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Some investors buy the "Dogs of the Dow"--the stocks with the 10 highest dividend yields among the 30 Dow Jones industrials--at yearend because they tend to be the next year's best performers. The 12/31/01 Dogs fell 10.3% in price year-to-date through Nov. 22. The S&P 500 Index sank 18.7%. Had the new dogs been chosen Nov. 22, General Electric (GE) and Honeywell (HON) would replace ExxonMobil (XOM) and Merck (MRK); Philip Morris (MO) would bump Eastman Kodak (EK) from the top spot.

Sure, you did the right thing by setting up 529 college savings plans for the kids. How could you have known your capital was about to get mauled by the bear market? At least there's a chance for some tax savings to salve those financial wounds and, in effect, start over.

If what's left in the account is less than the total invested, you can withdraw all of it. No federal taxes or penalties are due because there are no earnings. You can't take a capital loss, but the Internal Revenue Service will allow a miscellaneous itemized deduction. Of course, that won't do much unless all such deductions add up to more than 2% of your adjusted gross income. And if you're taking a loss, better to wait 61 days before opening a new 529--otherwise the IRS might consider it a rollover.

For those unhappy with their initial 529 choice, this could be the best opportunity to change. Of course, a write-off isn't as good as a profit. But, hey, this is the school of hard knocks. Tired of headphones? Blow up the sound from your portable MP3 or CD player with inflatable speakers. They run off an AC adapter or batteries and deflate to fit a jacket pocket or laptop case. Get them for $50 a pair at Bloomingdale's, Discovery Channel stores, and ellula.com. Smaller ones that look like Budweiser cans are $29 at budshop.com. Here's a little yearend getaway. Spend two nights each at the Fairmont Hotel in San Francisco and the Sonoma Mission Inn & Spa in the Sonoma Valley and you also get the use of a new Porsche. At $7,990, the package includes champagne, spa treatments or golf, a picnic lunch, and valet parking. The deal's good only through Dec. 31.


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