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Here's exactly how much you'll pay your mortgage company over 10, 15, or 30 years

Sat, 02/23/2019 - 1:15pm  |  Clusterstock

  • When comparing a 15-year mortgage versus a 30-year mortgage, it helps to figure out how much you'll pay in total over time.
  • Using the standard mortgage calculation formula, we estimated how much mortgage borrowers will pay their mortgage providers over time.
  • Interest rates are critical to how much money a borrower will pay, but so is the time period.

Buying a house is one of the largest purchases many people will make over the course of their lives. And a mortgage will be one of the biggest loans a person will take out.

Monthly mortgage payments are generally calculated using a formula that combines the principal (the amount of money borrowed in the loan), the annual interest rate for the loan (what the lender charges you to borrow that money), and the term of the loan (the number of years it will take to pay the mortgage off).

The formula works backwards from the idea that each month, a borrower will be charged interest on the remaining balance of the loan, and then that balance will be reduced by the amount of the monthly payment. For a standard fixed-rate, fixed-term mortgage, we know how many payments the borrower will be making, and so we can figure out exactly how much they need to pay each month so the remaining balance of the loan is zero at the end of the term.

Using that basic mortgage payment formula, we can come up with some estimates for how much you'll end up actually paying your mortgage provider over time, based on some of the key parameters of the loan.

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The term of a loan is a huge factor in how much a borrower will pay in total. Shorter-term loans will have a higher monthly payment, but because there is less time for interest to compound, borrowers on a shorter-term loan will end up paying much less interest overall.

Indeed, author Chris Hogan suggested in his book "Everyday Millionaires: How Ordinary People Built Extraordinary Wealth — and How You Can Too" that long-term mortgages are a big reason why many people don't become rich.

Interest rates also make a big difference in how much a borrower will pay back in total. Higher rates will lead to higher monthly payments and more total interest paid on the loan.

Let's assume that a borrower is taking out a $250,000 loan under the following three term and rate scenarios:

  • A 30-year term and a 4.25% annual interest rate, which at the time of writing is listed as the mortgage purchase rate offered by Wells Fargo.
  • A shorter 15-year term and a 4.25% interest rate.
  • A 30-year term, but a higher 5% interest rate.

Using the standard mortgage payment calculation, the two 30-year mortgages will have a lower monthly payment than the shorter-term 15-year mortgage:

Read more: The most and least expensive places to live in America

But that higher monthly payment means accruing less interest over time and paying off the principal of the loan faster. Here's what the three different scenarios would have paid off over the first 10 years of the mortgage:

After 10 years, the 15-year mortgage would have a much lower outstanding principal balance than the 30-year loans, and the slightly higher interest rate would result in a higher outstanding balance for the 30-year loan at 5% interest:

The effect of mortgage terms and interest rates can be seen in the total amount paid back to the bank at the end of the 15- or 30-year term. The shorter term leads to much less interest being paid overall, and the slightly higher 5% rate eventually leads to about $40,000 more in interest over a 30-year term:

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US inequality is only getting worse, and the 'dynastic wealth' bemoaned by Warren Buffett may be one of the reasons why

Sat, 02/23/2019 - 1:00pm  |  Clusterstock

  • Income inequality has increased in the US over the years, and many consider generational wealth to be one of its key causes.
  • The fortunes of US family dynasties have been on the rise, and some rich families are taking advantage of new tax laws that make it more flexible for them to pass money on to their heirs.
  • Some billionaires are thinking twice about how they're tackling generational wealth; Bill Gates and Warren Buffett plan to give most of their money away through the Giving Pledge, instead of keeping it in the family.

The median American family owns just over $80,000 in household wealth, while 15 family dynasties own a combined $618 billion.

That's according to the left-leaning Institute for Policy Studies' Billionaire Bonanza report, which examined the growing concentration of wealth in the US by looking at 15 dynastically wealthy families from the Forbes 400 list and data from the Federal Reserve Survey of Consumer Finance.

"Each of these family's wealth comes from companies started by an earlier generation, either a parent or more distant ancestor," states the report. "Each of them also represents a wealth dynasty passing generation to generation free from interruption."  

Since 1982, the combined wealth of three families — the Waltons, the Kochs, and the Mars — increased by 5,868%, while the median household wealth over the same period decreased by 3%. The families' combined wealth totals $348.7 billion, quadruple the median wealth of US families.

Read more: The 25 richest American families, ranked

"A lot of folks don't like to acknowledge the big leg up they get in things like buying a house or avoiding significant student debt as a result of generational wealth," Josh Hoxie, director of the Project on Opportunity and Taxation at the Institute for Policy Studies, told Business Insider.

"That leads to big problems when other people who don't have generational wealth look around and wonder why they're so far behind," he continued. "The reality is that the top indicator for economic prosperity is not hard work or intelligence, it's the family you're born into."

Generational wealth is seen as a key contributor to the gap between the rich and the poor

From 1978 to 2012, the amount of wealth among the richest .1% of families in the US grew from 7% to 22%, according to a University of California, Berkeley study.

That figure nearly doubles to 40% when looking at the wealthiest 1% of American households, according to a paper published in 2017 by the National Bureau of Economic Research.

"Today's extreme wealth inequality is perhaps greater than any time in American history," Hoxie wrote in the Billionaire Bonanza report. "This is largely the result of rapidly growing wealth dynasties and a rigged economy that enables the ultra-wealthy to grow their wealth to never-before-seen highs."

In 2015, the income the bottom 99% of families took home was, on average, 26.3 times less than the top 1% of families, according to IRS data reported by the Economic Policy Institute, a nonprofit and nonpartisan think tank.

From 1980 to 2014, income doubled for the top 10% of earners, tripled for the top 1%, and quadrupled for the top .1%, according to The Quarterly Journal of Economics' "Distributional National Accounts: Methods and Estimates for the United States." 

Read more: Calls to 'abolish billionaires' raise eyebrows, but they've been a long time coming

In an attempt to even the playing field between the richest and poorest Americans, a number of wealth-tax proposals have been introduced in 2019. Rep. Alexandria Ocasio-Cortez suggested a 60% to 70% top tax rate for Americans earning $10 million or more. Sen. Elizabeth Warren introduced a plan to levy a 2% tax on wealthy Americans' assets over $50 million and 3% for assets over $1 billion. Sen. Bernie Sanders' "For the 99.8% Act" would impose a graduated scale for the estate tax that increases to a 77% rate for assets in excess of $1 billion.

And the idea of abolishing billionaires reached a boiling point with a column by Farhad Manjoo in the New York Times in early February.

New tax laws increase flexibility for passing down wealth

Passing wealth down from generation to generation usually happens through a trust.

Most families establish revocable living trusts (meaning they can be changed) as the centerpiece of an estate plan that becomes irrevocable (meaning they can't be amended) upon their death, Michael Rosen-Prinz, a partner in the Private Client Practice Group at McDermott, Will & Emery who works with ultra high-net-worth clients, told Business Insider. 

But recent tax reform has allowed for more flexibility in estate planning, Alicia Waltenberger, the director of wealth planning strategies at TIAA Institute, told Business Insider.

President Trump's Tax Cuts and Jobs Act doubled estate tax exemptions and gift tax exemptions. An estate tax is a tax on money or assets transferred upon the trustor's death, whereas a gift tax is imposed if the transfer occurs while the trustor is living. Several states have a separate state-level estate or inheritance tax.

An individual can transfer over $11 million in assets, and married couples more than $22 million, before being subject to federal estate taxes and federal gift taxes, according to Rosen-Prinz. The exemption amount is set to be halved at the end of 2025, and is subject to changes in new tax legislation, he said. 

"The IRS has made it clear that if the gift and estate tax exemption is reduced, it will have been a 'use it or lose it' situation," Rosen-Prinz said.

Sheltering taxes — methods to reduce one's tax liability — leaves more money for families to pass on to other family members, who can use it to grow their wealth if they choose.

Consider Sheldon Adelson, CEO of casino company Las Vegas Sands who has an estimated net worth of $35.3 billion. From 2010 to 2013, he passed on $7.9 billion to his heirs while escaping $2.8 billion in gift taxes, The Washington Post reported.

"Some families with substantial wealth are using lifetime gifts as seed funding for irrevocable trusts, and then selling interests in closely held businesses and real estate at a discounted value to those trusts to further reduce the value of their taxable estates," Rosen-Prinz said.

Read more: 7 strategies rich people use to pay less in taxes

"Gifting can be done for a variety of reasons," Waltenberger said, "including non-taxable reasons such as having the ability to see the enjoyment and use of the gifted assets now during lifetime, and taxable reasons such as shifting of assets expected to appreciate in the future, so that that appreciation happens in the hands of others, not us where it may be subject to potentially higher income tax rates and/or estate tax at some point."

These tactics are often viewed as the root of massive family wealth, widening the gap between America's rich and poor.

Some of the superrich are thinking twice about how they pass down wealth

The superrich are beginning to think twice about how they're passing wealth to their heirs, according to Rosen-Prinz.

"The previous generation's plan to just transfer as much money tax free down the family tree is being reconsidered in favor of a more nuanced approach based on the personalities and circumstances of the beneficiaries," Rosen-Prinz said.

Older generations may think about limiting the access their children will have to family wealth thanks to highly visible heirs and "trust fund babies" flaunting their wealth on social media, he added, and might include provisions to ensure that the trust can be modified in the future.

"Often, charities or 501(c)(4) social welfare organizations are included as additional discretionary beneficiaries — both to fulfill philanthropic wishes of the settlor and also as 'overflow valve' for additional wealth that may not further benefit the human beneficiaries of the trust," Rosen-Prinz said.

Or, the superrich could take a cue from high-profile billionaires Bill Gates and Warren Buffett.

Bill Gates, who has an estimated net worth of nearly $96 billion, and his wife, Melinda, created the Giving Pledge, in which wealthy individuals agree to donate the majority of their money. So far, 189 billionaires, or would-be billionaires, have joined.

The Gates themselves plan to leave only a fraction of their wealth to their children.

And Warren Buffett, the third-wealthiest person on the Forbes 400, pledged his entire fortune to charity and taxes. Buffett has been vocal about his efforts to reduce the vast wealth sitting in the hands of a few influential people.

"Dynastic wealth, the enemy of a meritocracy, is on the rise," Buffett said in 2007. "Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."

SEE ALSO: Bill Gates says the politicians proposing 70% income tax rates for the superrich are 'missing the picture'

DON'T MISS: Billionaires who hate Alexandria Ocasio-Cortez's 70% tax on the superrich are adamant it will hurt the economy — but history suggests otherwise

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NOW WATCH: What it's like to do your own taxes for the very first time

Rammed Earth Construction Techniques from Hive Earth @hive_earth #Ghana

Sat, 02/23/2019 - 12:58pm  |  Timbuktu Chronicles
DW in conversation with Joelle Eyeson founder of Hive Earth:

View this post on Instagram

A post shared by Hive Earth (@hive_earth) on Mar 5, 2018 at 6:54am PSTDW: What is the mission of your company Hive Earth?

Joelle Eyeson: Hive Earth is a construction company based in Accra, Ghana. I set it up with my business partner in 2016. I was able to bring my background in property management, and they brought their expertise in local materials and the local environment. The whole idea is that we build affordable and eco-friendly housing. We use locally sourced materials such as clay, laterite and granite chippings which are abundantly available in West Africa. More here

Take a look inside the best hotel in Europe, a boutique hotel in the heart of Paris with personal butlers, a hidden smoking room, and views of the Eiffel Tower

Sat, 02/23/2019 - 12:31pm  |  Clusterstock

  • U.S. News & World Report recently published their annual lists of top hotels around the world.
  • La Réserve Paris was ranked as the No. 1 hotel in Europe, followed by Hotel Sanders in Copenhagen and Hotel Eden in Rome.
  • The 40-room hotel opened in 2015, but has already received accolades due to its luxury suites, personalized amenities, and prime location.

La Réserve Paris Hotel & Spa is the best hotel in Europe.

U.S. News & World Report ranked the luxury hotel as the No. 1 hotel in Europe in this year's report. La Réserve Paris also previously received accolades from Condé Nast Traveller — including top hotel in Paris and Gold List status — along with a Trip Advisor five-star rating and Certificate of Excellence. 

Located in the well-known eighth arrondissement of Paris, the hotel exudes old elegance but is barely four years old. While it is furnished with antique decor, modern amenities make the grand hotel a state-of-the-art stay. As many travelers remain interested in boutique hotels, La Réserve Paris offers luxury resort perks in a small setting.

Read more: Millionaires are showing off their money differently than they used to, and it's led to the creation of 2 distinct luxury worlds

The hotel offers a spa, a pool, and many impressive dining options: two luxury restaurants, a wine cellar, and a la carte service. There's also a hidden smoking room with a cigar chest, contributing to recent trends of hotels' secret luxuries.

La Réserve Paris is one of multiple properties of the French hotelier Michel Reybier's group, including La Réserve Genève in Switzerland and La Réserve Ramatuelle, also in France. For the Paris hotel and spa, Reybier once again enlisted the help of star designer Jacques Garcia.

The hotel also notably achieved palace distinction, a status introduced by Atout France, otherwise known as the France Tourism Development Agency. According to the agency's statement, certain five-star hotels deserve additional recognition. La Réserve Paris is the smallest of the current 25 palace hotels.

SEE ALSO: Take a look inside the best hotel in the US, a Hawaiian resort with 7 swimming pools where a villa goes for $18,000 per night

NOW READ: Luxury travelers want more than ever before, and hotels are borrowing a tactic used by Netflix and Amazon to keep up

La Réserve Paris is located in a renovated mansion in the heart of France's capital city.

Source: La Réserve Paris Hotel & Spa, The Telegraph

In the 8th arrondissement, one of Paris' most prominent neighborhoods, the hotel sits in a prime location.

Source: Google Maps

La Réserve Paris is walking distance from Jardins des Champs-Élysées ...

Source: Google Maps

See the rest of the story at Business Insider

Warren Buffett says monster buybacks are in store for Berkshire Hathaway — and that could drive Bernie Sanders and Chuck Schumer crazy (BRK.B)

Sat, 02/23/2019 - 12:22pm  |  Clusterstock

Warren Buffett released his annual letter to shareholders on Saturday, and in it he said that his Omaha-based conglomerate, Berkshire Hathaway, planned to buy back more of its stock.

Buffett wrote it's likely, over time, that "Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value."

That prospect is likely to draw the ire of politicians like Senators Bernie Sanders and Chuck Schumer, who wrote in a New York Times op-ed earlier this month that corporate stock buybacks should be limited.

"At a time of huge income and wealth inequality, Americans should be outraged that these profitable corporations are laying off workers while spending billions of dollars to boost their stock’s value to further enrich the wealthy few," they wrote.

The senators argued public companies buying back stock exacerbates income inequality and impedes long-term economic growth, adding that they do not benefit the vast majority of Americans. 

When reached for comment, Justin Goodman, national press secretary for Senator Schumer, pointed Business Insider to a post Schumer wrote on Medium earlier this week responding to criticism of the proposal. A press contact for Senator Sanders did not respond to Business Insider's request for comment on Berkshire Hathaway's plans. 

But Berkshire isn't the only one planning to buy back large amounts of its stock. 2019 is expected to be another record year for stock buybacks, according to Bank of America Merrill Lynch. Last year, companies announced more than $1.1 trillion in share repurchases. 

Buffett and his vice chairman, Charlie Munger, are big fans of buybacks. He wrote that most of Berkshire's major holdings, like American Express, buy back their shares.

"We very much like that: If Charlie and I think an investee's stock is underpriced, we rejoice when management employs some of its earnings to increase Berkshire's ownership percentage."

Analysts said this quarter's guidance on share buybacks would particularly notable because the company's board of directors last summer loosened its policy for buying back stock. Buffett and Munger said they would authorize stock buybacks when the repurchase price fell "below Berkshire's intrinsic value."

In the third-quarter, Berkshire bought back nearly $928 million of its stock, at a price of about 1.35 times its third-quarter book value per share. Prior to the policy change, the company said it would not buy back its stock above 1.2 times book value per share.

Kai Pan, an analyst at Morgan Stanley, said 1.35 times book value per share could be the new "floor" below which Berkshire would consider the stock below its intrinsic value. 

After all, taking value into consideration has long been a core tenet of Buffett's investing philosophy. He wrote in his letter that repurchases should be "price-sensitive." 

He added: "Blindly buying an overpriced stock is value destructive, a fact lost on many promotional or ever-optimistic CEOs."

Read more of Markets Insider's Berkshire Hathaway coverage:

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Here are Warren Buffett's 15 biggest investments (BRK.B)

Sat, 02/23/2019 - 11:57am  |  Clusterstock

Warren Buffett's annual letter was released Saturday, and in it he listed Berkshire Hathaway's 15 biggest investments by market value.

Buffet said he and Berkshire Hathaway Vice Chairman Charlie Munger don't view the names as a "collection of ticker symbols – a financial dalliance to be terminated because of downgrades by 'the Street,' expected Federal Reserve actions, possible political developments, forecasts by economists or whatever else might be the subject du jour." 

Instead, they see them as "an assembly of companies that we partly own and that, on a weighted basis, are earning about 20% on the net tangible equity capital required to run their businesses" without employing excessive debt. 

Buffett called those returns "remarkable" and said they are "truly mind-blowing when compared against the return that many investors have accepted on bonds over the last decade – 3% or less on 30-year U.S. Treasury bonds, for example."

Below are Berkshire's 15 largest holdings ranked from smallest to largest market value at the end of 2018 (Note, Kraft Heinz, of which Berkshire owns 325,442,152 shares, is not included, because the conglomerate is part of a control group and must account for the investment on the "equity" method. Berkshire's Kraft investment has a cost basis of $9.8 billion and market value of $14 billion.): 

United Continental

Ticker: UAL

Shares: 21,938,642

% of company owned: 8.1%

Cost: $1.195 billion

Market value: $1.837 billion

USG Corporation

Ticker: USG 

Shares: 43,387,980

% of company owned: 31%

Cost: $836 million

Market value: $1.851 billion

Charter Communications

Ticker: CHTR

Shares: 6,789,054

% of company owned: 3%

Cost: $1.21 billion

Market value: $1.935 billion

See the rest of the story at Business Insider

Half of all startups expect to get acquired, but the number of companies that don't have a plan is growing

Sat, 02/23/2019 - 11:30am  |  Clusterstock

  • The proportion of US startup executives who expect their companies to eventually be acquired is 50%, according to a new study from Silicon Valley Bank.
  • That's a smaller proportion of respondents than last year.
  • More executives this year said they are not sure of their exit strategy.
  • The portion of US executives who expect to their firms to go public or remain private long-term remained stable.

A plurality of US startup executives expect to sell their companies down the road, but uncertainty over the future is growing, according to a new survey.

Around 50% of startup executives in the US expect to their firms to be acquired in the future, according to Silicon Valley Bank's US Startup Outlook report, published Wednesday. While that was still the predominant answer, it was down from 57% in 2018.

Nearly all of the decline can be attributed to one factor — a nearly corresponding increase in uncertainty among executives about their firm's long-term outlook.  Some 15% of executives said they didn't know what a realistic exit would be for their companies. That was up from 9% a year ago.

For its report, Silicon Valley bank surveyed 1,377 startup executives about their views of the business climate heading into 2019. The exit answers were in response to this survey question: "What is the realistic long-term goal for your company?"

While fewer executives expected their companies to be acquired and more were uncertain about their future, the portion of respondents who expect their firms to stay private long-term remained fairly stable. Some 17% of US respondents gave that answer in the latest survey, compared to 16% in 2018.

Similarly, the number of US executives who expect their companies to go public stayed the same. In both the latest study and in last year's, 18% of respondents said an initial public offering was a realistic goal for their firms.

Many think M&A activity won't change this year

In addition to asking executives about their long-term plans for their businesses, the bank asked them how they see the market for mergers and acquisitions changing this year. That question saw a similar change as did the one about executives' long-term goals. The portion of US respondents who expect to see more acquisitions declined by 8%, dropping to 42% in 2019 from 50% a year ago.

A plurality of US respondents in the latest survey expect M&A activity to stay the same this year. Some 45% in this year's report said they expect to see "no change" in such activity in 2019, up from 41% in last year's study.

Of the respondents in the latest report, 66% work in technology, 16% in healthcare, and 18% in other industries. The Executives who primarily work in the US comprised 59% of overall respondents to the survey. Executives who primarily work in China made up another 17% of survey takers. Those that work mainly in the UK, Canada, and other locations each comprised 8% of respondents. 

SEE ALSO: Investors used to balk at startups for software developers — but after Microsoft bought GitHub for $7.5 billion, they’re all in

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How two Eritrean brothers (the founders of Aptech Africa) built a solar power business in some of Africa riskiest markets

Sat, 02/23/2019 - 7:00am  |  Timbuktu Chronicles
James Courtright reports on the work of Aptech Africa:

Within an hour of landing in Nairobi, Kenya in July 2016, Metkel Zerai received word that a fresh round of fighting had broken out in Juba, South Sudan. “We were freaking out – we just had $2.2 million worth of [solar equipment] delivered,” he says. “That was our whole company, and Juba was being looted!”

As the booming East African solar market brings in significant foreign competition, Aptech Africa, a start-up founded by two Eritrean brothers, is holding its own against better financed firms in some of the continent’s riskiest markets...[more]

These 3 people have cracked the code to making major profits while working fewer hours per week. Here's how they did it.

Sat, 02/23/2019 - 12:01am  |  Clusterstock

Although a 40-hour workweek is seen as quite standard for many Americans, most people would rather be making more money while working fewer hours. Retiring early with plenty of cash to spare is a common financial goal and some people seem to have discovered the secret to building up their savings account without spending decades working a salaried job with a major time commitment.

Here are a few people who have cracked the code to making profits outside of the standard salary system.

After working in finance for 13 years, Sam Dogen wrote that he retired at 34 years old and he now lives entirely off of his passive income

In a 2018 article he wrote for CNBC, Sam Dogen said that at the beginning of his career he was working 70 or more hours per week, but he "escaped full-time work for good" 13 years later at the age of 34.  He wrote that one of his steps to success is that he's been saving and investing ever since he got his first job.

According to the CNBC article, he began putting away at least 50% of his income after taxes as soon as he got his first post-college job at an investment bank. He wrote that he used those funds to buy rental properties, stocks, bonds, and CDs (savings certificates with a fixed maturity date and interest rate) in order to build passive income streams. "Start your passive income journey as soon as possible because it takes a long time to build something significant," he wrote. 

In 2009, Dogen started a personal finance site called the Financial Samurai where he educates others about maximizing their income and productivity. And as his blog and profits from his investments and rental properties grew, Dogen wrote that he found himself making enough money to retire at age 34.

According to his CNBC article, Dogen and his wife don't have day jobs and they live entirely off of passive income. According to his blog, in 2017 he made about $211,000 in passive income alone. He also wrote that he and his family continue to save money by driving a car worth less than 1/10th of their gross income, never buying new clothes, and taking advantage of free activities in the city during weekdays. 

He later wrote that he only works about 25 hours a week on his blog as of 2018.

Timothy Kim said he immigrated to the US with just $500 and by the age of 31 he had become a self-made millionaire

So grateful for my blogging-for-income book that was released in December! . . . By God’s grace, and all of your support, it was the #1 best selling book in the “New Releases” category on Amazon for 4 weeks in a row! . . . I appreciate all of you who have shown support and your eagerness and enthusiasm for self-improvement by getting my book, especially those who took time out of their day to leave such thoughtful and kind reviews! Thank you! All glory to God! . . . #wordsintocash #bloggerlife #passiveincome #escape #ninetofive #financialsecurity #financialstability #financialindependence #thankyouLord #

$5 billion hedge fund LMR Partners poached Bank of America Merrill Lynch's top equity derivatives boss in the US

Fri, 02/22/2019 - 11:58pm  |  Clusterstock

  • The US head of equity derivatives at Bank of America Merrill Lynch quit this week after less than two years at the bank.
  • He's headed to LMR Partners, a $5 billion hedge fund launched in 2009 and run by former UBS traders.

Bank of America Merrill Lynch's top equity derivatives boss in the Americas is leaving after less than two years, and he's headed for the hedge fund LMR Partners.

After an eight-year run with Barclays, William "Bill" Hillegass joined BAML in 2017, heading up equity client solutions and running equity derivatives out of New York.

He quit the firm, Business Insider reported this week, and he's joining LMR Partners, a multistrategy fund founded and run by the former UBS traders Ben Levine and Stefan Renold, according to people familiar with the matter.

Hillegass, LMR Partners, and Bank of America declined to comment.

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Hillegass may have crossed paths with Levine and Renold at UBS, where he started his career in 2003. He left for Lehman Brothers in 2007 just before the financial crisis, followed by his run at Barclays, according to his LinkedIn profile.

LMR, which was founded in 2009 and has offices in Hong Kong, London, and New York, manages more than $5 billion in assets, according to its website.

A private-equity fund run by Goldman Sachs Asset Management bought a minority stake in the hedge fund last year, according to Reuters.

Hillegass will manage the portfolio out of the New York office, the people said.

He is one of a slew of sell-side equity derivatives traders to switch posts in the past year amid a rebound in the business and a war for talent.

Join the conversation about this story »

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Everything to know about the Florida spa at the center of the Robert Kraft sex scandal

Fri, 02/22/2019 - 6:36pm  |  Clusterstock

Orchids of Asia Day Spa in Jupiter, Florida, has become the epicenter of a large-scale human-trafficking and prostitution investigation involving multiple spas and massage parlors.

Patriots owner Robert Kraft was charged Friday with two counts of soliciting prostitution. He was allegedly a customer at Orchids of Asia Day Spa in Jupiter, Florida, which is about 20 miles from Palm Beach and 30 minutes from Donald Trump's Mar-a-Lago club.

Jupiter police said Kraft paid for sexual services at the spa and that there is video evidence of Kraft in both instances. Kraft has denied any illegal activity. So far, 173 people have been charged with crimes in the bust.

Police said women lived in the parlors and were coerced into having sex for money.

Read more: Reviews on an illicit massage website helped Florida police crack a massive sex trafficking and prostitution ring that Patriots owner Robert Kraft has been tied to

The spa offers services such as waxing, antiaging facials, acne treatment, and 11 different types of massages, including a "Tokyo Ultimate 4 Hand" massage.

Here's everything we know about the spa at the center of a prostitution scandal. 

SEE ALSO: NFL insider Adam Schefter says Robert Kraft 'is not the biggest name involved' in Florida prostitution ring

Orchids of Asia Day Spa in Jupiter, Florida, has become the center of a massive prostitution and human-trafficking bust involving multiple spas and massage parlors.

Source: Business Insider

Robert Kraft, the owner of the New England Patriots NFL team, was charged Friday on two counts of soliciting prostitution. He is accused of paying for sexual services at Orchids of Asia Day Spa. Police said there is video evidence linking him to the incidents.

Source: Business Insider

Kraft's arrest comes as part of a large-scale human-trafficking and prostitution bust in Florida involving multiple spas and massage parlors. Police said women lived in the parlors and were coerced into having sex for money.

Source: Business Insider

See the rest of the story at Business Insider

The 25 CEOs whose pay is most wildly out of sync with their company's performance

Fri, 02/22/2019 - 6:12pm  |  Clusterstock

  • Check out which 25 CEOs on the S&P 500 earn a salary that's higher than expected, given shareholder return.
  • The list appears in a report from As You Sow, a nonprofit focused on shareholder advocacy.
  • As You Sow also calculated the ratio of CEO pay to median employee pay.
  • Ronald F. Clarke, CEO of Fleetcor Technologies Inc., took the top spot: He makes about $53 million a year, which means he's overpaid by 263%.

Most CEOs make a lot of money. No surprise there.

In fact, the typical CEO made a whopping 312 times their median employees' salary in 2017, according to the Economic Policy Institute.

But some chief executives earn salaries that are seemingly disproportionate to their company's shareholder returns. A new report from As You Sow, a nonprofit focused on shareholder advocacy, ranks the most "overpaid" leaders on the S&P 500.

To figure out who's overpaid, As You Sow calculated the ratio of CEO pay in 2018 to total shareholder return at each company, as well as the companies where the most shares were voted against the CEO pay package (the first ratio was weighted double).

Ronald F. Clarke, CEO of Fleetcor Technologies Inc., which makes corporate payment products, took the No. 1 spot. According to the analysis, Clarke is overpaid by 263%. His expected pay based on Fleetcor's performance is $14,483,985; his actual pay is $52,643,810. Per the report, 86% of shareholders voted against Clarke's pay package.

Because there was a change in CEO at a few companies (Oracle Corp., The Walt Disney Co., TransDigm Group, Inc., and Discovery, Inc.), the salary of the higher-paid CEO was counted.

Below, we've listed the 25 most overpaid CEOs, as well as each of their salaries, the median employee salary at their company, and the pay ratio.

Read more: A new study found CEOs at America's biggest companies raked in $19 million on average last year, while workers' pay barely budged

25. Randall Stephenson, AT&T, Inc. 

CEO pay: $28,720,720

Median employee pay: $78,437

Pay ratio: 366:1

24. Reed Hastings, Netflix, Inc.

CEO pay: $24,377,499

Median employee pay: $183,304

Pay ratio: 133:1

23. Paal Kibsgaard, Schlumberger NV

CEO pay: $20,759,340

Median employee pay: $88,604

Pay ratio: 234:1

22. Brenton Saunders, Allergan Plc

CEO pay: $32,827,626

Median employee pay: $94,064

Pay ratio: 349:1

21. Brian Roberts, Comcast Corp.

CEO pay: $32,520,224

Median employee pay: $71,006

Pay ratio: 458:1

20. Ari Bousbib, IQVIA Holdings, Inc.

CEO pay: $38,029,517

Median employee pay: $97,997

Pay ratio: 388:1

19. Richard B. Handler, Jefferies Financial Group, Inc.

CEO pay: $21,787,285

Median employee pay: $44,584

Pay ratio: 489:1

18. Leonard S. Schleifer, Regeneron Pharmaceuticals, Inc.

CEO pay: $26,508,058

Median employee pay: $123,418

Pay ratio: 215:1

17. Mark D. Okerstrom, Expedia Group, Inc.

CEO pay: $30,720,457

Median employee pay: $71,696

Pay ratio: 428:1

16. Jeffrey A. Miller, Halliburton Co.

CEO pay: $23,078,364

Median employee pay: $79,636

Pay ratio: 290:1

15. Debra A. Cafaro, Ventas, Inc.

CEO pay: $25,254,607

Median employee pay: $88,630

Pay ratio: 285:1

14. James Cracchiolo, Ameriprise Financial, Inc.

CEO pay: $23,900,309

Median employee pay: $107,082

Pay ratio: 223:1

13. Gary A. Norcross, Fidelity National Information Services, Inc.

CEO pay: $29,141,610

Median employee pay: $44,556

Pay ratio: 654:1

12. Stephen Kaufer, TripAdvisor, Inc.

CEO pay: $47,933,462

Median employee pay: $99,643

Pay ratio: 481:1

11. David M. Zaslav, Discovery, Inc.

CEO pay: $42,247,984

Median employee pay: $80,858

Pay ratio: 522:1

10. E. Hunter Harrison, CSX Corp.

CEO pay: $151,147,286

Median employee pay: $98,697

Pay ratio: 1531:1

9. Margaret H. Georgiadis, Mattel, Inc.

CEO pay: $31,275,289

Median employee pay: $6,271

Pay ratio: 4,987:1

8. Brian Duperreault, American International Group, Inc.

CEO pay: $43,086,861

Median employee pay: $64,186

Pay ratio: 671:1

7. W. Nicholas Howley, TransDigm Group, Inc.

CEO pay: $61,023,102

Median employee pay: $46,742

Pay ratio: 1,306:1

6. Robert Iger, The Walt Disney Co.

CEO pay: $36,283,680

Median employee pay: $46,127

Pay ratio: 787:1

5. Stephen Wynn, Wynn Resorts Ltd.

CEO pay: $34,522,695

Median employee pay: $44,437

Pay ratio: 777:1

4. Dirk Van de Put, Mondelez International, Inc.

CEO pay: $42,442,924

Median employee pay: $42,893

Pay ratio: 990:1

3. Hock Tan, Broadcom, Inc.

CEO pay: $103,211,163

Median employee pay: NA 

Pay ratio: NA

2. Mark V. Hurd/Safra Catz, Oracle Corp.

CEO pay: $81,562,244

Median employee pay: $89,887

Pay ratio: 907:1

1. Ronald F. Clarke, Fleetcor Technologies Inc

CEO pay: $52,643,810

Median employee pay: $34,700

Pay ratio: 1,517:1

SEE ALSO: Regular workers now have to work for 167 years to make as much as CEOs do in one

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Twitter co-founder Ev Williams has stepped down from the $24 billion company's board (TWTR)

Fri, 02/22/2019 - 5:45pm  |  Clusterstock

  • Twitter cofounder and former CEO Evan Williams will step down from the public company's board of directors, the company announced Friday.
  • Williams, who is CEO of Medium, said he stepped down from Twitter's board to pursue other projects.
  • He ran the company as CEO from 2008 to 2011 after reportedly leading a coup against then-and-now CEO Jack Dorsey.

Evan Williams, who ran Twitter as CEO for two years before founding and running Medium, has stepped down from Twitter's board of directors after 13 years. The company announced his departure in a filing Friday.

“It’s been an incredible 13 years, and I’m proud of what Twitter has accomplished during my time with the company. I will continue rooting for the team as I focus my time on other projects,” Williams said in a statement.

Williams, who is CEO of Medium as well as a partner at Obvious Ventures, has not always seen eye-to-eye with his cofounder and current Twitter CEO Jack Dorsey. Williams reportedly led the coup which led to Dorsey stepping down from the helm back in 2008.

Read more: The Evolution of Ev: The creator of Twitter, Blogger, and Medium has a plan to fix the mess he made of the internet

Williams then took over as CEO and held the role until 2010, when he was replaced by Dick Costolo, who ultimately took the company public in 2013.

After Twitter posted its public filing, Williams confirmed the news on none other than 

I'm very lucky to have served on the @Twitter board for 12 years (ever since there was a board). It's been overwhelmingly interesting, educational—and, at times, challenging.

— Ev Williams (@ev) February 22, 2019

Dorsey followed up with his own kind words and emoji love.

I appreciate you, Ev! You’re the reason I joined Odeo in the first place. I’ve learned so much from you since that crazy interview you and @Noah put me through. We’re going to miss your voice in our board conversations. ❤️

— jack (@jack) February 22, 2019


SEE ALSO: $1 billion video-conferencing company Zoom is aiming for an April IPO

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MoviePass lays off its entire business-development team as the company continues to tailspin

Fri, 02/22/2019 - 5:10pm  |  Clusterstock

  • The three-person business-development team at MoviePass was laid off on Thursday, multiple sources told Business Insider.
  • This is the latest in a string of departures at the company as several employees, including some on the management level, have resigned or been let go in the last month.
  • The salaried staff is now about 50 people.

The business-development team at MoviePass was laid off on Thursday, multiple sources familiar with the decision told Business Insider.

The loss of the Los Angeles-based, three-person team — who were given the news by MoviePass CEO Mitch Lowe — is the latest in a string of departures at the movie-ticket subscription company. In the last month, several employees, including some on the management level, have resigned or been let go, the sources told Business Insider. The salaried staff is now about 50 people (at the end of 2018, there were about 60 staffers, at its height it was about 80).

These layoffs came on the heels of MoviePass' parent company, Helios and Matheson Analytics (HMNY), being kicked off the Nasdaq earlier this month. It had failed to meet the Nasdaq's listing standards by trading at less than $1 per share since July. The stock price crashed as HMNY sold new shares to offset hundreds of millions of dollars in losses.

Read more: MoviePass has been hit with a lawsuit from subscribers alleging it's a "bait and switch" scheme

At the time of the delisting, HMNY said in a statement that the "delisting has no effect on the day-to-day business operations of HMNY or its subsidiaries, including MoviePass and MoviePass Films."

But the continued layoffs and departures tell a different story.

Employee morale has been low for months. Product manager Eric Jeng sent a scathing letter to the entire staff when he resigned in January, blasting management, particularly for how they responded to Business Insider's reporting on MoviePass employee allegations of inappropriate conduct by a contractor.

MoviePass did not respond to a request for comment.

SEE ALSO: Former Oscar producers say the Academy should move the telecast to January — before the 14 other award shows make everyone exhausted

Join the conversation about this story »

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An executive coach uses rocks, pebbles, and sand to explain time management to new CEOs

Fri, 02/22/2019 - 4:35pm  |  Clusterstock

  • Time management is difficult to master, but is critical for productivity.
  • One executive coach has a helpful analogy involving rocks, pebbles, and sand that can drive home the point of effective time management.
  • The takeaway: By taking time to address our most important goals, the smaller items on our to-do list will fall into place around them.

Time management is one of the most difficult things to master at work, whether you're an intern or a CEO.

Alisa Cohn knows that firsthand — she's an executive coach who teaches leadership and business strategy to entrepreneurs.

Cohn said when first-time CEOs ask her for advice on time management, she responds with an analogy involving, rocks, pebbles, and sand. And it's a helpful piece of advice for anyone who struggles to find enough time in the day to get things done.

Here's how it goes: A professor presents a class with a gallon-size glass jar he says he's trying to fill up. He brings out a platter of large, fist-sized rocks and dumps them into the jar until they reach the top.

He asks the class if the jar is full, to which they naturally reply, yes.

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Then, the professor brings out a bowl of pebbles, and proceeds to pour them into the jar. He shakes the jar until the pebbles settle in all the spaces between the big rocks. He asks again if the jar is now full, to which the class responds yes. 

Lastly, the professor reveals a bucket of sand, which he pours into the jar until every nook and cranny is occupied. The jar finally appears full — until the professor pours a bottle of water into the jar.

"Now it's full," he says, before revealing the moral of the story: "If we had put the sand in first, would there have been any room for the big rocks?"

It's an old story that was popularized in part by speaker and management expert Stephen Covey, author of "The 7 Habits of Highly Effective People."

As Cohn explains, each of the materials in the story represents tasks of varying importance in your workday: The big rocks are your major goals and strategic initiatives, the pebbles are shorter-term goals of lesser importance, and the sand is minor tasks that aren't essential to your success. Meanwhile, the water is the distractions that prevent you from getting any work done at all.

Cohn said that by taking time to identify what your "big rocks" are, the smaller tasks will fall into place around them, like the rocks in the analogy. On the flip side, you can easily get sidetracked by email chains or choosing the perfect font for a report — the pebbles and sand — if you lose sight of your overarching objectives. 

"You can't work on those if you're inundated by the day-to-day little minutiae of the day," she told Business Insider. "So when you're looking at your week, it's really helpful to figure out, when am I going to block out a couple hours, maybe two or three times a week, to really do that reflection, to have a sacred time that you can work around?"

Read more: An NYSE exec who spent a week resisting email for 7 hours a day quickly caved to her inbox, but took away a productivity strategy she uses to this day

The big rocks are the hardest to conceptualize, as they are often abstract and wide in scope, like the mission of a company or its yearlong growth goals. A common trap executives fall into, Cohn said, is focusing so hard on completing smaller tasks that they put off the larger, more consequential ones that would ultimately improve the business and make their lives easier.

"Let's say the head of marketing is doing all the marketing presentations and all the work himself," Cohn said. "Why? Because he hasn't stopped and done the big rock of hiring a really great director to do all the work."

"You will never get out of that mode if you don't sit back and say, 'I've got to do the important work here.'"

SEE ALSO: An NYSE exec who spent a week resisting email for 7 hours a day quickly caved to her inbox, but took away a productivity strategy she uses to this day

DON'T MISS: I answered an AI-powered survey that revealed my innermost motivations, and immediately understood why companies pay thousands for employees to take it

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Apps are reportedly telling Facebook how much users weigh and when they're menstruating (FB)

Fri, 02/22/2019 - 4:22pm  |  Clusterstock

  • Some 11 popular apps are sharing the highly personal data they collect with Facebook, The Wall Street Journal reported Friday.
  • Among the data the apps shared with Facebook were users' weight and whether they were menstruating, according to the report.
  • The apps generally didn't give users an easy way to opt out of such sharing and many didn't explicitly disclose what data they were uploading to Facebook.
  • Facebook bars developers from sharing certain sensitive data with it ,and deletes such information when it finds it, a spokeswoman said.
  • But sharing of app data generally is a standard industry practice, she said.

Some of the most popular smartphone apps are uploading to Facebook highly personal information about their users, including their blood pressure and weight, what house listings they were looking at, and whether they were menstruating or pregnant, without users' explicit knowledge or consent, The Wall Street Journal reported Friday.

The Journal found that at least 11 apps were transferring such sensitive data to Facebook; they included Flo Health's Flo Period & Ovulation Tracker, Move's, and Instant Heart Rate: HR Monitor. All of the apps named by the Journal — and thousands of others besides — include code from Facebook that allow their developers to track how people are using them and use that information to target ads at them.

The apps are transferring data to Facebook regardless of whether the individual users log into the app via the social network or are even members of it, The Journal reported. None of them gave users an obvious way to block Facebook from getting their data, according to the story. Many of them didn't explicitly disclose to users what information they were sharing with Facebook, according to the report.

The practices may put the developers and Facebook in trouble with regulators in the United States and Europe. Following The Journal's report, New York Gov. Andrew Cuomo reportedly ordered an investigation into apps sharing sensitive information with Facebook.

That may only be the start. The Federal Trade Commission has in the past cracked down on companies whose actual privacy practices differed significantly from what they disclosed to their users. Meanwhile, Europe's new General Data Protection Regulation typically requires companies to gain users' explicit consent before collecting or sharing their personal data.

The company is already under regulatory scrutiny after a series of mishaps that came to light last year, including the leak of records to Cambridge Analytica, the data firm linked to President Trump. The Journal's report comes as the company is reportedly negotiating with the FTC over the size of a fine related to that massive data leak.

Read this: Facebook is reportedly considering paying a record multibillion-dollar fine to settle the FTC's investigation into its privacy practices

Facebook's terms bar the sharing of sensitive data

Facebook's terms of service require developers that use its code to make clear what information they are sharing with the social network, company spokeswoman Nissa Anklesaria told Business Insider. They also bar app makers from sharing certain sensitive data with Facebook. Facebook looks for and deletes such data when the company finds it, she said.

But generally, the practice of apps sharing data with Facebook for the purpose of advertising to users is nothing unusual or untoward, Anklesaria said.

"Sharing information across apps on your iPhone or Android device is how mobile advertising works and is industry standard practice," she said.

Several of the developers mentioned in The Journal's report changed their privacy policies or data sharing practices after being contacted by the newspaper. For example, BetterMe, maker of BetterMe: Weight Loss Workouts, updated its privacy policy to make more explicit what information it shares with Facebook and why.

SEE ALSO: Mark Zuckerberg once suggested that a Facebook user's data was worth 10 cents a year

Join the conversation about this story »

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United is doubling down on its business class offerings — and that could be good news for investors (UAL)

Fri, 02/22/2019 - 4:18pm  |  Clusterstock

  • United is slowly adding to its fleet of business class cabins and lounges.
  • The premium upgrade market is huge, and selling more to these customers could be good news for United's stock price, Credit Suisse said Friday. 
  • United's hubs in premium cities like San Francisco, New York, and Chicago should also help it fill the luxury seats. 

United Airlines's business class — branded as Polaris — might be the best in the industry.

It's wowed Business Insider reviewers with everything from its posh airport lounges, to comfortable seats, and even luxury amenity kits. And now, Wall Street appears to be on board too.

In a note to clients Friday, Jose Calado, an analyst at Credit Suisse, said the company's premium push could be good news for the stock.

"With operational reliability on the mend, UAL is now going all-in with its premium push to carve out a greater slice of this highly lucrative market," he said. "Today UAL has an extremely competitive biz-class product (ground & onboard) with its Polaris concept, and is increasing supply to satisfy customer demand."

Read more: United Airlines is retrofitting its fleet for more high-fare travelers in a bid to take down Delta

Calado was already one of the most bullish analysts on the stock, and now he's raised his price target even further, to $113. At Friday's prices of $89 per share, that could reflect a 26% upside for shareholders.

"The focus on premium seating has been a successful strategy for DAL and is an important driver of its current revenue (and margin) premium," Calado said. "Considering that UAL’s hub geography is skewed to even bigger premium markets (San Fran, LA, NYC, Chicago, Houston), these moves by United have the potential to close that revenue and margin premium over the long-run "

Credit Suisse isn't the only firm hoping premium offerings can help airlines eke out extra profits on their balance sheets.

Southwest, known for its open seating policy, could bring in an extra $1 of earnings per share per year if it were to change up its seating process. That's according to JPMorgan's Ryan Brinkman, who admitted earlier this month that while Southwest has said no changes are imminent to its famous policy, he's begun to "opine on the feasibility and potential profitability of seat monetization" at Southwest.

SEE ALSO: The United Airlines app has a new feature that could be a game-changer for delayed travelers

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A mistake on Google is causing people to freak out that Nigeria's currency is soaring

Fri, 02/22/2019 - 3:45pm  |  Clusterstock

  • Nigeria is going to the polls on Saturday.
  • Ahead of the election, an error on Google is showing the country's currency to be more than twice as valuable as it really is.
  • The error has caused a stir on Twitter.
  • Watch the Nigerian naira trade live.

Nigeria is going to the polls Saturday to vote in an election that pits President Muhammadu Buhari, who is seeking a second term in office, against former Vice President Atiku Abubakar and other challengers. But ahead of the election, an error on Google is causing a stir among Nigerians in the Twittersphere.

A Google search shows the Nigerian naira to be trading at 184 per US dollar, nearly twice as strong as its actual value of 362. A quick look at the chart, however, shows the currency at the correct value.

Still, that hasn't stopped people from excitedly weighing in on Twitter.

This isn't the first time the currency's value has been wrongly displayed on Google. Last March, a similar error occurred, with a Google search showing the naira's exchange rate at 182.16 per US dollar. At the time, it was trading at about 360 per dollar.

Google did not immediately respond to a request for comment.

Join the conversation about this story »

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Car companies are saying goodbye the sedan — but there are still some great ones on the market

Fri, 02/22/2019 - 3:42pm  |  Clusterstock

  • Automakers are discontinuing sedans.
  • In general, automakers are ditching passenger cars in the US.
  • SUVs may be surging, but there are still plenty of great sedans on the market.
  • We've driven many four-doors over the past few years.
  • Here are 12 of our favorites.

One of the big stories in the car business over the past two years has been the realignment of sales in the US. Pickup trucks have always done well, but as the market was setting records in 2016 and 2017, SUVs were moving up while sedans were moving down.

Ford announced last year it would no longer invest in passenger cars for the US markets, and General Motors has been existing car-heavy markets for years, most recently selling its Opel division in Europe. Fiat Chrysler Automobiles got on the trend earlier, transforming car plants into SUV plants.

So four-doors aren't the be-all and end-all products they once were, for both mass-market and luxury brands. But for luxury brands in particular, mainstays such as the BMW 3-Series and the Mercedes S-Class have been watching as their SUV counterparts capture new buyers.

Does that mean that the sedan is truly dying? Not entirely. Ask anybody in the industry, and they'll tell you that Toyota Camrys and Honda Accords are still important vehicles. Audi continues to take four-doors seriously. Yet it's also clear that a customer can now start out with a small SUV and work his or her way all to a big one, and never look twice at a sedan.

Too bad, as there are some great ones for sale. We rounded up a dozen of the best:

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Kia Stinger

Here's what I had to say about the $52,000 Business Insider Car of the Year for 2018 in our review:

The Stinger takes things to a whole new level. This is easily the best car Kia has ever made, but more than that, it's among the best cars of its type that I've driven. The comparison that jumped immediately to mind was the Alfa Romeo Giulia Quadrifoglio, a 505-horsepower beast that was a finalist for Business Insider's 2017 Car of the Year.

BMW 7-Series

We were impressed enough the say in our review that the $90,000 bimmer is "easily the finest 7 Series that BMW has ever built."

Plus, we named it a finalist for our 2015 Car of the Year. The new 7-Series is basically incredible. Crammed with technology and capable of BMW-level performance and pure cruising comfort, it has reset expectations for what is probably BMWs history least-loved car.

The 7-Series is getting a major update for 2019.

Audi A4

In our review of a $52,000 tester, Business Insider's Ben Zhang wrote that the "Audi A4 is everything you could want in a modern compact luxury sedan," adding that "it's the best car Audi has ever made."

The A4 was a finalist for BI's 2017 Car of the Year. It was also one of those cars that we unanimously adored. We literally couldn't find anything wrong with it. Nothing. 


See the rest of the story at Business Insider

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