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Twitter Your Trades
Tweet Share on Facebook August 14, 2008 Comment (1)Now you can keep your friends up-to-date on your every investing move. Covestor, an online social network for the investing crowd, added a new feature this week that allows investors to send live trade notifications directly to their Twitter feed. The alerts appear automatically when you execute a trade with your online broker. Here's a look at how it works.
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Expert Pick: A Top-Notch Green Fund
Tweet Share on Facebook August 13, 2008 Comment (1)Recently, Morningstar analyst Bill Rocco shared with me one of his favorite environmentally oriented "green" funds, Winslow Green Growth (symbol WGGFX). Managed by Jack Robinson and Matt Patsky, the $395 million fund is a "good but extremely aggressive" choice for green investors. It focuses on small, fast-growing companies that have either a positive or neutral impact on the environment. Top holdings include First Solar, Green Mountain Coffee Roasters, and fitness club operator Life Time Fitness. The fund, which has gained a respectable 9 percent annualized over the past five years, has dropped 28 percent so far in 2008. "When things are looking up, this fund looks great, but it can also lose a lot of money at times," says Rocco. "Investing in it would be like adding a bit of spice." He added that in general, small-company growth funds should make up a small slice of your overall portfolio.
On another note, if you want to evaluate green funds based on their screens, check out SocialFunds.com's "SRI Fund Finder" tool.
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Here's a New Idea: Invest Conservatively
Tweet Share on Facebook August 13, 2008 Comment (2)Here's some advice you don't hear everyday: Invest conservatively in case you need to dip into your 401(k). That's straight from Scott Burns, a former Dallas Morning News columnist, cofounder of online investment advisory AssetBuilder and creator of the "Couch Potato Portfolio."
His reasoning hinges on job security. "At this age, you're urged to take risk, but in fact your career is vulnerable, so you should invest more conservatively when you're in your 20s or 30s than you might otherwise," says Burns, who is also an investment strategist. "At this point, your human capital vastly exceeds your financial capital. You need to be a flexible tool to help you maximize your human capital."
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What's Happening With Your Foreign Funds
Tweet Share on Facebook August 12, 2008 Comment (2)So far this year, international funds of all flavors have suffered steep losses. Most developed markets, from the UK to Japan, are down 10 percent to 20 percent, reports Morningstar, and most emerging markets—especially those heavy on natural resources—have posted even greater declines. The reasons mirror many of the problems in the United States: credit woes, rising inflation, a cutback in consumer spending, and fears of a global recession. (On that note, a Citi report released today says worries over the global economy are "overdone" and that a modest slowdown is underway.)
Chances are your international funds are down. Morningstar provides some context: Every international fund it tracks that's available to retail investors is in the red so far this year. Foreign funds that invest in large companies are down an average of about 16 percent. Funds that invest in small and midsize value-oriented companies have dropped the same amount, and those that buy small and midsize companies with a growth bent are down even more.
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An Expert Take on ETFs: New Markets, Future Growth
Tweet Share on Facebook August 12, 2008 Comment (2)Recently, Heather Bell of IndexUniverse interviewed Mariana Bush, a senior analyst at Wachovia Securities who covers the exchange-traded funds industry. Here, I've highlighted a few takeaways from Bush:
On ETF growth: "I think flows will just simply continue to go into ETFs because people will continue to prefer ETFs over mutual funds. I get calls from people telling me they are moving into ETFs, away from mutual funds. I am still surprised when I talk to people—fairly financially knowledgeable individuals—and they don't know about exchange-traded funds."
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ETF Link Roundup
Tweet Share on Facebook August 11, 2008 CommentThere are plenty of advantages when it comes to investing in ETFs, but one of the biggest drawbacks is transaction fees, which you must pay each time you buy or sell the funds. This is especially problematic if you plan on regularly contributing. But ETF investors are in luck, reports the Wall Street Journal, because more brokerage firms are offering low-cost and even free ETF trades. The highlights: Discount broker SogoTrade charges $1.50 per online ETF trade with a $10 monthly subscription fee, or a $3 trade with no additional fee on up to 5,000 shares; TradeKing charges trades of any size at $4.95 each; and Zecco offers 10 free online ETF trades per month if you maintain a $2,500 minimum account balance.
In light of Pimco's move into exchange-traded funds, Jim Wiandt of IndexUniverse predicts that more firms outside the traditional index world will make a significant move into ETFs. "Up until now, those who have said that ETFs are going to take over the world have been on the radical fringe, but Pimco's announcement seems to be a step in that direction," he writes.
Finally, I had to share this headline: WTF is an ETF? If you're wondering, check out 10 Things You Didn't Know About ETFs—but Should.
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Investing Advice From the Bogleheads
Tweet Share on Facebook August 11, 2008 Comment (1)The Bogleheads, devotees of Vanguard founder and index-fund pioneer Jack Bogle, run a highly active online forum of about 9,000 registered posters. If you have time to sift through posts (anyone can read and search the site without registering), the site offers a wealth of free investing advice—and it's not just for Vanguard investors. Under the forum's broad discussion topics, the Bogleheads chat about long-term indexing strategies, investing theory, ideas for building portfolios, and specific funds. You can also ask the group for help with your own portfolio (you'll have to register for this). Here, you'll find guidelines and information on forum etiquette.
Here's an example of a typical thread:
Under "Help With Personal Investments," a 28-year-old investor asked the forum what stock-bond breakdown is appropriate for people in their late 20s: 100/0, 90/10, or 80/20.
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Advice From the 'Disciplined Investor'
Tweet Share on Facebook August 8, 2008 Comment (1)Investing podcasts are a great way to catch up on market news and get new ideas, all during your morning or evening commute. Recently, I spoke with Andrew Horowitz, a Weston, Fla.-based investment adviser and host of the weekly podcast The Disciplined Investor. During his show, which lasts an hour or so, Horowitz says he aims to "bring the markets to life" with a mishmash of guests who include bloggers, analysts, journalists, and authors. Recent shows have featured discussions of the psychology of investing, the Enron Loophole, and guest John Perkins, author of Confessions of an Economic Hit Man.
Last week, I asked Horowitz to give me his best ideas for navigating the current market. His advice:
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The Lowdown on Bottom-Up Investing
Tweet Share on Facebook August 7, 2008 Comment (3)Professional stock pickers—especially mutual-fund managers—often fall into one of two camps when it comes to investing: "bottom up" or "top down."
You may be able to figure out their meaning by name alone. Bottom-up investing emphasizes individual stock research, as opposed to the top-down strategy, which relies on big-picture analysis—such as the direction of the economy—to guide stock selection.
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Investing During a Recession: 3 Things You Should Know
Tweet Share on Facebook August 6, 2008 Comment (4)Is it smart to buy stocks during a recession? Absolutely, says Morningstar analyst Bill Bergman. He crunched some historical data from the nine recessions we've had since 1950 (each of which was deemed so by the National Bureau of Economic Research's Business Cycle Dating Committee). Interestingly, Bergman's examples show that recession investing beats continuous investing, in either nominal or real terms, he says. Consider the following illustrations:
1. Let's say you had put $1 into the S&P 500 stock index every month since 1950, Bergman says. That $703 would be worth about $9,300 today. But had you been "lucky, smart, and disciplined enough," he says, to invest only in the nine months that the NBER deemed the onset of each of the nine recessions—in other words, investing equal chunks of the $703 ($78.11) in each of those nine months—you'd have $11,600 today. That's 24 percent more than if you had just bought into the S&P 500 every month.
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