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The Gift That Stops Giving

Still haven't used up your gift card from the holidays? If the retail chain files for bankruptcy, it might be too late to spend the money. While gift cards issued by credit-card companies, banks, or other financial firms are usually protected under federal laws, those sold by retailers come with no such guarantee. When a store goes bust—an increasingly likely event in the current economic environment—its creditors can go after that pot of gift-card cash.

Linens 'n Things, which filed for bankruptcy on May 2, had to petition the court to continue operating its gift card and other customer loyalty programs. The judge agreed, preserving $42 million outstanding on consumers' gift cards. "We are pleased that our current restructuring will not interrupt our program," said F. David Coder, president and chief operating officer of the Clifton (N.J.) home goods chain, in a statement. Customers of Sharper Image weren't as lucky. After the specialty store filed for bankruptcy in February, the company imposed new restrictions on its gift cards. Shoppers must spend their balance during one visit. And the total purchase must amount to at least double the dollar value on the card. The company did not return calls for comment.

An X-Rated Hedge Fund

The hottest new hedge fund may also be the raciest. The $7.9 billion AdultVest, one of four firms in the running for Alternative Investment News' Hedge Fund Launch of the Year award, invests only in the adult entertainment industry. Recently, it purchased, an Internet site that enables users to import flicks to their mobile phones, computers, or MP3 players. AdultVest also snapped up an equity stake in VCG Holdings (VCGH), which operates gentlemen's clubs across the country. "It's a market untapped by Wall Street," says AdultVest CEO Francis Koenig. "There are 6 billion people on the planet, and most of them participate in adult entertainment."

All That Glitters Is Not a Great Investment

Market panics have a way of motivating investors to rush into gold. And a wave of new products in recent years, including exchange-traded funds, mutual funds, and specialized online trading sites, have made it easier for small investors to load up on bling. Given that confluence of events, the metal's price has vaulted from $662 an ounce to about $905 over the past 12 months—a 37% jump—compared with a loss of 6% for the Standard & Poor's (MHP) 500-stock index. Gold is up roughly 150% in the past five years.

But while gold glitters aplenty right now, a recent report from the Wharton School of the University of Pennsylvania warns that it lacks luster as a long-term play. That's especially true since many investors tend to pile in at exactly the wrong time-the peak. With inflation factored in, gold's value has actually declined since 1980, when it reached a high of $850. During the same period, the S&P 500 has risen more than 12% annually. "Gold is a commodity, and it goes up with inflation," says Jeremy J. Siegel, a professor of finance at Wharton. "But when you buy at a period of high anxiety, it's a terrible investment."

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