A Financial Revolution
In his book, You Can Be a Stock Market Genius
, Joel Greenblatt reviews a number of special situations that provide opportunities for significant profit potential. Mr. Greenblatt also tackles the question that every stock investor asks - how many stocks do I need to own to have a well diversified portfolio?
The objective of diversification is to reduce the portion of a portfolio's risk not attributable to the stock market's overall movements. Examples of this type of risk include when a product line doesn't sell well, a company cooks the books
, or a company misses earnings. Based on statistics, owning two stocks reduces this risk by 46%. Four stocks reduces nonmarket risk by 72%. Eight stocks cut your risk by 81%. Sixteen gives you 93% protection, 32 provides 96%, and 500 cuts your risk by 99%.
The result: Once you own eight stocks in different industries (and that part is key!), the benefit of adding more stocks in an effort to reduce nonmarket risk is minimal.
But what about reducing market risk? Adding other types of investments that have a low correlation to the stock market - REITs
, preferred shares
, royalty trusts
- can help you cut market risk.
There are some excellent posts on this week's carnivals. Money Blog Network
hosts the Carnival of Personal Finance
. I recommend the following posts:
Retire at 30 hosts the Carnival of Investing. Check out these posts:
Mighty Bargain Hunter hosts the Festival of Frugality. My favorite is:
In about 20 minutes I'll be heading to the airport to catch a flight to Central America. I'll be "off the grid" for most of the week and unable to post.
[Update: I'm back. Contest ended / details deleted.]
Every month, the University of Michigan's Tozzi Financial Center compiles a list of 100 stocks that "can blow holes in your portfolio."
The list is built by analyzing value, momentum, quality, predictability, and "other" factors. The list isn't always right on, but it has a good track record. If you own one of the stocks on the list, I would advise doing some additional due diligence.
The Center's other monthly report is the Value 40
. Again, the record isn't perfect, but it's a great place to look for investment ideas.
The Internet has brought us many great things (including A Financial Revolution
). One of the benefits of the Internet is the ability to research products and prices with a few keystrokes and clicks. Comparison sites like Price Grabber
, My Simon
, and others allow consumers to read reviews from people that use the product or service and helps compare prices at leading (and lagging) online stores.
Since I’m in the market for a GPS navigation system, I decided to compare the comparison sites. Here are the rules: I searched for the Garmin StreetPilot i5
on each of the sites, rated the sites on three factors – ease of use, lowest price, and other features (e.g., reviews, price alerts) – and then averaged the ratings for a final score.
|Site||Sellers||Score||Best Price (all/trusted retailer)||Notes|
|NexTag||27||4.5||$358/$358||Allows you to set price alerts|
|Yahoo! Shopping||25||4.25||$358/$358||Allows you to set price alerts|
|PriceRunner||29||4.0||$347/$362||Allows you to set price alerts|
|MSN Shopping||33||3.5||$358/$358||Does not include shipping charges|
|Become.com||4||3.3||$358/NA||Few merchants and no store reviews, but a good site for finding research|
|Smarter.com||23||2.8||$358/$367||The same merchants are approximately $10 higher at this site|
|Froogle||180||2||-||Included results for other products as well as ridiculously low prices|
Overall, there wasn't a great deal of difference between the sites scoring 3.5 or better; it generally came down to ease of use (e.g., how hard was it to sort on price including shipping.) I wanted to try the price alert feature so I set up a price target of $345 on both NexTag and Yahoo! Shopping. Now I wait...
has an article about what makes a successful budget. Here are their top ten features of a successful budget:
- Categories that fit your personal situation and your spending habits, not somebody else's.
- Accurate income projections.
- Enough categories to give you a meaningful picture of where your money goes and where you might be able to cut costs, but not so much detail that tracking is a chore that you'll soon tire of.
- Inclusion of expenses that don't occur on a monthly basis, such as auto maintenance, homeowners insurance, personal property taxes, service contracts, etc.
- Regular review of categories to determine if you need more or fewer, review of expenses, and brainstorming about ways to trim costs in each category.
- Cash expenditure tracking and recording. Cash spending is the biggest leak in most budgets. Cash disappears quickly and if you don't write down everything you spend it on, you'll have a distorted look at your spending.
- A line item for savings so you treat a contribution to your savings account just as you would a bill you owe.
- Realistic written goals. Budgeting isn't about tracking your costs, it's about setting financial goals (saving for a downpayment on a house, buying a new car, getting out of debt, saving for retirement, putting your kids through college, traveling, etc.) and finding ways to meet them. Without goals, your budget is just a pair of handcuffs.
- Identification of spending patterns you may not have been aware of when you weren't tracking your spending.
- Most importantly, internal motivation and a positive attitude!
That's a good list. I would expand on number 5 a bit more and suggest using the Internet to research ways to save money. There are a number of great blogs and communities devoted to saving money. A good place to start is the Festival of Frugality.
I recently read that debit cards are the fastest growing payment method. Why? I've never understood the allure of these "plastic checks." They look like a credit card, but, as the name implies, debit cards deduct the cost of a purchased directly from your checking account at the moment of sale. The cards benefit merchants (instant payments) and banks (processing fees), but I fail to see how they benefit consumers. Let's look at the pros and cons of these cards:Pros
- More convenient than checks.
- No bill to pay (or forget to pay) at the end of the month because charges are deducted from your checking account at the time of purchase.
- Fewer consumer protections than a credit card (see this Bankrate article.)
- No rewards - miles, cash back - for purchases.
- No float - buy-now-pay-now compared to credit cards buy-now-pay-later approach.
- Greater consequences of fraud - it depletes your checking account directly, may take time to correct, and it isn't covered by the Fair Credit Billing Act.
Why would anyone use a debit card over a credit card? That's a question I cannot answer.
A couple months ago I posted about opportunities in going private transactions
. Erich left a comment that he was getting anxious
because there wasn't much information on the status of the transaction. Well, after an email to my brokerage firm, I received the following response:
...Thank you for your recent inquiry regarding Collins Industries. We will be submitting participation instructions on behalf of our clients who hold less than 300 shares. Participants will receive cash for their shares at a rate of $7.70 per pre-split share. After we submit instructions, your shares of COLL will receive a temporary ticker symbol. This symbol will be in place to identify your shares during the reorganization process. Cash will be deposited to your account once it is received from the transfer agent. If you require additional assistance, please contact us...
I also checked with Mellon Financial, the transfer agent for Collins Industry, and the man on the phone said the instructions for the cash out have been sent to stockholders/brokers.
When investing in these transactions, it's important to recognize that these are often small companies and there aren't a lot of press releases or news reports available. On the other hand, it's easy to pick up the phone and call the investor relations department at the company (or get your money's worth by asking your brokerage firm to do it.)
[Update 3/3/06: I checked my brokerage site this morning and I see the reverse split was completed. Now I just wait for my money.]For Additional Information:
Welcome to the 178th Carnival of the Vanities at A Financial Revolution
. Let me take a moment to thank Zuesswood at Harshly Mellow
for managing the Carnival of the Vanities. I had a great time reading the posts and hope you enjoy them too.
While you're here, feel free to explore A Financial Revolution
. The most popular posts help you select the right cash-back credit card for you (details
) and explore nontraditional investments (going private transactions
, preferred stocks
, real estate trusts
, and royalty trusts
Now, onto the carnival...Host's Top PickLiving the Scientific Life (Scientist, Interrupted)
tells the story of a group of scientists on their recent expedition
in western New Guinea. The scientists found numerous new and forgotten species. They also proved that there still are (or should I say "were"?) pristine places on earth where no human has set foot. Where do I sign up for the next trip?Business & Finance
Steven at Scatterbox
takes issue with Wal-Mart's creation of a senior-level Director of Stakeholder Engagement
. He asks: "Is this a classic PR strategy to align with critical interest groups by adopting the inflated phraseology of the Corporate Social Responsibility movement?"
David at Pacesetter Mortgage
informs us that loan prepayments are slowing and he suggests refinancing your mortgage
if you have an ARM and plan to stay in your home more than 3 years.Blueprint for Financial Prosperity
offers some advice on buying a car on eBay
and recommends not relying on the buyer protection policy. As someone who bought a 35 year old car on the web, I agree with BFP's advice.Free Money Finance
shares some advice on setting limits
for children's extracurricular activities and saving some money to boot. This is good advice that I hope to follow.
Dan at Searchlight Crusade
educates us on annuities in his post Debunking the Ignorant Press
shares his experience doing business in India and the benefits of understanding cultural differences in Culture, Capitalism, and Google
Nickel, one of my favorite personal finance bloggers, of Five Cent Nickel
calculates the weight of one million dollars
. Is this is the blog equivalent of CBS' hit show Numb3rs
?Retire at 30
explains why a Roth 401(k) is better than a traditional 401(k)
for people who max out their account. I would add a caveat: company's generally don't provide matching contributions to the Roth 401(k); make sure you're not giving away free money by selecting only a Roth 401(k).
Josh of Multiple Mentality
explores the new podfading trend
. While I've toyed with the idea of sharing my silky voice with the MP3-toting public, this post has helped me decide to better use my time taking Blog Business World
's advice to learn a new trick (see below)
Bora of Science and Politics
provides a helpful list of Proper Procedures for Shutting Down a Blog
. I'd add one more to his list: turn off comments to avoid spam comments.
Scott from The Browster Blog
explains why the search toolbars are big business
and why Google had to ink a deal with Dell.ScienceRuminating Dude
discusses a recent NY Times article about Gerald Schatten - a scientist involved in the human cloning paper - and the ethical issues
that don't make it into the newspapers.MedicineConsiderettes
discusses a "cutting edge" proposal
in the UK to give free, clean razor blades and bandages to folks who enjoy mutilating themselves. Hmmm, and to think that I had to pay $15 for that 10 pack of Gillette cartridges.
Barry at The Other Bloke's Blog
discusses some recent research about links between the ABCs - Alzheimers, bilingualism, and creativity - of the brain
.Blog Business World
shows us that it's never too late to learn something new
. This is a nice complement to TOBB's post about brainware ABC.Religion & Philosophy
OK, this one isn't really about structured religion, but if you worship the caffeinated gods, The Library Girl
offers a great idea for blending the pleasures of coffee/tea and a good book
.Reb Chaim HaQoton
explores Jewish history and teachings to answer the question whether it's OK to sin when faced with death
.Goosing the Antithesis
explores the meaning of beliefs as part of a series on The Immorality of Belief
.Politics & InternationalEarly Riser
explains why he's a Republican
. He does a nice job of justifying his position, but we'll just have to agree to disagree.
The Radical Libertarian
explores the relationship between governments and war
, including "perpetual" wars, such as the war on drugs.
Guido at Dodgeblogium
provides a nicely articulated post about the protests in Britain
over the Danish cartoons, and the British government's response.Dubious Profundity
(nice name for a blog) explains that the Muslim outrage to the Danish cartoons is easier to understand if you look to Islamic teachings
.Mensa Barbie Welcomes You
looks to the future of Palestine - the children
. What will be the consequences?Everyman Chronicles
posts about a speech by Julian Bond, chairman of the NAACP, and how it promotes hatred and racism
Jack at The People's Republic of Seabrook
discusses why these three words should scare you
: President Sam Brownback.Forward Biased
highlights a recent jury verdict in Greenville
, SC on eminent domain. The city government wasn't quite ready for this one.
Tom at Libertarian Leanings takes issue
with the Washington Post's accusations about Bush Administration cherry picking of evidence to support the war.
The Conservative Cat
offers up some homemade conservative children's stories
Gullyborg of Resistance if Futile!
posts pictures and commentary of the matricula consular registration event
at the University of Oregon to help aliens get government benefits.
I'll let Elisson from Blog d'Ellison
describe his Cartoon Jihad
post: "When Muslims offended by cartoons of Muhammad start a jihad, eventually the cartoons themselves get involved."
Miriam shares her ideas
about Bush's approach
to the cartoon protestors.Random Yak
closes the discussion about the Danish cartoons with a discussion of Prophet Muhammad Syndrome
Amka of Testing the Cultural Divide
offers us a way to take action to reduce poverty in Africa
.Et tu Bloge
explains why radical Islamists seek out the weakest
societies or governments - in this case, Europe - to expand their influence.Family
Mom at Raising 4 Boys
shares her thoughts on spending a day with the kids
watching TV and playing video games.
FMF's post (see above) got me thinking about spending time with family and the pressures of modern life. I put virtual pen to virtual paper (or is it finger to keyboard?) to share some ideas for creating quality time
with your family (and saving a buck or two.)Humor
Joan at Mamacita
presents the nominations for infomercial of the year
. My money's on the Meatball Magic.
In This Boxing Fan is Outraged Over the Muhammad Cartoon
, Buckley of The Nose on Your Face
shares his disapproval of the caricature.
OK, one more post about the Danish cartoon. Radioactive Liberty
demonstrates how short attention spans
can make the world's problems go away.Avant News
reports that Grover Norquist drowned in his tub
. The site claims to have tomorrow's news today. I wonder if Mr. Norquist knows this will happen tomorrow?Alan Henderson
shares the history of less-than-attractive Olympic logos
Keeping with the Olympic theme, Mark of The Skwib
fame shares his ideas for making Olympic sports a bit more exciting
Brian of Musings from Brian J Noggle
shares the secret of lust for the long haul
shares her Limerick about The VP's hunting prowess
introduces us to his new business - Political Funerals R Us
Joe of Play One on TV
presents today's Top Ten list: Top Ten Changes in Olympic Figure Skating
.And Finally... The Unanswerable Question
The Grill Maestro
poses the question: Why would anyone want a steak well done?
Just as we pay off the holiday gifts charged on our credit cards (cash back cards
, of course), along comes Valentine’s Day. Once again we are bombarded with advertisements, this time from jewelry, flower, card, and candy companies. The message is simple: if you love that special someone you should open your wallet and show it.
But remember, Valentine’s Day is supposed to be about love. Free Money Finance
’s post about the time and financial commitments
of children led me to ponder how we celebrate this special day in our house. With our hectic lifestyles it is sometimes simpler to just buy that toy or special gift, but it’s the special moments that are really important; not just for Valentine’s Day, but everyday.
Here are some simple ways to create those special moments with your children – a more valuable gift than store-bought presents – and save some money to boot:
- Make something special together. It could be an art project (see KinderArt and the Yahoo! Directory), a special meal or dessert, or a poem.
- Tell a special story. It might be a story about your child’s grandparents or a special event when your child was young. Everybody’s family has some interesting characters that have done something interesting, brave, silly, or exciting.
- If you can’t come up with a story about your child or family, create some fiction. Make it about your child and his/her friends or family. LitSite Alaska provides some ideas. You might have the next Harry Potter on your hands.
- Play your child’s favorite board or card game. Better yet, take the time to teach them a new game. Chess anyone?
- Volunteer together. Find something that interests them and volunteer as a family. Is your child interested in animals? Volunteer at the local animal shelter. Do you have a budding environmentalist? Go for a hike and pick up trash at a local park or stream.
- Share your values. Teach your child about love, friendship, and kindness.
- Get active. Teach your child to ice/roller skate, play basketball, or build the foundations for sports.
But most importantly, enjoy the time with your child. Enjoying the moment is infectious. By spending the time to create those special moments, you are demonstrating to your child how important they are to you. That memory will last a lot longer than a box of chocolates.
And since this is a personal finance blog, I feel compelled to encourage you to deposit the $15 you didn’t spend on a gift into your child’s college fund.
The earnings, interest, and gains statements have all come in; the advertisements and coupons for tax software are everywhere; and people are sharpening pencils all across the country. It must be tax season. As I prepare to calculate my 2005 taxes, I thought I'd share the important numbers for this year...
|Taxable Income Range|
|Single||Married, Filing Jointly||Married, Filing Separately||Tax Rate|
|$0 - $7,300||$0 - $14,600||$0 - $7,300||10%|
|$7,301 - $29,700||$14,601 - $59,400||$7,301 - $29,700||15%|
|$29,701 - $71,950||$59,401 - $119,950||$29,701 - $59,975||25%|
|$71,951 - $150,150||$119,951 - $182,800||$59,976 – $91,400||28%|
|$150,151 - $326,450||$182,801 - $326,450||$91,401 - $163,225||33%|
|$326,451 and up||$326,451 and up||$163,226 and up||35%|
|Single & Married, Filing Separate:||$5,000|
|Married, Filing Jointly:||$10,000|
Financial Revolution is hosting the Carnival of the Vanities on February 15. If you have a submission, use the form on Blog Carnival
or Conservative Cat
. I've had a chance to read the early entries and I can say that this promises to be another interesting Carnival. Bring in the clowns!
A study by Javelin Strategy & Research found that about half of identity theft is committed by someone the victim knows - friends, relatives, and neighbors. In addition, most ID theft is low tech.
|Most Common Sources of ID Theft|
|Lost or stolen wallet/purse||28.8%|
|Brick and mortar merchants||8.7%|
magazine has a steps to take for spotless credit. The list includes some very obvious items like paying your bills on time, but here's my short version of the list with a few items added in for good measure.
- Order your free credit report from AnnualCreditReport.com. Better yet, since you are entitled to one from each of the three credit bureas, order from one bureau every four months.
- Carefully review your credit report for errors. According to the US Public Interest Research Group, 25% of reports have serious errors. If you find serious errors, notify the bureau with a certified letter with return receipt requested.
- Don't open (or apply for) too many accounts. If you apply for a number of accounts, loans, or insurance policies, your credit score will suffer. Frequent credit checks affect scores. However, according to Money, multiple applications for mortgage or car loans within 14 days are treated as a single check.
- Don't close longstanding accounts if you don't have to. The most valuable accounts are those that you've had for the longest time and have built up a history.
- Don't max out credit cards. Credit scores are influenced by the percent of available credit that has been used.
- Guard your identity. Don't give out personal data and shred papers and receipts.
Ben Stein penned a recent article criticizing management at UAL, parent of United Airlines. Mr. Stein wrote:
In the early 1990's, when some investment bankers were casting around for a way to make tens of millions of dollars, they came up with a doozy: the employees of UAL would give up some of their salaries and benefits in exchange for stock in UAL, eventually becoming UAL's largest owner through an employee stock ownership plan.
The deal went through – with staggering compensation to Wall Street – and in 1994 the American employees of UAL, as a group, became its largest owners...
Trouble was not far behind. The employees found management demanding pay cuts, big (and, for passengers, inconvenient) changes and cuts in scheduling and services... Then came the blows of 9/11 and a recession, and then rising fuel costs. There were demands for more cuts in pay and benefits and more layoffs. That was not enough. About three years ago, UAL was "forced" to enter bankruptcy to stay alive.
This step meant that UAL could drastically cut workers' pay – and it did. Pensions were simply jettisoned and made the burden of the federal government's Pension Benefit Guaranty Corporation, which meant cuts of close to two-thirds in some pilots' pension payments. And, of course, the bankruptcy simply eliminated all of that equity in UAL that the employees had bought with their hard-earned savings.
Thus, in a series of evil events, management of UAL basically ruined the lives of the employee-owners, if that is not putting too fine a point on it, by taking away their savings, incomes and pensions...
While some readers may simply say that management had no choice in a challenging market – high fuel costs, increased competition, high legacy costs, and, initially after September 11, reduced demand – there is a new twist to the story:
Now UAL has been reorganized. It is preparing to emerge from bankruptcy. It will soon have a stock offering. This offering is expected to raise very roughly $6 billion...
Here comes the good part: management has asked the bankruptcy court to let it have – free – roughly 15 percent of the stock in the new company, or about $900 million. Mr. Tilton, the chief executive... would get about $90 million personally for his hard work shepherding UAL through bankruptcy (for which he was already paid multiple millions of dollars).
The bankruptcy court, instead of ordering Mr. Tilton's arrest, instead cut the management share to about 8 percent, so he will get more than $40 million, more or less...
So here it is in a nutshell: employees are goaded into investing a big chunk of their wages and benefits in UAL stock. They lose that. Then they lose big parts of their pay and pensions. They become peons of UAL. Management gets $480 million, more or less. "Creative destruction?" Or looting?
Wait, Mr. Tilton and Mr. Bankruptcy Judge. The employees were the owners of UAL. They were the trustors, and Mr. Tilton and his pals were trustees for them. How were the trustors wiped out while the trustees, the fiduciaries, became fantastically rich? Is this the way capitalism is supposed to work? Trustors save up, and their agents just take their savings away from them?
If the company is worth so much that management has hundreds of millions coming to them, shouldn't the employee-owners get a taste? Does capitalism mean anything if the owners of the capital can be wiped out while their agents grow wealthy? Is this a way to encourage savings and the ownership society? Or is this a matter of to him who hath shall be given?
Perhaps it's because I'm related to a flight attendant and know many UAL employees (I'm a very frequent flyer), but I think Mr. Stein's question about looting is right on. We’ve seen a steady climb in CEO compensation over the past decade and it is once again reaching dizzying heights. I don’t fault anyone for making money, but I do question whether the CEOs of the Fortune 500 deserved a 54% pay increase from 2003 to 2004 while worker compensation remained flat and shareholder value remained below 2000 levels. What are your thoughts? Is this fair?
For Additional Information:
Sound Money Tips
has some helpful posts about using resources on the web to save money on travel costs. The posts I found most helpful include:
I would also add the following sites:
- SmarterTravel consolidates the major airlines' weekend escape deals. (I've used these to pay as little as $39 each way for a flight.) They also consolidate the airlines' frequent flyer bonuses. Anyone who travels frequently should sign up for their free email newsletters.
- Because I frequently travel to China, I need information on flight, train, and hotel prices. FlyChina is the best search engine for domestic flights and train schedules and prices. SinoHotelGuide can usually save me 50% or more on hotels.
For most people, the biggest purchase they make is their home. However, unlike some other assets it can be challenging to calculate the current value of a home. That's where the US Government can help. The Office of Federal Housing Enterprise Oversight
maintains a house price index
(HPI) for most metropolitan areas. The HPI is a weighted average of repeat sales, meaning that it measures average price changes in repeat sales or refinancings on the same properties. While the HPI is useful, take a pass on their calculator (it requires software downloads and is several megabytes.)
The HPI provides information about the movement of house prices, but other tools like HomeStore provide lists of home sales
in your neighborhood. If you're trying to calculate your net worth and you need to estimate the approximate value of your home, these two sites can help.
In last month's Journal of Financial Planning
, Charles Farrell wrote about using personal financial ratio benchmarks for retirement planning
. The author reasons that the benchmarks can be used to gauge whether or not you're on track to retire by 65. Alternatively, the numbers can be used to develop a retirement savings plan. The author introduces the concept this way:
Just as stock ratios are primarily based on a company's earnings, the personal financial ratios are based on an individual's income. There are three ratios: savings to income (S/I), debt to income (D/I), and savings rate to income (SR/I). Benchmarks are then created for each ratio at different ages. For example, the D/I ratio is generally much different at age 30 than it is at age 60. The objective of the ratios is to help individuals move from a situation of having high debt and low savings at the beginning of their working careers, to one where they have high savings and no debt at the end of their working careers. The ratios are designed to serve as a road map so that investors can compare their individual ratios with the benchmarks to determine whether they are on track to retire by age 65, or any other desired retirement age.
The theoretical foundation for the ratios is that there is a fundamental relationship between income, debt levels, and saving rates. One affects the other, and investors need to get their finances in proper balance...
Just as stock ratios do not tell the entire story of a company's finances, personal financial ratios have limitations as well. They are not meant to substitute for individual advice or account for all of the specific variations in people's financial lives. But they can serve as an important tool, a guideline, to help convey to individuals how their income, savings, and debt are related, and how those ratios must change over time.
The ratios begin at age 30 - the point the author believes most investors can seriously start to save for retirement - and continue through age 65.
The savings or S/I ratio is calculated by dividing the current value of savings, including 401k, IRA, and brokerage accounts by annual salary. The debt or D/I ratio is calculated by dividing the current financial obligations by annual salary. The savings rate or SR/I ratio is calculating by dividing total savings, including employer matches, by annual salary. Notice that dividends and investment income are not included in income values in the formula or the savings rate. That is because the gains on investment holdings are built into the account growth assumptions that are used to calculate the benchmarks.
This approach is attractive and simple, but there are a number of caveats:
- Most first-time home buyers would exceed the D/I by a wide margin.
- The ratios assume that a retiree can live on 60% of pre-retirement income. The author assumes that Social Security will add another 20%.
- Investments are assumed to provide a real rate of return of 5%. Just below the historical average for a 70% stock/30% bond portfolio. However, that may be an overly aggressive allocation for a 65 to 70 year old.
The lesson of the ratios is to reduce debt and increase savings. That's good advice for everyone. These financial ratios can help you determine if you're moving in the right direction.
Following my post about creating an UTMA/UGMA custodial account for a minor
, Janet posted a good question
: Once you've put money into a custodial account, can you transfer it to a 529 plan? The short answer is yes and no. Regardless of your state laws, one thing remains constant: placing money in an UTMA/UGMA account for a child is a completed, irrevocable gift. Although Janet may act as custodian for the account, she can only withdraw funds for the child's expenses (e.g., education, orthodontia, summer camp.) I know of only two ways to move money from an UTMA/UGMA account to a 529 plan.
First, a normal 529 won't work because Janet, the custodian, could change beneficiaries (that goes against the concept of an irrevocable gift.) However, some plans allow for UTMA/UGMA 529s. While I'm not an expert and I advise consulting a tax attorney, I believe that the UTMA/UGMA 529, like the standard UTMA/UGMA, will also be considered the child's asset for computing financial aid. In addition, the capital gains may be taxed following the transfer. It is also important to note that an UTMA/UGMA 529 carries the same restrictions as the normal UTMA/UGMA and it overlays the restrictions of the 529 (e.g., for educational expenses only.)
The better method for moving money from an UTMA/UGMA to a 529, Roth IRA, savings account, or piggy bank is to drain down the UTMA/UGMA by using the money for the benefit of the child while they are young. As the money is drained down, put an equal amount of money into the new non UTMA/UGMA account. When pursuing this approach, be sure to keep records of how the money is spent in case the IRS asks.
If possible, I would recommend leaving some money in an UTMA/UGMA account. It is a good way to lower the family's tax bill, teach the child about money - interest, investing, saving - and provide the child with a safety net when they are older.