Companies speeding up dividend payments

Wal-Mart announced recently that it would pay out its fourth-quarter dividend early to help ease investors' worries about the fiscal cliff.

NEW YORK (CNNMoney) -- While investors brace for higher tax rates on dividend payments next year, a few companies have taken steps to soften the blow with early payouts.

Wal-Mart (WMT, Fortune 500) became one of the largest companies to take action recently. The world's top retailer said last week that it planned to pay its fourth-quarter dividend in late 2012, rather than early 2013.

The move is a preemptive strike against potentially higher tax rates on income from stock dividends, as the debate in Washington over the fiscal cliff remains unresolved.

Under the automatic tax hikes and federal spending cuts set to take effect Jan. 1, the rate at which dividend payments are taxed could more than double for some high-income taxpayers. Dividends are currently taxed at a rate of 15%.

"There are complex fiscal and federal tax rate issues that may not be resolved in the next few weeks, despite the ongoing good faith negotiations between the administration and Congress to resolve details related to the fiscal cliff," Wal-Mart said in a statement. "In light of this uncertainty, the board determined that moving our dividend payment up by a few days to 2012 was in the best interests of our shareholders."

Wal-Mart isn't alone.

Hot Topic (HOTT), a youth-oriented apparel company, said earlier this month that it would accelerate its quarterly dividend payment "to allow shareholders to benefit from the lower dividend tax rate that is set to expire December 31, 2012."

Related: 8 things that could kill a fiscal cliff deal

The Buckle (BKE), another clothing company, also moved up its fourth-quarter dividend payment this month, and announced a $4.50 per share special cash dividend for long-term shareholders to be paid on Dec. 21.

And department store operator Dillards (DDS, Fortune 500), which normally pays its fourth-quarter dividend in January, said Monday that it would pay that dividend, along with a special one-time $5 cash dividend, on Dec. 7.

All four companies were originally set to pay dividends in January, when the fiscal year ends for many retailers.

While most experts say lawmakers and the White House will reach a compromise, many investors expect taxes on dividend payments to go up regardless of how the fiscal cliff is resolved, said Brian Gendreau, market strategist at Cetera Financial.

"I'm not surprised this is happening," said Gendreau, who is also a professor of finance at the University of Florida. "It would make sense for companies to cut investors a break and accelerate dividend payments."

Related: Wall Street bracing for capital gains tax hikes

For companies, making dividend payments a few days ahead of schedule would probably not involve any extra expense, said Gendreau. But the strategy is "not a big deal" for shareholders since it only provides a tax break on one dividend payment, he added.

At least one major retailer is bucking the trend and standing pat.

Best Buy (BBY, Fortune 500) said last week that its regular quarterly dividend would be paid on Jan. 2, after the tax rates are expected to go up. A spokesman said Monday that Best Buy currently has no plans to change its dividend pay date.

Overall, higher taxes have not diminished demand for dividend-paying stocks and investors do not appear ready to abandon the steady stream of income they provide.

"It's hard to look at historical data and concluded that higher tax rates on dividends have been a disaster," said Gendreau.

First Published: November 27, 2012: 8:05 AM ET

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Independent farms rake in millions

Some 50,000 farms bring in over a million dollars a year, thanks largely to their size. Smaller farms, on the other hand, are struggling.

NEW YORK (CNNMoney) -- The American farmer might not be as poor as you think.

Despite the common notion that family farms have fallen on tough times and been pushed out by big agribusinesses, tens of thousands of families in the United States actually run multi-million dollar farming operations that produce the majority of the nation's food.

While million-dollar independent farms aren't the norm -- there are many times more small farms that struggle to make ends meet -- these slightly larger farms have been able to take advantage of their size, more advanced technologies and the recent commodity boom to become very successful small businesses.

"Times have been pretty good," said Matt Schuiteman, who has 2,400 hogs and farms 2,500 acres in northwest Iowa with the help of his sons and a few hired hands. "We've been dealing with an environment where the price of all commodities has been going up."

Schuiteman's farm is one of over 50,000 nationwide that have gross sales of over a million dollars a year, according to the United States Department of Agriculture.

Lumping in farms with sales of over $250,000 a year, and these so called large-scale commercial farms represent just 10% of the country's farms but account for 82% of its overall food production.

"People, on average, that are running large commercial farms are making substantial amounts of money," said Jim MacDonald, an economist at USDA, noting their the average household income is over $200,000 a year.

Related: Cash-strapped farmers feed candy to cows

What makes them so successful?

The biggest driver of their income is their ability to take advantage of their larger size. A farm with 300 dairy cows will produce ten times as much milk as a farm with 30 cows. But the barn to house those extra cows isn't ten times as expensive, nor is the equipment or the laborers to do the work. The payoff for more land is well worth the expense.

And these large independent farmers often have the means to supply the big food companies like Tyson Foods (TSN, Fortune 500) or Dole (DOLE, Fortune 500) with their raw product.

Plus, farm subsidies from the federal government, which are doled out largely based on the output of the farm, are another advantage. Subsidies, which total about $14 billion a year, represent about about 5% of the gross cash income for all farms, according to USDA.

Large farmers also have the capital to put down on new technologies that smaller farmers can't afford, like GPS-guided tractors that drive themselves (and save fuel) and computer programs that monitor the health and productivity of livestock. They're often more savvy at using hedging strategies to protect against future uncertainties.

"I call it an information technology gap," said David Miller, an economist at the Iowa Farm Bureau who also has a 350-acre corn and soybean farm outside Des Moines.

With sales of about $200,000 a year and profits of about $50,000, Miller considers himself on the borderline between large and small operator. He makes decent money, but his tractor is 20 years old and does not have GPS.

It also helps that he farms corn and soybeans in Iowa -- two crops that are in strong demand in China and elsewhere.

Related: Feds offer help to drought-stricken farmers

Things are very different for Clark Hinsdale, a dairy farmer in northern Vermont.

With 300 cows and sales that usually top a million dollars a year, Hinsdale has a large commercial farm. But with the high price of corn to feed the cows and gasoline for the tractors, turning a profit has still been tough.

"Grain prices have virtually doubled," he said. "I think I'll lose money this year."

It's even harder for many of his neighbors.

The Northeast is home to many smaller commercial farms. These are the 30-cow, 200-acre operations that many consider "traditional farms." There are about three times as many of these smaller farms nationwide as there are the large farms.

Most of these farmers can no longer support themselves by working the farm alone. The average farm income for this group is about $8,000 a year, according to USDA. As a result, many have at least one family member take a job outside the farm as a primary means of income.

But even though they may not be money machines, the farming lifestyle is still attractive for a lot of people.

"We don't need the big pickup and the fancy tractor," said one Vermont dairy farmer. "We do it because we enjoy it."

First Published: November 27, 2012: 8:28 AM ET

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Home prices: Biggest rise in more than 2 years

Home prices are up for the 2nd straight quarter, the biggest year-over-year increase in more than two years.

NEW YORK (CNNMoney) -- In another sign of a housing market rebound, home prices posted the biggest percentage gain in more than two years in the third quarter, according to the closely followed S&P/Case-Shiller index.

The 3.6% increase from a year earlier is more than three times the rise in the previous quarter and was the biggest jump in prices since the second quarter of 2010. But that 2010 rise was much more of a temporary blip caused by a homebuyer's tax credit of up to $8,000 on homes purchased in late 2009 and early 2010.

Related: Most affordable cities for home buyers

This latest rise comes as the housing market has shown numerous other signs of recovery in recent months. The rebound is spurred by a combination of record low mortgage rates, an improving jobs market and a drop in foreclosures to a five-year low, reducing the supply of distressed homes available. There is also a tighter supply of both new and previously owned homes on the market.

The improvement in housing market fundamentals have helped to lift the pace of both home sales and home building.

Related: Housing is indeed heading higher

The latest rise in the Case-Shiller index was the second straight quarter of year-over-year improvement, while the monthly annual reading has climbed for four months in a row.

Home prices are now back to where they were in early 2003, before the housing bubble inflated over the next three years before bursting. Even with the recent gain, the index is down 28.6% from the peak level reached the first quarter of 2006.

First Published: November 27, 2012: 9:00 AM ET

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Why old media stocks are on top today

Stocks of traditional news and entertainment companies are besting new media upstarts.

NEW YORK (Money Magazine) -- Big media companies were supposed to die outright along with the old tube TV set.

At least that was the thinking a few years ago as up-and-comers Netflix (NFLX) and Hulu let you bypass commercials, and Facebook (FB) and YouTube made it possible to create and share your own material.

Given that, the recent performance of old- vs. new-media stocks might surprise you.

This year the legacy players have shot up 34%, more than twice the gain of the S&P 500. Yet Facebook has fallen 45% since it went public in May. Why are the old guys ahead?

In short, Americans still like to watch television, especially live sporting events and buzzed-about series. Average time in front of the TV is up since 2003, from 2.6 hours a day to 2.8, according to the Bureau of Labor Statistics.

"TV-bypass is not a mainstream issue," says Bill Nygren, a portfolio manager at Oakmark Funds, who invests in several media stocks.

Related: 14 Money heroes: Their best financial advice

What's more, even as more consumers watch shows online, traditional media are finding ways to earn money off that shift by creating live streaming tools and cutting deals with Netflix and Apple (AAPL, Fortune 500). Social media firms, on the other hand, are still struggling to figure out a profitable business model.

Big-media stocks have gotten pricey, with the sector trading at 14.6 times forecast earnings for the next 12 months, compared with 13.5 for the S&P 500.

The good news is that for the strongest players, earnings are expected to grow faster than the S&P's in the coming years. So stick to these areas for growth worth the price.

Hook onto the cables

Cable-TV subscriptions are dropping off. But a high-speed connection has become a crucial service that consumers are willing to pay up for, says Ann Miletti, a senior portfolio manager at Wells Fargo Advantage Funds.

Broadband subs are as much as 110% more profitable than TV-only customers. That should be a boon to the two largest cable companies, Comcast (CMCSA) and Time Warner Cable (TWC, Fortune 500). "Cable has proven to be flexible," says Miletti.

Also, with the high-speed cable infrastructure largely in place, broadband now generates a lot of cash. This year Comcast raised its dividend 44% and announced a plan to repurchase $6.5 billion in stock. Time Warner Cable raised its payout 17% and announced a $4 billion buyback.

At these two cable giants, those payouts have room to grow. Both firms spend less than 40% of their cash on dividends, far less than the 69% that competitor Cablevision (CVC, Fortune 500) spends.

Own in-demand networks

To cash in on the majority of Americans who still watch TV, favor broadcasters with must-have content.

As the owner of the most popular cable channel, ESPN, Disney (DIS, Fortune 500) has pricing clout with the satellite and cable companies that air the sports network. Through 2017, price hikes for ESPN and other Disney channels could boost that fee revenue by 7.6% a year, reports Credit Suisse. Another edge: Two-thirds of Disney's TV revenue comes from fees, not often-unpredictable ad sales.

Traditional broadcast networks are thought of as the industry laggards: too dependent on ads, audiences shrinking.

CBS (CBS, Fortune 500), a true pure play, is off 13% since the start of a disappointing fall TV season. But therein lies an opportunity. CBS leads its peers in potential syndication deals and has nine of the top 20 shows.

Related: Tips for investing in stocks

"The value of broadcast is enormous," says David Bank, equity research analyst at RBC Capital Markets. CBS is cashing in on that value as broadcasters are collecting more in cable and satellite fees. In 2011, CBS earned 33 cents a subscriber per month. Analysts expect that figure to top $1 in five years.

Spread your bets

If you don't want to make a bet on a single stock, diversify with a fund that invests in the sector. Fidelity Select Multimedia (FBMPX) is a good option. To get a boost from global growth, try T. Rowe Price Media & Telecommunications (PRMTX), which has 19% of its portfolio overseas.

First Published: November 27, 2012: 5:30 AM ET

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Adam Bain: Twitter's adman delivers

Adam Bain at Twitter's San Francisco headquarters

(Fortune) -- Moments after Vice President Joe Biden called Paul Ryan's foreign-policy comments "a bunch of malarkey" during the Oct. 11 vice presidential debate, the Obama campaign bid on the trending term "malarkey" on Twitter. Users seized on the old barb, generating tens of thousands of messages tagged #malarkey, which created a commercial boomlet, complete with T-shirts and bumper stickers.

That is the kind of thing that really gets Adam Bain going. As it should: Twitter's president of global revenue is responsible for the growing array of advertising tools that make moments like these a profit center.

Bain, 39, started his career in news at one of the first regional city guides, Cleveland.com, and then spent two years as a web producer at the Los Angeles Times before he joined News Corp. (NWSA, Fortune 500) in 1999. An affable sales executive, he rose to become president of the Fox Audience Network, a division that included one of the largest digital advertising networks and was responsible for making money from properties like MySpace.

MORE: 19 most powerful names on Twitter

When Twitter CEO Dick Costolo recruited Bain in August 2010, the microblogging platform was the black sheep of social media sites. While LinkedIn (LNKD) and Facebook were building robust advertising engines in preparation for their much-anticipated initial public offerings, Twitter had a $3.7 billion valuation but no obvious business model.

Bain eschewed banner ads in favor of messages that showed up directly in the stream of tweets. Pundits wondered whether users would rebel, but it worked. Says Bain: "In 2011 the most retweeted tweet of the year actually came from a marketer itself." (It was a Wendy's tweet aimed at charities.)

With 140 million active users, Twitter has now become a staple for advertisers. It is expected to pull in $288 million in ad revenue this year, according to eMarketer, a 107% jump over 2011, and is now valued at $8 billion. What's more, the company launched mobile advertising in February and already brings in more revenue from that than from desktop users. "Even though Twitter's usage is way below what Facebook has, the company has been able to attract a lot of big brands," says eMarketer analyst Debra Aho Williamson. She credits Bain and his 250-person team.

Next up? Bain has a self-service tool for small businesses in the works, but as with the company's slow-to-emerge ad products, he is taking his time to learn from competitors before releasing it widely. By watching other companies struggle, Bain calculates Twitter will benefit. That's likely to be the strategy for an initial public offering as well: It's not expected before 2014.

This story is from the December 3, 2012 issue of Fortune.

First Published: November 27, 2012: 5:39 AM ET

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Stocks: Choppy trading ahead

Click on chart for more premarket data.

NEW YORK (CNNMoney) -- Stocks could get a lift from the latest deal aimed at fixing Europe's debt crisis, although that could be offset by contentious fiscal cliff negotiations in Washington.

U.S. stock futures were mixed Tuesday, after Greece reached a deal with eurozone leaders over its debt.

Eurozone finance ministers and the International Monetary Fund announced late Monday they had reached an agreement that moves Greece closer to receiving a massive bailout payment. The deal includes lower interest rates for Greece, a debt buyback and more time for the debt-laden country to repay its rescue loans.

But the Organization for Economic Cooperation and Development warned early Tuesday that Europe's worsening economy next year will slow U.S. growth more than previously forecast.

Europe's Debt Crisis

European markets rose in morning trading, with Britain's FTSE 100 up 0.4%, Germany's DAX rose 0.5% and France's CAC 40 added 0.3%.

Meanwhile, Asian markets ended mixed. The Shanghai Composite lost 1.2%, while the Hang Seng in Hong Kong ended up about 0.2% and Japan's Nikkei rose 0.4%.

Fear & Greed Index

On the domestic front, investors will continue to keep an eye on economic negotiations in Washington. With Congress back in session, lawmakers are under pressure to reach a deal with the White House before the end of the year in order to avoid falling over the fiscal cliff.

The U.S. economy will also be in focus Tuesday, with reports on consumer confidence, housing and manufacturing due out in the morning.

A report on durable goods is due before the bell, with economists from Briefing.com expecting a slight decline for October.

The Case-Shiller 20-city index will be released at 9 a.m. ET. Analysts expect that the average home price in these markets increased 3.1% in September, up from 2% the month before.

Related: Most affordable cities for homebuying

At 10 a.m. ET, the Conference Board will release its report on consumer confidence. This month's figure will be particularly important, as retailers gear up for the holiday shopping season. Economists expect a slight uptick in November.

Stocks ended mixed on Monday, the first full trading day since last Wednesday, as fiscal cliff concerns countered strong holiday shopping reports.

Companies: Packaged food maker ConAgra (CAG, Fortune 500) announced it has reached a deal to buy Ralcorp (RAH), the largest U.S. manufacturer of private label food, for $90 a share in cash -- a 28% premium from Monday's closing price.

Shares of Facebook (FB) rose more than 8% Monday after several analysts upgraded the stock. Facebook has rallied nearly 50% since touching a low of $17.55 in early September. The stock, currently around $26, is trading at its highest level since late July. Shares of Facebook gained another 1.3% in premarket trading Tuesday.

Currencies and commodities: The dollar gained against the euro, the British pound and the Japanese yen.

Oil for January delivery gained 14 cents to $87.88 a barrel.

Gold futures for December delivery fell $3.10 to $1,746.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged up, pushing the yield down to 1.65% from 1.66% late Monday.

First Published: November 27, 2012: 6:05 AM ET

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UBS fined over rogue trading case

British regulators have fined UBS nearly $50 million due to the actions of a rogue trader. Swiss authorities are reviewing the investment bank's capital base

LONDON (CNNMoney) -- British regulators have fined UBS nearly $50 million, and Switzerland may force the bank to raise more capital, after it failed to prevent a rogue trader running up $2.3 billion in losses last year.

Kweku Adoboli, a trader on the bank's exchange traded funds desk in London, was found guilty last week of two counts of fraud and sentenced to seven years in prison for his role in Britain's biggest trading scandal.

The Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority (FINMA) said a joint investigation into the case had revealed serious deficiencies in risk management and controls at UBS' investment bank.

"UBS failed to question the increasing revenue of the desk and failed to ensure that there was a corresponding increase in the controls in place over the desk," said Tracey McDermott, the FSA's director of enforcement and financial crime. "As a result, Adoboli, a relatively junior trader, was allowed to take vast and risky market positions and UBS failed to manage the risks around that properly."

The FSA fined UBS £29.7 million ($47.5 million), equivalent to 15% of the revenue of the global synthetic equities division of the ETF desk, and said the penalty would have been £42.4 million but for the bank's willingness to settle at an early stage.

UBS, which was bailed out by the Swiss government in 2008, last month announced a major overhaul, saying it would shed 10,000 jobs by 2015 and save $3.6 billion as it scales back investment banking to focus on wealth management.

Related: 9 more banks under scrutiny in Libor investigation

UBS said in a statement it had cooperated fully with the regulators since the losses were first discovered and was pleased that "this chapter has been concluded".

UBS has since disciplined a number of staff, including clawing back bonuses and other payments worth more than £34 million. It has also introduced a number of changes to the way staff are evaluated and rewarded.

FINMA, which had already imposed new controls on the investment bank in the wake of the rogue trading scandal, said Monday it would hire an audit firm to review whether the measures had proved effective. It would also be re-examining the capital base of the investment bank.

"All of these measures will take place over the next few quarters," FINMA spokesman Tobias Lux told CNNMoney.

The regulators' investigation found Adoboli used one-sided internal futures positions, delayed booking of transactions and fictitious deals to conceal the extent of his unauthorized trading.

But it also found serious weaknesses in UBS trading and risk management systems, and in the supervision of the desk. Managers were aware that risk limits were being breached but failed to take disciplinary action or investigate further.

First Published: November 26, 2012: 7:04 AM ET

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8 things that could kill a fiscal cliff deal

Lawmakers will probably compromise on the fiscal cliff before Christmas. But if they do, it won't come easily.

WASHINGTON (CNNMoney) -- Pete Davis is president of Davis Capital Investment Ideas. He worked for Democrats and Republicans on Capitol Hill, serving as an economist for the Joint Committee on Taxation and the Senate Budget Committee.

Despite what the optimists say, it's too early to count on a fiscal cliff deal.

Senior staffers have been trying to set the broad outlines of a compromise -- dollar amounts of revenue increases and spending cuts.

They're working up options for President Obama and congressional leaders to consider when they meet for their first substantive talks.

In my experience, the first thing that happens in such a meeting, after opening statements and procedural matters, is they reject all of the options the staff prepared.

Then they start arguing among themselves. After an hour or two, they tire of that and walk out on camera and tell the world they made progress.

Their staff then goes back and works all night on new options, and they meet again, and again, and again.

Here's my short list of why the fiscal cliff won't get resolved easily.

1. President Obama insists on a tax rate increase on those earning $250,000 or more, and House Republicans balk.

2. President Obama and Democrats refuse to accept revenue increases that won't be scored by the Congressional Budget Office -- i.e. that depend upon tax reform and/or upon an assumed increase in economic growth.

3. Republicans won't accept another extension of the temporary 2% payroll tax cut for working Americans. So President Obama may insist on a Making Work Pay tax credit much like the one from the 2009 stimulus package. That credit was worth up to $400 for single workers earning less than $95,000 and up to $800 for married couples making less than $190,000.

4. House Republicans insist on entitlement cuts that Senate Democrats won't accept. Senate Democrats see Social Security as completely off the table, and Medicare cuts will be difficult to achieve because most of the easier ones were used to pay for health care reform.

5. Everyone wants to repeal the $109 billion sequester of defense and nondefense spending, but Republicans may object if it's not "paid for."

6. Democrats want bigger defense cuts than Republicans will accept.

7. Discretionary spending can be shaved a bit more, but not much more without incurring Democratic opposition.

8. Republicans may refuse to accept a debt ceiling increase that is not "paid for." A one-year hike would cost about $1.2 trillion. There's no way they could pay for that.

I'm not ruling out a deal before Christmas, particularly one that combines a very modest "down payment" with procedures to deliver tax and entitlement reform. I've always said I see about a 40% chance of such a deal by December 24.

The problem for the market will be to gauge how much deficit reduction will ultimately be delivered. I expect to be underwhelmed.

This all comes down to how insistent President Obama will be on raising taxes on the rich and whether he will accept a deal without a rate increase.

All of the president's statements so far have upped the ante on a tax rate increase on those earning $250,000 or more. Sure, he has caved many times before on a wide range of issues, but will he do so following an election victory and when he never has to run again?

One big final impediment will remain after a deal is announced. The House may not pass it.

In July 2011, House Speaker John Boehner thought he had agreed to a deal with Obama that his colleagues would support, but House Republicans rejected it because it included revenue increases.

Boehner was put in the embarrassing position of having to return to the bargaining table and ended up cutting a smaller, kick-the-can-down-the-road deal, that resulted in the creation of the so-called Super Committee, which failed, and the $109 billion sequester that no one wants. I'm sure he'll be a lot more careful this time around to whip his support before finally signing off on a deal.

Of course, anything the House Republican Caucus will pass is unlikely to attract more than a handful of Democratic votes, even if Obama supports it. Boehner will not get united House Republican support for any deal. He may need Democratic votes to pass it, and Nancy Pelosi is unlikely to supply them.

I still see a 60% chance that we temporarily go over the fiscal cliff. After Obama and congressional leaders exhaust themselves by trying to reach agreement but failing, they may decide to risk the fiscal cliff for a short time rather than accept a bad deal.

First Published: November 26, 2012: 8:59 AM ET

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Buffett renews argument for millionaire's tax

NEW YORK (CNNMoney) -- Warren Buffett is again arguing for higher taxes on himself and other high-income individuals, calling for an even steeper bite than in the Obama administration's so-called "Buffett Rule."

In an op-ed column in Monday's New York Times, Buffett advocates that taxable income of between $1 million and $10 million should be taxed at a minimum 30% rate, and that income above $10 million should be taxed at 35%.

"A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours," Buffett writes. "Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy."

President Obama, in arguing for a millionaire's tax that is commonly called the Buffett rule, is seeking a minimum 30% rate on income above $1 million.

While the top marginal tax rate is higher than 30%, many wealthy taxpayers pay less because their income comes from sources such as capital gains or carried interest, which have a lower tax rate.

Related: The wit and wisdom of Warren Buffett

Buffett said he also agrees with President Obama's call for allowing the Bush tax cuts to expire for high-income taxpayers, although he would set the cut-off at $500,000 a year, rather than the $250,000 threshold advocated by the president.

And Buffett said he doubts that raising taxes on the wealthy would do anything to slow needed investment and job creation. He cites much higher rates on capital gains and top wage earners that were in effect in the past.

"Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered," he wrote. "So let's forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities."

Related: The Buffett rule quiz

Buffett's column appeared as Congress returns from a holiday recess to resume negotiations on tax rates and federal spending, an effort to avoid the so-called "fiscal cliff" that will occur if there's not an agreement. Republican leadership has expressed a willingness to limit deductions for top wage earners, but they remain opposed to raising their tax rates.

Some have suggested comprehensive tax reform, which eliminates many deductions across the board and simplifies the tax code, would be the best policy for the economy. Buffett writes he supports such tax reform, but that he believes higher tax rates on the wealthy should be an interim step.

"The reform of such complexities should not promote delay in our correcting simple and expensive inequities," he wrote in the Times. "We can't let those who want to protect the privileged get away with insisting that we do nothing until we can do everything."

First Published: November 26, 2012: 7:57 AM ET

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SGB's jatropha vision: Jet fuel grown from seeds

An SG Biofuels worker examines the company's experimental jatropha crop.

NEW YORK (CNNMoney) -- Call it the jatropha bubble.

When word got out several years ago about the promise of a small subtropical tree called jatropha, it became a biofuel sensation. Advocates claimed the fruit tree was hearty, drought-resistant and could be grown on marginal land. Its oil seeds offered a promising biofuel that wouldn't compete with food crops.

Air Japan, Continental Airlines and Air New Zealand ran test flights of planes using jatropha-based biofuel, prompting more than 100 companies to plunk down millions on jatropha plantations in developing countries. Energy giant BP (BP) sunk $160 million into the farms, and one industry group projected that $1 billion would be invested annually in jatropha.

Then everything crashed. Jatropha, it turned out, was much harder to grow than once thought. Yields were inconsistent, and many farmers didn't have the training needed to manage commercial-scale crops. Most of the jatropha operations shut down.

Except for a few outliers. While most of its rivals raced to commercialize the fuel, San Diego-based SG Biofuels took a different path: It hired plant geneticists. They hunkered down in the laboratory to come up with the best genetic variations of jatropha -- ones that would be more consistent, easier to grow and could produce more oil.

"We were impressed they waited until the plant science was there," says Darrin Morgan, director of sustainable biofuel strategy at Boeing (BA, Fortune 500).

While the Seattle plane maker hasn't invested cash, Boeing has collaborated with the startup, sharing its own biofuel research and making industry introductions for SGB in Brazil and other markets.

Armed with backers like Boeing, $27 million from energy and biotech investors, and a team made up of former Monsanto executives and plant scientists, SGB is now testing its genetically boosted seeds in India and Brazil.

Plenty of observers are watching to see if it pays off.

"We have a strong desire to see SGB succeed," says Boeing's Morgan. "They're definitely the real thing."

Related story: Clean energy saves military lives

SGB has had a few new-death experiences.

The company was launched by CEO Kirk Haney, a former tech executive who made a fortune when his employer, ArrowPoint Communications, sold to Cisco for nearly $6 billion. Haney was working at a friend's sustainable forestry company in Guatemala when a local told him about the promise of jatropha.

Like everyone else, Haney saw opportunity. But when he sought advice from University of California plant scientists about what seeds and soil to use, they had never even heard of the jatropha tree.

"He left and I started Googling it, trying three or four different spellings," says plant geneticist Bob Schmidt, now SGB's chief scientist. "The more I learned about it, the more excited I became about it."

But Schmidt ultimately told Haney that the existing, wild jatropha seeds wouldn't work. In his view, anyone hoping to profit from the plant would first need to fund a breeding and biotechnology program to develop hybrid seeds with higher yields that could grow in some of the most infertile ground in Africa, Southeast Asia and Latin America.

Jatropha was a perfect candidate for experimentation, Schmidt says, because it reseeds quickly and has myriad genetic variations from which to pull.

In 2008, the startup lined up $200 million from investors. Then the economy collapsed -- and so did the jatropha hype. Three weeks before the cash hit the bank, investors pulled out.

Haney frantically reached out to friends and contacts, seeking new backers, but no one would bite. To keep things rolling, Haney convinced the company's 10 employees to work for stock or take pay cuts and wrote a personal check to pay the company's research bills.

That move "kept us alive and focused," he says.

Over the next two years, Haney rounded up $9.4 million from angel investors and from Flint Hills Resources, a large petroleum and ethanol refiner, and Life Technologies Corp., a biotechnology tools company. Last year, venture capital investors put $17 million more into the startup.

Today SGB has 13 field trials of its hybrid seeds in Brazil, Guatemala and India, and it's trying to fill 20 executive and management jobs to expand those markets and move into Africa and Southeast Asia. The company plans to put a big emphasis on farmer education, selling not only its seeds but also its expertise, such as helping pick the best locations and conditions for the seeds. SGB plans to collect royalties on fuel produced from its seeds.

One new customer, JetBIO -- a Brazilian consortium of Airbus, the Inter-American Development Bank and TAM Airlines -- is optimistic about an ongoing field trial it's doing with SGB in Brazil.

"I think this will be game-changing in the industry, because what it really lacked was proper genetics," says Rafael Abud, JetBIO's managing partner.

Still, the company's fate is tied to many forces beyond its control, including potential changes in renewable energy policies in countries across the globe. Right now, demand for biofuel is huge, but SGB has a lot to prove, says Michael Cox, an analyst who follows the space for Piper Jaffray.

This time around, jatropha needs to prove it can be an economical alternative to conventional fuels.

"The plant needs to perform," says Boeing's Morgan. "If so, they're the beginning of jatropha 2.0."

First Published: November 26, 2012: 5:37 AM ET

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