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JUNE 12, 2006
Edited by Monica Gagnier COLLEGE SAVINGS Take Your 529 On The Road It's a good idea to shop for a 529 college savings plan, but many people look no further than their home state. The reason: Twenty-six states and the District of Columbia offer residents tax breaks for contributing to their plans. Starting in 2007, Maine and Kansas will become the first to allow residents to claim a deduction -- of up to $250 per beneficiary in Maine and up to $6,000 per couple in Kansas -- for contributions to any 529. Pennsylvania and four other states are weighing similar measures. But most states "are likely to resist because it would weaken their own programs" if they allow a tax deduction for other states' plans, says Joseph Hurley of savingforcollege.com. By Anne Tergesen 
STOCKS Risky Business Wall Street has concocted all manner of indicators to divine which stocks will do well. But most rely on the numbers that companies report each quarter about their past performance. Professor Feng Li of the University of Michigan's Ross School of Business wanted a measure that was more forward-looking. He found it in the section of annual reports where management discusses the challenges for the coming year. Li tried an experiment. Assisted by a computer, he counted up the number of times that words such as "risk," "risky," "uncertain," and synonyms appeared in the annual reports of every nonfinancial company from 1993 to 2004 -- 34,180 reports in all. Then he compared each year's total with that of the prior year. He discovered that a big jump in words related to risk is usually followed by poor share performance. A model portfolio that shorted equal amounts of stocks with the biggest jumps in the number of risk words and bought stocks with the smallest changes would have outperformed the Standard & Poor's 500-stock index by 6% a year since 1995. Not a bad return for word counting. By Aaron Pressman   LIFE INSURANCE How Family History Hurts When buying life insurance, it's hard to qualify for the lowest rates if your parent was diagnosed with cancer before age 60. That's why Byron Udell, chief executive of online insurance broker AccuQuote, recommends AIG American General to customers with a family history of cancer. Among insurers with the most competitive rates, AIG American General is the only one that doesn't use this as a risk factor when underwriting policies, Udell says. In August, however, that will change. Right now, a healthy 40-year-old male whose parent died of cancer before age 60 can get a $1 million, 20-year term life insurance policy from AIG American General for $720 a year. Udell says the rate is expected to rise to $1,230. To get today's low rates, those who meet the underwriting standards must get an application to AIG American General by Aug. 6. By Anne Tergesen COLLEGE SAVINGS 
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