Products Association (APPA). The figure has risen every year
right through the Great Recession.

That kind of robust spending – not just on dogs but also on
a menagerie of pets from cats to iguanas to parakeets – is up
from $41.2 billion just five years ago, making for an almost 30
percent increase over that time frame. From gourmet food to
designer wear, from pet insurance to organic treats, Americans
always seem able to make room in the family budget.

“American pet owners continue to spend on their animals,”
says Howard Telford, a pet care analyst for research firm
Euromonitor International. “Long-term, I am encouraged by
increasing consumer confidence, and feel that pets – treated as
members of the family – will be leading beneficiaries of
increased consumer spending.”

TREATED LIKE KINGS AND QUEENS

These days you can find Martha Stewart-brand dog
beds ($49.99 for the “Bonequilt Snuggler” model at PetSmart.com)
or BK Atelier’s luxury poop-bag holder ($39.99 at
bitchnewyork.com). Forget tasteless dry kibble; now it’s all
about repasts of free-range chicken and organic quinoa, like the
dehydrated meals prepared for dogs by San Diego-based The Honest
Kitchen ($69.99 for a 10-pound box of the company’s “Verve”
mix).

When it comes to show dogs, like the ones strutting their
stuff for the Westminster show, the pampering can be taken to a
whole new level. Bryson, Alvin’s handler, has seen owners pay up
for everything from pet psychics to dog chiropractors to luxury
motor homes that allow the furry little kings and queens to
travel between shows in style.

But even the mutt down the street can run up some serious
bills. According to the APPA’s 2011-2012 National Pet Owners
Survey, dog owners spent an average of $407 a year on surgical
visits, $248 on routine checkups, $274 on kennel boarding and
$254 on food. And that is before other costs like vitamins
($95), travel expenses ($78) and toys ($43).

The spending has helped boost the animal supply business.
Petco Animal Supplies Inc, a specialty food retailer for
household pets with more than 1,150 stores in the U.S., has
generated consistent revenue gains in past years, despite weak
economic conditions, Moody’s Investors Services Inc said in
October. The privately owned company is being eyed for an
initial public offering, though the company will not comment on
whether it will pursue one in the near future.

Add it all up, and according to a separate survey by the
American Kennel Club, dog owners reported spending around $2,500
annually on our four-legged friends. In many cases, this is more
than many dog-owning families signed up for. Only 3 percent of
respondents said dog ownership was costing them less than
anticipated; 29 percent said it was costing them more.

That is affecting a lot of families. More than 46 million
American households own a dog – more than any other animal,
besting cats by about 7.4 million households.

PAYING FOR YOUR PET’S HEALTH

The largest portion of a pet owner’s budget is simply
keeping the animals in good health. Total up those APPA figures
about surgeries and vet visits, and the average dog owner
reported spending $655 a year on healthcare, up by almost half
from a decade prior. And according to one survey by the
Veterinary Pet Insurance Co, 70 percent of pet owners said they
would spend “any amount” to save their pet’s life.

Wall Street has been taking note. Pharmaceutical giant
Pfizer’s recent spinoff of its animal-care division,
Zoetis, was an unqualified success. Its shares,
originally priced at $26, leapt 20 percent in their first day.
That made for the biggest IPO since Facebook. The
company’s products include an array of pet and farm animal
vaccines, anti-infectives and other medicines, like Revolution,
a flea and heartworm-battling potion for cats and dogs.

“Healthcare has been one of the most successful and dynamic
areas of pet care in the U.S.,” says Euromonitor’s Telford.
“Sales of healthcare products for pets increased by 14 percent
between 2009 and 2012, and I expect continued growth. It is not
unreasonable to think that the likes of Sanofi or
Merck could followsuit in spinning off their
animal health businesses.”

Other trends that Telford notes: “Premiumisation,” with
luxury food and treats consistently ramping up sales despite the
sluggish overall economy. Telford says sales of high-end cat and
dog food grew by 4 percent a year from 2007 to 2012, outpacing
lower-end brands.

Even Wal-Mart Stores Inc, the world’s largest
retailer, understands the importance of pleasing pooches. In
August 2012, it launched its own “ultra premium” dog food,
called Pure Balance, sold at Walmart stores in the United
States.

Pure Balance is an expansion on the company’s Ol’ Roy brand,
which was named after one of founder Sam Walton’s hunting dogs.
Walmart has said it sells enough dog food each year to fill an
Olympic-size swimming pool 2,050 times. Pet supplies are part of
the largest business at Walmart U.S., the grocery unit. Grocery
items (including dog food) accounted for 55 percent of Walmart
U.S.’s $264.19 billion in sales in fiscal 2012.

Meanwhile, Iams brings in more than $1 billion in sales each
year for Procter & Gamble Co. And Hill’s pet products,
such as the Hill’s Science Diet line of dog food, account for 13
percent of sales at Colgate-Palmolive Co.

In addition to pet food, observers also note increased
spending on pet insurance, to cope with the punishing cost of
veterinary procedures. Payments for pet-policy premiums grew by
an estimated 10 percent in 2012, to over $400 million a year.

The burgeoning business in pet care doesn’t surprise Bryson,
who is busy prepping 4-year-old Alvin for his big moment. If all
goes well, Alvin will win his group on Monday, and then battle
other breeds for Best in Show honors on Tuesday in the heart of
Madison Square Garden.

“People who love dogs will make huge financial sacrifices
for them,” says Bryson, whose first Best in Show victory as a
handler turned her into a blubbering mess of tears. “Real dog
lovers will put high-quality food in their dog’s dish before
they put it on their own table.”