Investment Clubs [1/6/2011]
Let’s face it. Your fellow investment club members aren’t going to stick around forever. Hey, we’re not here to pass judgment — there are lots of reasons why folks drop out of clubs. People move away or go through changes in work or family responsibilities that make it harder to stay involved. Sometimes, they simply lose interest.
Financial Issues to Review in Difficult Times [11/29/2010]
When I bought my first used car, Dad said “caveat emptor” — let the buyer beware. Great advice for buying a car and even better advice for buying stocks. Unfortunately for the casual reader of financial statements, many accounting methods and typical cost-cutting schemes may make results appear as if the company is clouding reality.
W.W. Grainger, Inc. [11/21/2010]
This article is an edited adaptation of an online stock study of W.W.Grainger, Inc. conducted on Jan. 7 by Brian Altschul, a director ofBetterInvesting’s New Jersey Chapter.
Equality? Balderdash! [11/13/2010]
Don’t get me started on “equal ownership” in an investment club. Balderdash — there’s no such thing!
In Clubs, Capitalism Trumps Democracy [11/6/2010]
We’re in the thick of election season and soon Americans will be going to the polls with an eye toward a) kicking the bums out or b) keeping the bums in.
With Stocks, Resist the Collecting Mania [10/27/2010]
In the play (and film) Amadeus, Emperor Joseph II and his sycophantic courtiers admonish the young Mozart for employing “too many notes” in his latest composition. Mozart is aghast at this criticism, explaining that his work uses only as many notes as are required, no more and no less.
Best Buy Co., Inc. [10/21/2010]
The 2009 liquidation of Circuit City after its bankruptcy has
significantly changed the competitive landscape in the $166 billion
consumer electronics industry. For one thing, Circuit City’s departure
reinforced the position of Best Buy Co., Inc. (ticker: BBY) as the
world’s largest consumer electronics retailer.
Two Good Candidates, But Only One Portfolio [10/14/2010]
(Originally published in SFO Magazine)
Top 100 Companies [10/7/2010]
As in last year’s survey, the biggest mover in this year’s survey was a small company that wasn’t even in the top 200 companies last year. PetMed Express, which provides prescriptions for dogs and cats and other veterinary supplies directly to consumers through the Internet, debuts at No. 30. Other top movers included technology companies, communications businesses and biotech firms. Clubs also apparently took advantage of last year’s market plunge to buy high-quality companies such as IBM.
Fundamentals of Investing [10/1/2010]
Our February issue traditionally includes an invitation for you
to bring a visitor to your investment club meeting so that they can
discover how clubs can help them build wealth and can learn about
BetterInvesting’s philosophy. Two years ago we published an article
explaining our approach to investing that proved popular with readers.
This month we’ll tackle the subject again. If you’re bringing a guest
to a meeting or want to introduce someone to the BetterInvesting
approach, you might consider giving them this issue.Brad Perry,
in his classic book Winning the Investment Marathon, wrote that
investing “is pursued most successfully in a simple, straightforward
way.” This is the Golden Rule for most investors who employ fundamental
analysis and have a long-term perspective. Buy stocks of high-quality
companies at good prices and continue holding them as long as the
companies’ performance merits doing so.
Frontier Days for Investing in Emerging Markets [9/23/2010]
Before the Great Recession, emerging markets were like dessert — a nice addition to a portfolio, but hardly necessary.
Leveraged, Inverse ETFs Exotic, Risky Options [9/16/2010]
If you’re a day-trader, you may find leveraged and inverse
exchange-traded funds useful. If not, you might find they carry
excessive risks that could tank your entire investment, warned the
Securities and Exchange Commission and Financial Industry Regulatory
Authority in a joint release in August.
Earmarks of a High-Quality Fund [9/9/2010]
When you’ve been through the downturn we’ve experienced, it
makes sense to get back to basics. For mutual fund investors who
believe that actively managed funds will outperform index, or passively
managed, ones, the big question is how to recognize a high-quality fund.
Judge a Fund by the Company That Keeps It [9/2/2010]
Megafund companies can seem pretty indistinguishable from one another,
but a report from fund-data tracker Morningstar reveals that not all
fund companies are created equally. There’s a significant difference
between fund companies in terms of how their funds perform over the
long term, how long their managers stick around, how much their
managers have invested in their funds and how well they carry out their
Investing’s a Manageable ‘Risky Business’ [8/25/2010]
Investing in the stock market is risky business. Although admittedly not in the same category as the “risky business” in which Tom Cruise’s character found himself embroiled in the 1980s film of the same name, buying and selling stocks carries a significant level of risk nonetheless.
Profits Rebounding for Most U.S. Companies [8/18/2010]
In this era of serial macroeconomic instability, it’s easy to forget that stock prices are ultimately driven by earnings. And while structural weakness in the eurozone was the crisis du jour this spring — set against a backdrop of tighter Chinese monetary policy and waning stimulus spending in the U.S. — profits have been soaring for the vast majority of domestic corporations.
Excel Queries Snare Stock Data From Websites [8/11/2010]
Excel Web queries have been around for a decade, but they’re still a slick way to feed data to your pet investment spreadsheet.
Emotion-Free Selling [8/4/2010]
It’s tough to know when it’s time to sell a stock from your investment club portfolio, especially one that’s underperforming your expectations.
Putting PEGs in Practice [7/28/2010]
What is the PEG ratio and why is it useful? The PEG ratio is simply the price-earnings ratio of a stock divided by its projected earnings growth rate. It’s a quick and dirty statistic that approximates the analytical insight that can be gained by performing the much more complicated analysis of discounted cash flow.
Choosing A-Plus Options for 529 Plans [7/21/2010]
As college savings assets in 529 plans grow and states add plans and investment options, you have more investment options than ever. Picking an option can be tricky, and even after doing so your job isn’t done. 529 plans will occasionally change investment managers or add or subtract investment options, so it pays to stay on top of investment-related developments so that you can select the options best suited for your situation.
Five From Consumer Discretionary [7/14/2010]
In March of 2009, we featured five small-company stocks from the consumer discretionary sector.
China Tries to Rein In Economic Dragon [7/7/2010]
The Chinese economy must be getting out of control, because the Chinese government is doing the unthinkable: It’s desperately trying to put the brakes on it. When you pump a stimulus package that represents 14 percent of gross domestic product through a fire hose into an economy that was already on shaky bubble foundation, in a very short time you’ll have some serious unintended consequences — you’ll get superbubbles.
Hedge Your Bets With Manning & Napier Fund [6/30/2010]
Even though the Dow Jones industrial average broke through 11,000 in mid-April, you probably haven’t forgotten the nightmarish lows of 2008 and 2009. If you’re looking for a fund that can protect you on the downside and offer some potential for capital appreciation, Manning & Napier Pro-Blend Conservative Term (ticker: MNCIX) may be for you.
Searching the Fund Universe [6/23/2010]
Even the most dedicated stock investors usually own a fund or two, whether in a 401(k), 403(b), college savings plan or another fund-focused investment account. Say you’re trying to choose the best funds out of the handful your employer’s retirement plan offers or you’re looking for funds to fill a niche in your portfolio. Sites such as Morningstar or Yahoo! Finance are still popular for mutual fund screening. Index Universe is another site that can help you sift through funds, although it’s better suited for exchange-traded funds and index funds because it leaves out several screening fields useful in evaluating actively managed mutual funds.
REITs, WHFITs and LPs — Oh, My! [6/16/2010]
All the acronyms in the headline as well as royalty trusts are investments that can give a club treasurer headaches. The cause may be work-arounds in the accounting entries or special tax treatment, but consider the extra work for the treasurer before buying these investments.
Our Unfunded Pensions Bomb Is Ticking [6/9/2010]
Underfunded state pensions are the multitrillion-dollar debt you’ve probably never heard of. Warren Buffett, Berkshire Hathaway’s chairman, has warned that state funding for pensions is “woefully inadequate.” This shortfall in defined-benefit pension plans will have to be made up by taxpayers, bondholders and state pensioners.
Harbin Electric’s Motors Keep China Revved Up [6/2/2010]
Harbin is a key inland port for China, much as Chicago is for the United States. The city, which is near Siberia, is best known for its power equipment and is responsible for about 30 percent of all installed hydro and thermal power capacity in China. All this power is transferred and generated by electric motors. These motors are made by Harbin Electric (ticker: HRBN), which merits closer attention for investors looking for overseas exposure to the Chinese growth story.
For Stovall, the Song Remains the Same [5/26/2010]
Sam Stovall has seen it all before. As the chief investment strategist of Standard & Poor’s Equity Research, he lives among historical market data and spots trends that he hopes will help investment decisions.
Estate Planning With Living Trusts [5/19/2010]
As we write this article in 2010, if you die this year there is no federal estate tax due. By the time this article is printed, however, the laws may have changed. The fact that taxes may not be due does not relieve you of the responsibility of making sure your estate plan is current. In other words, it’s important that your documents clearly state to whom you want to leave your assets.
Come On, Get Happy [5/12/2010]
J.D. Roth is my favorite type of financial expert: someone who has earned the position of advice-giver by graduating with honors from his personal school of hard knocks. Although the story of how he got himself into trouble isn’t anything out of the ordinary, his strategy for climbing back out of that hole sure is.
Choosing Between Stock or Cash [5/5/2010]
Determining how best to pay off a member withdrawal often causes stress and strife in investment clubs. Members debate the merits of paying the departing partner in cash or by transferring shares of stock, or they argue over whether it’s best to raise cash by selling stock or requiring additional member contributions.
Grace Period [4/28/2010]
During the past 12 months, we have had a partner who has lost
her employment twice, has been hospitalized and has had some unexpected
expenses for her car and home. It really has been a mounting financial
struggle for this individual, who joined our investment club over 12
years ago. Overall, this partner has an excellent record of attendance
and has actively served as an officer since our club was officially
organized in 1997. Up until April 2009, she has been able to meet her
$25 monthly payments.
Make the Most of Your Retirement Contributions [4/21/2010]
Given today’s longevity, most people will be retired longer
than they’ll work. Unfortunately, few companies provide pensions, and
we’re unsure how long Social Security will provide retirement income at
its current levels. Therefore, it’s up to each of us to make saving for
our own retirement a priority. Start contributing to a retirement
account as early as you can and as much as you can. If you have adult
children struggling to make ends meet, help them if you can by
providing money so that they can max out their retirement plans.
The Road to Riches [4/14/2010]
The U.S. Securities and Exchange Commission offers a friendly,
easy-to-digest website to help people in any stage of life learn to be
smart investors. Whether you’re just getting started, saving for
college tuition and retirement or basking in the glow of your golden
years, Investor.gov has great information and tools. The design is
refreshingly clean, and the site is clear and as easy as 1-2-3 to
Just Because You Can Doesn’t Mean You Should [4/7/2010]
The income restriction that kept some people from converting to a Roth account disappeared on Jan. 1, 2010. Just because you can convert to a Roth, though, doesn’t mean you should.
2012 Top 100 Companies [3/31/2010]
Diesel-engine manufacturer Cummins topped this year’s list of biggest movers among investment club holdings, showing that BetterInvesting members will seek growth in industries many investors consider too mature or mundane. Bio-Reference Labs is the only repeat company from last year’s list, going from No. 195 to No. 41 in just two years.
Guiding Light [3/24/2010]
In making projections of sales and earnings growth, some BetterInvesting members look to company guidance for help. But the uncertainty surrounding the credit crisis has made doing this more difficult.
Trading Down [3/17/2010]
The following is from a Jan. 4 interview with Terrance Odean, the Rudd Family Foundation Professor of Finance at the Haas School of Business at the University of California, Berkeley, conducted by Dan Richards, president of Toronto-based Strategic Imperatives.
Planning for Immediate Retirement [3/10/2010]
As we pointed out in our last article, the problem in calculating what your retirement income will be is compounded by the fact that few retirees will receive a pension providing them with a dependable lifetime income.
Inside Pitch [3/3/2010]
A woman participating on BetterInvesting’s Investing Discussion List recently said that during a club meeting, she mentioned that her brother worked for a company the club held in its portfolio.
The Inefficiency of the Efficient Market Theory [2/24/2010]
The writer, a longtime author of books on financial topics, offers his view of the efficient market theory. The subject is hotly debated by supporters and critics and in recent years has come under increasing scrutiny.
Don’t Get Even — Get Even Richer! [2/17/2010]
You don’t actually have to follow through to get some satisfaction out of plotting revenge after you’ve been wronged; just imagining what you’d do can often get you to a better place.
The Golden Compass [2/10/2010]
Before sending an expedition to explore the New World in 1511, King Ferdinand of Spain made clear one of his objectives. “Get gold,” he ordered his commanders, “humanely if you can, but at all hazards, get gold.” Five hundred years later, some investors still lust after the metal.
Apple Inc. [2/3/2010]
A solid brand identity, strong customer loyalty and a track record of successful innovations have long characterized Apple Inc. Those business advantages have helped the company keep pace with — or stay ahead of — its rivals in the highly competitive consumer electronics industry.
Collective Intelligence [1/27/2010]
Add StockLip.com to the growing list of crowdsourcing blogs that are quickly democratizing the investment advice business.
How Not to Invest [1/20/2010]
We’ve all made stupid financial decisions. Think how much worse you’d feel, though, if yours made the headlines and measured not in hundreds or thousands of dollars but in billions.
Taking a Second Look at First Impressions [1/13/2010]
First impressions, as we know, can often be deceiving. In Jane Austen’s Pride and Prejudice, the heroine, Elizabeth Bennett, makes a decision about the character of the wealthy and handsome Mr. Darcy based on several erroneous misconceptions.
Corporations Are Taxpayers, Too [1/6/2010]
Corporations, like individuals, pay tax on their income, specifically on their receipts minus their expenses. Those expenses include wages, depreciation, capital expenses and a range of other costs, including the interest they pay to bondholders and other lenders.
Turkcell Connects Turkey [12/30/2009]
In the United States the use of cellular phones is widespread. Certain emerging markets have a lower penetration rate, however, and this presents investment opportunities.
Resolutions for the New Year [12/23/2009]
January marks the beginning of a new year and is the time when many of us make resolutions of what we hope to accomplish. Often these resolutions are made and then broken during the first month.
Fundamentals Apply at Wasatch Small-Cap Fund [12/16/2009]
A few years ago, virtually every decent small-cap fund shut its doors to new investors, as floods of money threatened to turn most investing strategies for small-cap funds on their head. But today most of the funds that closed, including Wasatch Small-Cap Growth Fund (ticker: WAAEX), have reopened to new investors.
A Weak Argument [12/9/2009]
Events have a way of confounding the consensus, but the oft-repeated case for a weaker dollar appears well-founded.
Keeping Up Appearances [12/2/2009]
If you’ve read the 1996 best-seller The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, you already know it’s hard to identify the truly affluent based on appearance and behavior. Now Millionaire co-author Thomas Stanley is back with a dose of financial tough love for high-spending wannabes in Stop Acting Rich … and Start Living Like a Real Millionaire.
Meeting Reinforces Role of Emerging Markets [11/25/2009]
The Group of 20 Nations’ meeting in Pittsburgh at the end of September confirmed the rise of emerging markets.
Year-End Tax Planning for 2009 [11/18/2009]
As we approach the end of 2009, now is an ideal time to review your tax situation. In the past we’ve recommended deferring taxable income to the following year to minimize the current year’s tax bill. This year we suggest the opposite, as it is our opinion that taxes will be higher next year than this year.
Forget About It [11/11/2009]
During an invigorating session of Web surfing, you might log in to dozens of online accounts. Optimists believe they can remember all their logins and use different combinations of user names and passwords.
Staying Clear of the Madding Crowd [11/4/2009]
Being a contrarian investor is often dangerous, but it may be necessary to achieve superior investment returns. In this article we explore the notion of contrarian investing and put its principles into perspective.
Oil’s Well With Price Volatility [10/28/2009]
Oil prices have fluctuated radically over the past 20 months. To understand why this is a good thing for companies that use or produce oil, pretend you eat only steak and lobster. If the price of steak were always $20, which would you prefer to be true about the price of lobster: (a) it’s always $20, or (b) half the time it’s $10, and the other half it’s $30.
Diversification: A Great Idea, But Don’t Overcook [10/21/2009]
As investment strategies go, diversification is easy to love. Nobody has to convince you that variety is the spice of life, that you shouldn’t put all your eggs in one basket or that there’s safety in numbers.
Bringing New Members Into the Fold [10/14/2009]
Do you have a new club member application form I can have a copy of, or a link to one? Something with information, Social Security number — stuff that needs to be completed when a new member joins the club?
Bear Markets a Silver Lining for Young Investors? [10/7/2009]
From the summer issue of the T. Rowe Price Report — Would you rather start investing for retirement during a bull market or a bear market?
A New Tax Season [9/30/2009]
As the end of the year approaches, many people start to think about family, holidays and … tax planning? Talk about putting a crimp in a festive spirit.
Battle of the Bonds [9/23/2009]
By nullifying bankruptcy law in the Chrysler bailout, President Obama harmed bondholders and increased the cost to unionized companies of raising funds from bond markets. To show this, let me first provide an example of how bankruptcy law works.
The A-B-Ds of Medicare [9/16/2009]
Many of our clients ask us questions about applying for Social Security and Medicare benefits. Most understand how Social Security works, but there’s more confusion about Medicare. Thus, we thought we would devote this month’s column to the basics of Medicare.
Charting Your Course [9/9/2009]
If a picture really is worth a thousand words, time-starved investors might consider examining charts that depict various economic and market conditions. Though investment charts are often associated with technical analysis, they also can be used by investors with long time horizons to make informed decisions.
Capitalist Manifesto [9/2/2009]
The word capitalism gets tossed around a lot, especially by the financial media as they endlessly analyze every nook and cranny of this current economic crisis.
Hedging Our Debts [8/26/2009]
It’s the 2016 U.S. presidential campaign. The economy never recovered from the housing crash. Both major-party candidates have been generating plans to help the economy, but justifiably cynical voters aren’t buying them.
Earmarks of a High-Quality Fund [8/19/2009]
When you’ve been through the downturn we’ve experienced, it makes sense to get back to basics. For mutual fund investors who believe that actively managed funds will outperform index, or passively managed, ones, the big question is how to recognize a high-quality fund.
Dividend Growth: the Hidden Fundamental [8/12/2009]
Many investors, even the most conservative ones devoted to fundamentals, tend to overlook or ignore dividend yield as a primary indicator. One reason is that current yield — dividend per share divided by the stock’s price — is somewhat misleading.
How to Be a Good Client [8/5/2009]
We recently wrote an article about selecting a financial planner. This is a popular topic. But little is written about how to be a good client once you’ve made your selection.
The Quest for Railroad-Track Growth [7/29/2009]
Sustainable earnings growth is a Holy Grail sought by investors of all stripes. Value investing guru Benjamin Graham searched for it, choosing stocks based in part on a management team’s ability to generate an upward trend in earnings over many years.
Ground Rules for Treasurers [7/22/2009]
If treasurer is the scariest position in your club, perhaps the members have inadvertently made the job more complicated than it needs to be.
Diamonds in the Rough [7/15/2009]
About 12 years ago I received a book in the mail, The Essays of Warren Buffett: Lessons for Corporate America, published by the Cardozo Law Review. I doubt the book ever made the New York Times best-seller list. It should have.
Your Money and Your Life [7/8/2009]
The economy might be dragging, but one business is booming: identity theft. Every year, about 9 million Americans discover that other people are pretending to be them.
Staying on Course [7/1/2009]
With the banking crisis finally showing signs of loosening its grip, now could be a good time to calculate how far off course the economic storm might have blown your financial plan.
Re-evaluating Executive Pay [6/24/2009]
Thanks to the recession, shareholders outraged about overpaid executives at underperforming companies might see significant changes in corporate leaders’ pay this year, a recent survey suggests.
Money Crazy [6/17/2009]
The world lost $50 trillion in assets last year. If the earth had been beset by plagues, asteroid strikes or killer robots, it would be easy to understand this titanic loss. But because 2008 didn’t bring worldwide physical destruction, where did the $50 trillion go?
Finding Life Amid the Housing Ruins [6/10/2009]
The American housing market is ailing badly, and many European countries such as Ireland, the United Kingdom and Spain are suffering perhaps even more from their respective housing bubbles.
Danger in 140 Characters or Less [6/3/2009]
I’ve become a Twitter addict, and I know I’m not alone. Depending on where you look, the number of Twitter users ranges from 1 million to tens of millions. Perhaps the most significant point of this online social media tool, though, isn’t the number of users but how they use Twitter.
Beware Delisting, Reverse Splits [5/27/2009]
The banking crisis and recession are taking their toll on stock prices. Although a rebound in market indexes has brought some relief, several components of major indexes are trading near historic lows.
Selecting a Financial Planner [5/20/2009]
In 2006, Lee Eisenberg wrote a book called The Number. The question he posed in this book was: How much money do you need to secure the rest of your life?
Inflation’s Deflating Effect on Stocks [5/13/2009]
As unemployment increases and retail sales falter, the threat of inflation isn’t getting much attention. Instead, the government is focused on trying to stimulate spending as a way to end the recession.
Let’s Get Back to Earnings [5/6/2009]
During the 49 years I’ve been involved in the stock market, I have observed that it’s always one of extremes. Never, however, have I seen one as extreme as in the past year.
The Corporate Stalker [4/29/2009]
An unknown stalker instilled fear into my life during college. That person broke into my apartment and stole some of my clothing. The fact that someone could enter my home and make such a personal statement was frightening.
How Banks Make (and Lose) Money [4/22/2009]
Early in March, Citigroup made big news when it reported profits for the first two months of the year. The seemingly dramatic turnaround helped to lift the entire market, but the news really shouldn’t have been so stunning.
The Recession’s Silver Lining [4/15/2009]
Although overall it’s horrible, the recession will still offer benefits to many organizations. The college where I work, for example, is considering increasing professors’ workloads.
What’s Your Tolerance for Risk? [4/8/2009]
The dictionary defines risk as “the possibility of suffering harm or loss; danger.” But many people think of risk as the possibility of making money more than the potential of losing it.
Generic Drugs’ Future Far From Ordinary [4/1/2009]
It doesn’t take a crystal ball to realize that the long-term prospects are bright for the generic drug industry.
Reallocation Nation [3/25/2009]
The extreme bear market has caused stock prices to fall more than the price of most other financial assets. Consequently, the percentage of your wealth in stocks is probably lower than it was before last fall.
Many Snappy Returns [3/18/2009]
Taxpayers and businesses spend 7.6 billion hours every year to file their tax returns. That’s the equivalent of 3.8 million people working full time for a year.
Growth an Ageless Style [3/11/2009]
I’ve devoted the last few columns to writing about the benefits of long-term investing. Every month I pen this column, the stock market is turning down a bit more, so much so that it’s beginning to sound like a broken record. I’ve quoted some experts familiar to the BetterInvesting community in recent columns in discussing how to respond to this type of market, so this month allow me focus on someone who gaave me a great deal of insight through the years — Tom O’Hara, our association’s co-founder.
Going by the Book [3/4/2009]
Heading the list of questions investors sometimes struggle to answer is the perennial “What’s this stock worth?”
Taking Parents Out of the Tuition Equation [2/23/2009]
When my aunt died last year, she left a surprise contribution to my daughter’s college education. The caveat: I wasn’t allowed to touch the funds. My feelings might be hurt, but I was ecstatic. My daughter’s tuition would be paid with little effort on my part. Please don’t think I’m crass or heartless; bypassing parents in monetary gift giving is a great idea.
Money Talks [2/18/2009]
You’ve probably heard experts cite money troubles as the single greatest cause of divorce. Financial journalist Jeff D. Opdyke, former writer of The Wall Street Journal’s syndicated “Love & Money” column, has a slightly different theory: “It’s not the money that’s at the root of money fights; it’s the inability to communicate effectively about money.”
Calling All Savers [2/11/2009]
With multiple telephone lines coming into your home and a mobile phone or three, what you pay to reach out and talk to someone adds up.
Bringing Company Politics to Light [2/4/2009]
Shareholders will likely benefit this year from a movement to protect stock values that encourages boards of directors to pay closer attention to the purpose and beneficiaries of their corporations’ political spending.
The Nuts & Bolts of Personal Risk Management [1/28/2009]
Financial planning involves many components. One important but often overlooked part is protecting the assets you’ve accumulated with property and casualty insurance. For expertise on this kind of insurance, we consult specialists. So for this article we asked Mitch Freedman, assistant vice president of Lane McVicker Personal Insurance, McLean, Va., for his insights.
Last Call [1/21/2009]
Now that mobile phones are practically permanent ear attachments, we have to face the newest scourge of electronic life: mobile spam, aka m-spam. Telemarketing calls to your landline are annoying. Unsolicited calls and text messages to your mobile phone are infuriating: They not only intrude on your time but also consume precious plan minutes or add texting charges to your bill.
Choices in Raising Capital [1/14/2009]
When a corporation needs operating capital to keep its business running, it typically has some flexibility in raising cash. That’s because the company can tap its current investors or attract new ones either by selling stock or issuing bonds. In fact, many corporations do both, though generally not at the same time.
Buffett’s Advice Always Fit to Print [1/7/2009]
As a freshman at Michigan State University in 1952, I was required to read The New York Times for my Written and Spoken English class. Although we discussed the newspaper for only about two weeks, I continued to receive it and on occasion would pick it up to glance at the articles.
The Conversion to International Standards [12/31/2008]
The evolution of accounting standards, beginning with Luca Pacioli’s creation of double-entry accounting, has always been a dry subject. But with events such as the Wall Street bailout, Enron and Sarbanes-Oxley, accounting standards have been a popular topic in the business press.
Six Defensive Moves in a Down Market [12/24/2008]
Market volatility is enough to give any investor heartburn these days. Although there have been some notable gains — the Dow Jones industrial average’s 889.4 point gain on Oct. 28 being one of the most impressive ever — most of the volatility has been on the downside.
Fair Game for Asset Values [12/17/2008]
If you want to know what a stock sells for, you look at its current market price. That price might be different from what it was yesterday or what it will be later today or tomorrow. But it’s what the stock is worth right now because it’s what you could sell it for. The value of an investment, in this sense, is determined by how interested other investors are in owning it at this moment.
Let Banks Bid for Your Savings [12/10/2008]
Interest rates are as low as they’ve been in ages on short-term savings options such as savings accounts, money market accounts and certificates of deposit. And with the stock market looking like the world’s largest roller coaster these days, lots of folks are especially interested in finding relatively safe places to stash some cash and still earn a reasonable return.
Painful Times Call for Common Sense [12/3/2008]
The third-quarter report from our friends at investment management firm David Wendell Associates in Portsmouth, N.H., provides a sensible look at the meltdown of financial stocks and what it means to world economies. The newsletter points out that we’ve survived similar periods and that long-term investors should continue seeking stocks of high-quality growth companies, many of which are trading at historically attractive valuations.
Rewarding Capitalism [11/26/2008]
I was too young to have ever seen Will Rogers appear on stage. Even if I had been old enough, my parents never could have afforded tickets to see him, especially for the entire family. Still, I read a number of remarks he made during his performances and enjoyed his down-to-earth humor and the clarity and common sense of his messages.
Home Economics [11/19/2008]
When headlines scream about financial calamity, and the future stability of Wall Street is far from clear, hunkering down at home seems awfully attractive. But what happens when your family finances are just as messy as those in the headlines? Where are all those generous bailouts when you need them for yourself?
Days of Whine and Dozes [11/12/2008]
Whiners have a holiday, and it probably was created because someone whined about not having a holiday. National Whiner’s Day falls on Dec. 26, presumably so we can salute those ungrateful crabs who always want what they don’t have on the day after they whimper endlessly over being (wrongfully, of course) gifted.
Constructing the Major Indexes [11/5/2008]
The best-known stock market indexes — including the Standard & Poor’s 500, Dow Jones industrial average and NASDAQ-100 — get a lot of attention in a bull market. They get even more when the markets turn bearish.
Defining Value [10/29/2008]
Value, like beauty, is in the eye of the beholder. As “a beggar’s dime is worth more than a king’s gold,” seeking value in the stock market is often subjective. Some investors think that a value stock should be a mature company; some think it has to trade at a low price-earnings ratio; and some believe that a high dividend yield is key.
Five From the Industrial Sector [10/22/2008]
When visiting clubs throughout the Mid-Michigan Chapter, I find that a common concern is finding small-company stocks to study. Most clubs understand BetterInvesting’s recommendation that these stocks account for one quarter of their portfolio, but club members have difficulty finding appropriate candidates to study.
It Figures: Auditing Your Club [10/15/2008]
What is the procedure for investment clubs to be audited? How often should a club be audited? Do you have any recommendations of auditors?
When Funds Make Waves [10/8/2008]
They’re not always profitable, but the buy-sell decisions of mutual fund managers nonetheless affect individual investors’ portfolios. Like giant tankers changing direction at sea, institutional trades create waves that can temporarily knock a stock off its long-term course.
Wall Street’s Animal House [10/1/2008]
When the stocks in your portfolio begin to climb in value, what’s your first thought? If it’s “What should I buy next?” you have a glimpse into what fuels a bull market. When investors are rewarded with rising prices — and are confident they can choose winners — they tend to buy more. That demand drives prices even higher, confirming their expectations and boosting their optimism. Strong returns, in turn, draw more investors as more money flows into the market.
Working With a Full-Service Broker [9/24/2008]
The 18 members of Apple Investments of Brighton, Mich., built their $400,000-plus portfolio using their stockpicking skills and double-checking them with their full-service broker.
The Forks in the Road to Investing Success [9/17/2008]
I’m sure you’ve heard the chestnut that the hardest choice isn’t the one between right and wrong but the one between two rights. When you’re faced with a decision between two potentially profitable investment strategies, how do you find the clarity that will leave you content with your selection?
In Praise of Speculators [9/10/2008]
Politicians are blaming speculators for the recent rapid rise in the price of gasoline. Speculators may indeed be raising oil’s price, but I’m not sure. If they are, however, they deserve our praise.
Taking Aim at Target Prices [9/3/2008]
What would make investing a whole lot easier? How about knowing what the price of a particular stock will be next year at this time?
Keeping Costs Down While Gassing Up [8/27/2008]
As if the lockdown on mortgage lending isn’t enough, now folks have to take out a home equity loan just to fill up their gas tanks. If you absolutely, positively have to get somewhere by car, you’ll want to find the cheapest gas around.
Advice for Recent College Graduates [8/13/2008]
In September recent college graduates are starting their first jobs. Parents sometimes ask us to give their children some general guidelines as they begin their working careers.
Little Common About Preferred Stock [8/6/2008]
There’s something about the word preferred that puts a smile on your face. It conjures images of better treatment, faster service and lower rates. It’s the antithesis of the ordinary, everyday, common experience.
The Perils of High-P/E Stocks [7/30/2008]
Financial journalist Jason Zweig has a well-known interest in behavioral finance, the study of how investors’ minds work — sometimes against their best interests. In his latest book, Your Money & Your Brain, he deals with the “story stock,” the must-have equity of the moment that only investors with the strongest convictions can avoid.
Worry Nationally, Don’t Overreact Locally [7/23/2008]
The majority of consumers over age 45 lost money in the stock market in recent months and fear the economic slowdown may worsen, but most aren’t taking drastic action with their stock investments, according to a recent survey by AARP.
Overseas Companies, Home Market [7/16/2008]
Diversifying your portfolio with international stocks isn’t just a smart idea. It’s also easy — especially if you invest in American Depositary Receipts.
Amazon’s POD Policy Threatens Its Value [7/9/2008]
The Wall Street Journal got it wrong. Amazon.com’s recent ruthlessness won’t lead to higher profits.
Computing Cognizant’s Potential [7/2/2008]
A well-balanced portfolio includes rapidly growing, relatively small companies as well as larger, more stable ones.
IRAs and Other Retirement Savings Plans [6/25/2008]
Last month we discussed 401(k) and 403(b) plans you can contribute to as an employee. This month we’ll review some of the other retirement plan options.
How To Market Investing to Teens [6/18/2008]
I learned a lot about public relations at a 1990 seminar where one of Exxon’s marketing experts explained how the company handled the 1989 Exxon Valdez incident. I walked away from PR and marketing that night and never returned; I didn’t have it in me to be a spin doctor. So the marketing magazine sample I received in the mail the other day came as a surprise.
Future Shock? Not for Earners and Retirees [6/11/2008]
Consumer confidence generally declines in an economic downturn, but retirees and those who generated their own wealth are less likely to feel nervous, according to two recent surveys.
Diving Into Foreign Bond Funds [6/4/2008]
As yields on high-quality bonds slip in the United States, more investors are turning to foreign bonds and foreign bond funds to boost portfolio yield and provide more diversification.
Bank Examiners [5/28/2008]
History tells us that when an economy gets sick — really sick — banks are usually at the heart of the problem. Which makes sense, of course, since a banking system is to an economy what the cardiovascular system is to the body.
A Return Performance Worth Watching [5/21/2008]
Whether you’re considering a new investment or deciding whether to hold or sell a security, performance is a key element in decision-making. In evaluating returns, however, it’s essential to know what you’re looking for. That’s just as true for exchange-traded funds as it is for individual stocks.
Nightly (or Anytime) Business Report [5/14/2008]
An increasing number of e-mails arrive in my inbox from folks asking how they can get the investment reports they want from Quicken software.
Bear on the Run [5/7/2008]
A classic bank run caused Bear Stearns’ mid-March fall. Here’s how a run works: Imagine that a small-town bank collects $30 million in deposits, then lends $25 million of it to homeowners.
Stimulus-Check Destinations: Debt, Savings, Investments [4/30/2008]
Twenty-five percent of those receiving checks as part of the government’s $168 billion economic-stimulus package plan to save or invest the money instead of spending it right away, according to a survey by Kansas City, Mo.-based American Century.
Sanofi-Aventis: High Yield, Low Valuation [4/23/2008]
The drug industry is in trouble — at least that’s what the stock market is telling us. Many of the world’s largest pharma companies are trading at multiyear lows, and all of them seem to be facing several problems.
Mitigating the Inherent Risk [4/16/2008]
Although regulatory agencies cover portfolio assets, clubs still need to educate themselves about fraud.
Investment Clubs [4/9/2008]
Longtime investors from several clubs review strategies for recruiting and retaining members.
Managing Risk With Asset Allocation [4/2/2008]
When the market is choppy, your natural inclination is to shake up your portfolio. But this generally isn’t the best way to improve your returns or overall portfolio quality.
Investors Eye International Stocks [3/26/2008]
Worried that the economy may slide into a recession this year, individual investors plan to protect their core assets by making conservative moves and monitoring opportunities among international stocks, according to a recent survey.
Selecting a Financial Planner [3/19/2008]
We often see the media using the terms financial adviser and financial planner interchangeably. But there are distinctions between the services each of these professionals provides. A financial adviser’s primary function is to manage your investments. A financial planner takes a more comprehensive view.
Building in Room for Error [3/12/2008]
The margin of safety is one of Benjamin Graham and David Dodd’s most enduring contributions to the world of investing. The two coined the term in Security Analysis in 1934, and Graham expanded on the concept in The Intelligent Investor in 1949.
A Special Support in Value Investing [3/5/2008]
When you’ve identified a company to add to your portfolio, the quest for value may take you in an unusual direction. Let’s assume you’ve evaluated a company’s fundamentals and determined the price you’re willing to pay, which is based at least partly on its discounted cash flow or the present value of the dividend income you estimate it should provide in the future.
ArcelorMittal Transforms Steel [2/27/2008]
During 2006 a large merger took place in the steel industry. Indian self-made billionaire Lakshmi Mittal started a hostile takeover battle for Luxembourg-based Arcelor. After months of negotiating the merger was completed and ArcelorMittal was created.
Investing in Funds: Playin’ the Fools Game? [2/20/2008]
I sold one of my blogs for a small fortune in January. After escrow wired the funds to my bank account, my friends and family wanted to know what I would do with the money.
Avoiding That Blogged Down Feeling [2/13/2008]
lenty of folks don’t feel comfortable managing their finances online. But even if you don’t want to use the computer to handle such sensitive tasks, there’s no reason to hesitate in taking advantage of all the information and tools available on the Internet.
Four Questions for Your Section 529 Plan [2/6/2008]
When you’re evaluating Section 529 college savings plans, make sure you thoroughly understand the features of their funds, advises Amy Buttell Crane.
Tracking a Small-Cap Baron [1/30/2008]
Tracking the stock buying of good mutual fund managers is one way to mine for small-caps, writes BetterInvesting editor Adam Ritt.
When Inexpensive Meets Opportunity [1/23/2008]
BetterInvesting-style investors spend their time seeking growth stocks. But value investing is another proven strategy, dating back to the days of Benjamin Graham and David Dodd, authors of the seminal investing book Security Analysis in 1934. Graham and Dodd warned that anyone who paid more than 16 times earnings for a company would be “likely to lose considerable money in the long run.”
Beyond the Buzz [1/16/2008]
Timothy Geithner’s speech discusses various types of liquidity, how liquidity is measured and how monetary policy determines liquidity levels.
Value Investing: Bargains With Caveats [1/9/2008]
BetterInvesting methodology relies on studying a company’s revenues, earnings and other fundamentals in a search for quality growth companies whose stocks are selling at reasonable prices. Another type of fundamental investing seeks so-called value stocks.
The Case for Core Earnings [1/2/2008]
A few years ago, before the Enron “surprise,” we all trusted corporate financial statements, and even more, the above-reproach auditors who independently examined and certified the financial records of their publicly traded clients.
Six Questions for Your Fund Company [12/26/2007]
If you’re a buy-and-hold mutual fund investor, it’s easy to roll along owning shares in a particular fund for years. As long as the fund is performing at least in line with its benchmark index, there’s little reason to make a change.
Preparing for the 2007 Tax Season [12/19/2007]
Get your records organized now for the tax-preparation season, suggest planners Alexandra Armstrong and Karen Preysnar.
Selling Short: A Strategy for Price Declines [12/12/2007]
When you invest in equities, you’re giving a vote of confidence to the stock you purchase because you expect it to add value to your portfolio. You may be anticipating a short-term increase in price so that you can sell your shares at a profit. Or you may be looking for long-term gains from dividends and price appreciation.
Basic Internet Stock Screeners [12/5/2007]
The basic screener you get at MSN Money without the download is, well, basic
The Virtues of Dollar-Cost Averaging [11/28/2007]
If the biggest stumbling blocks to building your investment accounts are deciding what to buy and believing you don’t have enough money on hand, you might want to consider a convenient, simple strategy called dollar-cost averaging.
With Taxes, Firms Have Control Issues [11/21/2007]
You can’t ignore your own tax bills, but when you’re trying to find profitable and growing companies within a sector, paying too much attention to taxes can really obscure analysis.
Tax Planning [11/14/2007]
Planning portfolio changes strategically can allow you to minimize the taxes you’ll owe for this year.
The Case Against Saving for College [11/7/2007]
Although the case for saving for college is a strong, well-documented one, some people believe the concept is overrated. This month we’ll present this argument.
The Benefits of Health Savings Accounts [10/31/2007]
Health savings accounts make more and more sense as a way to line up adequate health coverage, say planners Alexandra Armstrong and Karen Preysnar.
Retirement Faces Changing Times [10/24/2007]
My mother used to tease me about her ability to get discounts through the Association for the Advancement of Retired Persons. “Just think — when you’re 55 you’ll be able to get hotel discounts, too,” she’d say.
Branded Unsafe [10/17/2007]
Modern economies run on trust. We purchase toys trusting they’re lead-free. We buy tires trusting they’re safe. And we even procure dog food trusting it isn’t contaminated with poisons.
Market Cycles Turn, Turn, Turn [10/10/2007]
Comparing investment markets to the seasons may seem a bit farfetched. But it can actually be an instructive way to introduce the concept of market cycles.
Start Early, Start Small [10/3/2007]
Starting to invest as early as possible, working with financial professionals when needed and diversifying intelligently are important elements of a successful retirement plan.
Your Brain and Investing [9/24/2007]
Financial journalist and book author Jason Zweig discusses research in neuroeconomics — the study of how people make choices — that suggests ways an investor can avoid becoming his own worst enemy.