When gift cards go under
You might want to rethink giving gift cards this holiday season, said Alina Tugend in The New York Times. Companies “make millions of dollars selling cards that are never or only partially used.” Worse, this year many consumers have discovered that those credits can become worthless when a store goes belly up. About $60 million in Sharper Image gift cards were rendered null when the company filed for bankruptcy protection last year, according to research and advisory firm TowerGroup. Linens ’n Things, meanwhile, won’t honor cards sold after Oct. 17, when its going-out-of-business sale began. “If you bought one before that, you can still use it—if you can still find an open store.” Some gift-card websites, including Leveragecard.com and Giftcardrescue.com, now let buyers protect themselves by swapping cards or being reimbursed. Of course, there’s an easier alternative: cash.
Honda revs for recovery
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A global sales slump has sent most automakers into a tailspin, said Jay Palmer in Barron’s. When the economy does recover, however, Honda is best positioned to surge ahead. “The stock is as close to being a blue chip as exists in the auto industry today,” says John Casesa, managing partner of New York’s Casesa Strategic Advisors. Honda’s stock hasn’t escaped the industry-wide pileup, but its sales have held up better than those of its peers. The Japanese automaker is a “standout” thanks to “fuel-thrifty cars, flexible assembly plants, and advanced technology.” Its price-to-earnings ratio is also the lowest it’s been in nearly a decade. “Any investor with a long-term view should consider its stock whenever signs start to emerge of an upturn in the auto industry.”
Investing according to Islam
Now “might be a good time for investors to pick up a copy of the Koran,” said Frederik Balfour in BusinessWeek. Because Muslims must avoid “excessive debt” and charging interest on loans, portfolios that adhere to Islamic law have mostly dodged the credit crunch. Besides giving “Islamic mutual funds a lift in recent months,” the strategy’s built-in security has prompted some non-Muslims to move money into such funds as Saturna Capital’s Amana Funds. The Bellingham, Wash., firm’s two funds were recently down 27 percent and 33 percent—not bad, compared to the 41 percent drop for the S&P 500. Still, Islamic investors will hardly be immune to economic slumps. Islamic banks “tend to have more real estate assets than Western banks do.” If home prices in the Gulf region take a tumble, “there could be trouble,” says Mohamed Damak, a credit analyst at Standard & Poor’s.
