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Investing in the Olympics
Tweet Share on Facebook August 21, 2008 CommentThe S&P 500 and the Dow have tumbled over the past year, but here's one unlikely index that's posting respectable returns: the Dow Jones 2008 Summer Games index.
The index, which tracks 37 stocks of companies that are official partners, sponsors, and suppliers of the Beijing 2008 Olympic Games, is up 8 percent over the 12-month period that ended June 30. From its December 31, 2006, inception, the index has gained an annualized 14 percent.
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Laid-Off Wall Streeters Bartending, Baking Cupcakes
Tweet Share on Facebook August 21, 2008 Comment (3)Tough times on Wall Street mean more than 76,000 workers in the financial service industry—including traders, bankers, and analysts—are now out of a job. What are they doing now? Trying on new careers for far less pay, reports the International Herald Tribune.
Take 27-year-old Harvard graduate Jessica Walter, who lost her job as vice president for credit strategy at Bear Stearns. Now she's in the cupcake business. Or Jeff Salmon, who left a job investing in asset-backed securities to open a hair-salon franchise in New Jersey. According to the story, former traders and bond salesmen are also bartending and selling real estate. Other ex-traders are paying the bills by gambling (perhaps inspired by the movie Boiler Room?).
And while bankers with a financial cushion are buying ranches out West and moving to Dubai, laid-off investment banker Joshua Perksy is trolling Park Avenue wearing a sandwich board reading "Experienced MIT Grad for Hire."
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Investors Playing Russian Roulette
Tweet Share on Facebook August 20, 2008 Comment (1)Thanks to Russia's abundance of natural resources and growing consumer economy, funds that track the country have been on a tear for much of this decade.
Now, the outlook for Russian stocks is growing ominous. The WSJ's Return on Investment blog says the risks of investing in Russia "are far greater than most ordinary investors realize.... It isn't so much about the invasion of Georgia...as what that war, along with other recent events, says about the regime and the country." (At last count, according to ROI, Americans had more than $3 billion in Russia funds.)
Russia's risks go beyond the feud with Georgia: Half of the country's stock market is made up of oil and gas stocks, and natural-gas giant Gazprom accounts for a whopping 26 percent, says ROI.
Timothy Hubbard of ETF Trends reports that the Market Vectors Russia ETF (symbol RSX) is down 23 percent year-to-date and has dropped nearly 4 percent so far this week. Instead of focusing on Russia, Hubbard suggests that investors look to diversified exposure through the SPDR S&P Emerging Europe ETF (GUR), which includes a 35.6 percent weighting in Russia, 22.9 percent in the U.K., 12.2 percent in Poland, and 10.6 percent in Turkey.
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Job Hunting and 401(k)'s: No Match? Forget It
Tweet Share on Facebook August 20, 2008 Comment (1)When you're surveying the benefits of a potential job, an employer 401(k) contribution match should be pretty much non-negotiable. The match should be a minimum requirement, but it's not necessarily a sign of a top-notch retirement plan, says ABC News columnist David McPherson. Here are two things he says to look out for when evaluating an employer contribution (the bold sections are mine):
First, any employer of a decent size should offer a contribution that amounts to at least 3 percent of your salary. This may be a stretch for some small employers or startups, but it should be the starting point for most companies...The most common formula is one in which the employer kicks in 50 cents for every dollar you contribute, up to 6 percent of your pay. Whatever the formula, your bottom line should be that the employer's contribution amounts to at least 3 percent of what you make. Anything less and I'd keep looking.
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The Angelina Jolie Stock Index, Decoded
Tweet Share on Facebook August 19, 2008 Comment (7)I'm loving Investopedia's (somewhat exhausting) list of investing buzzwords. A few of my favorites:
Angelina Jolie Stock Index: created by Fred Fuld of Stockerblog, this index is made up of companies linked to the actress. Think stocks of movie studios and producers: Sony, Viacom, and Time Warner. "Because Jolie's films usually earn large box-office revenues, the companies that produce these movies should have higher profits," says Investopedia. There may be something to this: According to Stockerblog (via Seeking Alpha), indexes that track three celebrities—Gisele Bündchen, Heidi Klum, and Angelina Jolie—have outperformed the Dow over the past six months.
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A Nifty Emergency Fund Calculator
Tweet Share on Facebook August 19, 2008 CommentLast week, I told you about a formula from blogger Money Under 30 that helps you figure out how much to set aside for your emergency fund. Now, he has a handy calculator that does half the work for you; all you need to do is plug in the numbers (you'll have to download the file in Microsoft Excel).
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Effortlessly Invest Like Graham and Buffett
Tweet Share on Facebook August 18, 2008 Comment (1)IndexUniverse reports that three exchange-traded notes based on the investing philosophy of Benjamin Graham are in the works. (A quick primer on ETNs: Like ETFs, they mimic the performance of an index and trade on exchanges. But instead of holding a portfolio of stocks, ETNs are typically filled with bonds that promise to repay the amount of your investment plus the return of the index, minus a management fee.)
According to this news release, the three ETNs (which focus, separately, on large-cap value, small-cap value, and total-market value) aim to "identify businesses with strong, liquid balance sheets that trade at a discount to their implied intrinsic value by implementing the investment principles of Benjamin Graham." Graham, the famed economist and value-investing pioneer, inspired many financial-world heavyweights, including protégé Warren Buffett.
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5 Ways to Track Your Stocks
Tweet Share on Facebook August 18, 2008 Comment (1)Want to become a more informed shareholder? Sure you do. Fund investors can get away with checking their holdings semi-annually, but stocks require more attention. Here are five ways to stay on top of your stock investments:
1. Set up a free portfolio tracker. Several sites let you customize trackers with a list of your stock, fund, and ETF holdings. For example, Yahoo Finance and Google Finance both offer basic tools that let you insert the number of shares you bought, and at what price. The trackers also link to company information for stocks, such as recent news, historical share prices, and filings with the Securities and Exchange Commission. In Yahoo's case, you'll also find blog postings that mention your stock.
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An Easy Formula for an Emergency Fund
Tweet Share on Facebook August 15, 2008 Comment (1)How much money should you have in short-term savings in case you lose your job or some unforeseen disaster strikes? I've heard everything from a couple of thousand dollars to three or six months' living expenses—and I even know someone who, until recently, had $20,000 set aside for a rainy day.
Fellow blogger Money Under 30 shares his formula for figuring out how much money you should set aside in an emergency fund:
Calculate your minimum monthly expenses: These are fixed expenses, such as rent, utilities, auto and student loans, and groceries.
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Balances Down, but Savings Up in 401(k) Plans
Tweet Share on Facebook August 14, 2008 Comment (1)Despite the ailing economy, 401(k) investors are saving more, according to a new study from Fidelity, which analyzed the 11.5 million participants it administers. In the first half of the year, investors who participated in the same plan both this year and last set $3,512 aside, on average, from their pretax earnings, up 7 percent from $3,283 in the first half of 2007.
Fidelity says the average retirement plan account balance dropped 7.5 percent in the first half of 2008, to $64,000, down from $69,200 in the first half of 2007. By comparison, Standard & Poor's 500 stock index dropped nearly 15 percent in the first half of this year. Surprisingly, the average balance for employees who stayed in their plans for both years fell less than 1 percent in the first half of 2008. Translation: 401(k) investors are diversifying!
Not surprisingly, Fidelity also found that few of us are contributing the annual maximum of $15,500 to our 401(k)'s: Just 3.8 percent of employees earning less than $100,000 contributed the max, although 28 percent of those making $100,000 or more did.
