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3 Major 401(k) Mistakes
Tweet Share on Facebook September 11, 2008 CommentThe Motley Fool lists three common mistakes that can hurt your 401(k) returns in the long run:
1. Chasing performance: When choosing funds for your retirement plan, recent rankings can seem like a safe bet—but focusing on short-term performance can be the kiss of death for your retirement nest egg. Short-term trends can come and go, but long-term performance is much more indicative of a manager's true abilities. It's also easy to put your money in the hottest sector—forgetting that if you wait for a sector of the market to run up before you get in, you've probably already missed much of the upside. Chasing hot recent performance is akin to buying high and selling low—a losing prescription if ever there were one.
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Spore Spawns Virtual Protest
Tweet Share on Facebook September 10, 2008 Comment (9)Electronic Arts has had a tough week. Shares of the largest video game publisher began declining Monday after the company announced a delay in the release of its highly anticipated Harry Potter video game (it had been scheduled for release in time for the holiday shopping season). Meanwhile, some Wall Streeters speculated that the release of three other titles—including Spore—could boost the company's ailing stock (symbol ERTS). It closed at $44 yesterday, near the 52-week low of $41.17.
Although Spore has been well received by critics, the game's restrictive digital rights management software—which limits players to just three installations—has sparked outrage among some gamers.
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ETF Roundup: Fantasy Edition
Tweet Share on Facebook September 9, 2008 CommentThree exchange-traded funds Morningstar would like to see come to life: long-short ETFs, momentum ETFs, and volatility ETFs.
A sustainable transportation ETF will begin trading soon. The PowerShares creation will focus on alternative vehicles; rail and subway systems; sea, land, air, and intermodal; and transport innovation.
Many ETFs are "riddled" with structural defects, one critic says.
China ETFs are in a deep slump that may continue, reports the Street.com.
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Economy Got You Down? Buy Booze, Guns, Smokes, and Slots
Tweet Share on Facebook September 9, 2008 Comment (1)Socially responsible investments, please step aside. Charles Norton, comanager of the Vice fund, has other ideas. Ironically, Norton doesn't think of the four pillars of his investment focus—alcohol, defense, tobacco, and gambling—in terms of "vices." And certainly not as "sin stocks." Here's how he puts it: "We don't really characterize them as vices—we just focus on four sectors that deliver long-term gains in a variety of different market environments. Consumers enjoy alcohol and tobacco regardless of what's going on in the economy." Here's the scoop on his outlook for each of the fund's four vices...er, sectors:
Booze. Emerging markets are the key driver for brewers; we're still focused on companies with the most exposure to these fast-growing beer marketing. The brewers have been weighed down as higher input costs, like barley and aluminum, have compressed their margins. Pricing power remains strong, though, and the brewers have been successful in recovering most cost increases by hiking prices. With barley prices now declining, we could begin to see some near-term margin relief. Distillers have been relatively less impacted by the same cost pressures, while spirits growth has remained robust. We're mostly focused large, multi-national players with the greatest distribution networks and brand portfolios.
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A Primer on Fannie and Freddie: What the Bailout Means
Tweet Share on Facebook September 8, 2008 Comment (5)The U.S. government takeover of Fannie Mae and Freddie Mac made history yesterday. So, what do you know about these mortgage giants? Here is a quick primer on the two players:
1. Think of Freddie and Fannie as hybrids. They are both government sponsored and shareholder owned. They do not have direct contact with consumers; instead, they work with lenders. The job of Fannie and Freddie is to buy mortgages from banks, savings and loans, credit unions, and other lenders to ensure that mortgage funds are consistently available. Together, they hold or guarantee about half of the country's outstanding home loans.
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Will Spore Give EA a Boost?
Tweet Share on Facebook September 8, 2008 Comment (5)I'll admit it: Spore is the first video or computer game I've been excited about since the original Super Mario Bros. A gamer I am not, but I just can't wait to create my own six-eyed creature (thanks to my boyfriend, the game—which came out Sunday—is in the mail).
BloggingStocks asks: "Are we witnessing the birth of a new, marketing-friendly super-franchise that will appeal to a broad demographic?" (If you're not familiar, I recommend checking out Forbes's list of things you should know about Spore.) In summary, BloggingStocks salutes the game but predicts that Spore won't move the needle on EA's stock (symbol ERTS).
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Google Worship Soars on Company's 10th Birthday
Tweet Share on Facebook September 8, 2008 Comment (1)Here's a roundup of stories paying homage to Google in honor of the company's 10th birthday:
A Los Angeles Times Q&A features Marissa Mayer—Google's first female engineer—who talks about what the company will look like at 20. (She says it's looking at new ways to deploy ads and exploring paid services.)
In "The World's Most Powerful 10-Year-Old," the Associated Press includes a photo of Google's first employee, technology director Craig Silverstein, blissed out on a beanbag chair.
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When It Comes to Giving, Gen X Trumps Boomers
Tweet Share on Facebook September 8, 2008 CommentMembers of generation X may be in big trouble when it comes to savings and retirement, but it turns out that they're more philanthropic than older generations. A new survey from Northern Trust found that gen X millionaires give nearly twice as much, on average, to charitable causes as their elders.
In 2006, gen X millionaire households gave nearly $20,000, compared with boomers and silent generation millionaires, who gave roughly $10,000, according to the study. Looking ahead, gen X millionaires plan to increase their giving modestly. Meanwhile, older, high-net-worth households expect their 2008 giving to remain roughly the same as in 2006 and 2007. More findings:
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Your Funds on Drugs: Any Questions?
Tweet Share on Facebook September 5, 2008 Comment (1)Some of the brightest minds in the mutual-fund business have their sights on pharmaceuticals. At first glance, it's hard to understand why: The sector has been plagued by weak drug pipelines, product liability lawsuits, and fears of a nationalized healthcare policy that could slap price controls on drug companies, says Morningstar. Indeed, the market has taken note of drug companies' slower revenue and earnings growth over the past few years, resulting in deflating or stagnating stock prices, writes analyst John Coumarianos:
You have an industry, whose growth has already slowed, beset by political uncertainty regarding its future. If there's one thing that the market can't abide and penalizes in spades, it's uncertainty, and the recent prices of pharmaceutical stocks are no exception.
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A Jim Rogers ETF
Tweet Share on Facebook September 5, 2008 Comment (1)Attention, fans of Jim Rogers, the veteran commodity investor and self-proclaimed "adventure capitalist": Van Eck has a new ETF that tracks an index created by the man himself. The Rogers-Van Eck Hard Assets Producers Index includes roughly 320 companies in 40 countries and covers such sectors asenergy, agriculture, base metals, precious metals, forest products, and water and renewable energy. The fund's name is Market Vectors-RVE Hard Assets Producers (symbol HAP).
But commodities have been crushed lately, points out "Random Roger" Nusbaum:
The simple fact that the resource space is down recently doesn't make HAP a good fund or a bad fund. Nor is the timing of the introduction of the fund good or bad. HAP is simply a new way to access this part of the materials space.
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