Posts Tagged asset
Active money management or buy and hold?
Posted by Oksana Grebenjuk in Investing on Май 10th, 2010
With so much volatility in the stock market, investors saving for retirement must decide what investment approach may work best over the long term. Some market players question the wisdom of a «buy and hold» investment strategy, embracing active management instead.
The debate is not new, but perhaps it’s become more heated after the roller coaster ride of the past decade.
Before making fundamental changes to your investment approach, here’s what you need to know about active money management versus buy and hold.
The argument for active management
Supporters of active money management say that buy and hold is not a good long-term investment strategy for the small investor. They note that the most recent decade was not the only period of time that stocks — the assets favored in buy-and-hold portfolios — underperformed other, less risky, assets.
For example, from 1966 to 1982, the S&P 500 produced no real return (meaning it did not keep up with inflation), underperforming one-month Treasury bills by 0.2 percent per year. From 1966 to 1988, U.S. large growth stocks consistently underperformed one-month CDs. Read the rest of this entry »
Europe’s Debt Crisis Is About to End
Posted by Oksana Grebenjuk in Favourites, Trading Markets on Май 6th, 2010
With the likes Nouriel Roubini, Jim Rogers and George Soros predicting a disastrous default by Greece and others in the euro zone, the contrarian in me has to ask if they could be very wrong. Sources from the City of London who would not go on the record have told me this week that Greek debt is currently a screaming buy.
They believe huge profits will be made for those holding Greek paper when Germany, the IMF and ECB outline a new rescue package that will convince investors they are serious about drawing a line in the sand on the sovereign debt crisis.
Rumors of a European TARP moment could yet be unfounded but with Merkel now serious about getting to grips with the crisis, investors who stay short Greek debt over the weekend could be scrambling to reverse their positions on Monday morning.
Officials at Greece’s debt agency did not respond to CNBC requests for comments. Fears over the long-term health of the euro zone remain high and it is difficult to argue with those who see the possibility of some members exiting the euro on a long term view.
Adam Cole, the Global Head of FX Strategy at RBC Capital Markets, is a euro bear and thinks we could hit $1.10 or $1.15 versus the dollar over the medium term but suggests an announcement on Greece this weekend could offer temporary respite for the market. Read the rest of this entry »
Eight do’s and don’ts for your 401(k)
Posted by Oksana Grebenjuk in Investing on Апрель 12th, 2010
When it comes to saving for retirement and building a portfolio to last a lifetime, most Americans are way behind the eight-ball, the nine-ball and all the other balls on the pool table.
More than 54% of Americans report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined-benefit plans, is less than $25,000, according to the Employee Benefit Research Institute’s annual Retirement Confidence survey. What’s worse, 27% have less than $1,000 in assets. Just 11% have more than $250,000 set aside.
Yes, those figures include Americans young and old, those just starting in the work world as well as those about to check out, but in the main many Americans need to modify their savings and spending patterns to have any hope of enjoying a standard of living to which, rightly or wrongly, they’ve become accustomed.
And it’s not rocket science. At least, it’s not according to some experts. Here are some nest egg do’s and don’ts, according to Hewitt Associates and Merrill Lynch. Read the rest of this entry »
High Yields Aren’t Always a Good Thing
Posted by Oksana Grebenjuk in Investing on Март 1st, 2010
In the parched landscape of income investing, dozens of closed-end funds yield more than 10%.
Just as wanderers in the desert shouldn’t mistake a mirage for an oasis, investors shouldn’t regard these funds as salvation. Often, the income you earn in the short run mightn’t be worth the principal you lose in the long run.
Like mutual funds, closed-ends are baskets of stocks or bonds. Unlike a mutual fund, a closed-end trades like a stock; you can buy shares only from other investors. Thus the price isn’t set merely by the value of a closed-end’s investments, but by the whims of those who trade its shares. When investors pay more than the portfolio’s net asset value, that is called a «premium.» When the shares trade at less than NAV, that is a «discount.»
As of last week, 11 of the roughly 650 closed-ends tracked by Lipper Inc. traded for at least 20% more than their portfolios are worth. In many cases, investors are paying those big premiums in pursuit of high yields.
Buy such a fund, and you may double-dose on risk. A yield that looks stable can crumble; then the premium may collapse as panicked investors dump the fund. That leaves you with less income than you expected—and a big market loss to boot. Read the rest of this entry »
The worst is yet to come
Posted by Oksana Grebenjuk in Budget, Favourites on Февраль 17th, 2010
Over the next few years, a wave of commercial real estate loan failures could threaten America’s already-weakened financial system. So warns a new report from the Congressional Oversight Panel as part of its oversight of the Troubled Asset Relief Program, highlighting yet one more hurdle for this country’s fragile economy.
The panel, chaired by Harvard law professor Elizabeth Warren, says it remains «deeply concerned» that commercial loan losses could jeopardize the stability of many banks, particularly the nation’s mid-size and smaller banks. Read the 183-page report for yourself here.
Worries about CRE loans — those loans taken out by developers to purchase and maintain shopping malls, offices, hotels, and apartments — have been simmering for months, as we noted in an October article. See «How Banks Will Fare in a Commercial Real Estate Crash.»
The problems now plaguing commercial real estate have no single cause, and the panel notes that the loans most likely to fail were made at the height of the real estate bubble when commercial real estate values had been driven above sustainable levels and loans.
«[M]any were made carelessly in a rush for profit,» the panel said. Read the rest of this entry »
Russian Banks Count Pigs
Posted by Oksana Grebenjuk in Favourites, Trading Markets on Октябрь 28th, 2009
When Russian billionaire Alexander Lebedev’s OAO National Reserve Bank seized collateral offered against a loan from a cash-strapped borrower, a health quarantine was slapped on the security: 40,450 pigs.
“We had a court decision to take away the collateral, which is the pigs,” Lebedev, 49, said in an interview in Moscow. The borrower, a farm near Samara on the Volga river, agreed “with the local authorities to establish a quarantine” against African swine fever. The former KGB officer is still waiting to collect the pigs offered against a loan of 100 million rubles ($3.5 million). A kilogram of live pig costs an average of 78.4 rubles, the National Meat Association says.
Russian lenders are seeking to recoup losses by accepting a range of collateral, including stakes in Wild Orchid, a lingerie retailer, and food store Mosmart. The banks have been hit by a surge in non-performing loans, which Moody’s Investors Service estimates may rise to 20 percent of the total by year-end. The bad debt threatens to stall bank lending and may jeopardize a recovery in Russia’s economy, which grew 0.6 percent in the third quarter from the second, the Economy Ministry says.
“It is not a viable strategy for a bank because banks aren’t doing their core business there,” Eugene Tarzimanov, assistant vice president and banking analyst at Moody’s in Moscow, said. “They could be stuck with those assets for a number of years.” Read the rest of this entry »
Ultra-rich want their children to know the ropes
Posted by Oksana Grebenjuk in Budget on Октябрь 13th, 2009
The ultra-rich are taking a more hands-on approach to investing and protecting their fortunes, and are increasingly determined that their children also know the ropes, wealth managers say.
The ultra-wealthy — those with at least $30 million in investable assets — are asking much more pointed questions of their advisers, and are making sure the kids hear the answers.
«Right now, people want to know, ‘How much money do I have? And how much money am I making every year from this? And how much money do you cost?’» said Keith Whitaker, managing director of Wells Fargo & Co’s (WFC.N: Quote, Profile, Research, Stock Buzz) Family Wealth division, speaking at the Reuters Global Wealth Management Summit in Boston.
«I’d say the crisis has brought about a feeling that we need to educate (the next generation) to be good stewards, not only in the general sense but actually about the nuts and bolts of money management,» he said.
Whitaker said he has heard a lot of anger and regret from clients who are questioning why they were not better prepared for the financial crisis, and who worry that wealth education for their children would seem pretentious.
But such skills are crucial. The managing director of BNY Mellon’s Family Wealth Services, Thomas Rogerson, told of a woman he recently spoken with at a conference on wealth planning. Read the rest of this entry »
Watching those dollar correlations
Posted by Oksana Grebenjuk in Currency, Favourites on Октябрь 12th, 2009
The dollar’s decline — enough so far to trigger intervention from some Asian central banks — should dominate investors’ attention in the coming week if only because of the way it is so closely matched with other assets.
There was a near-perfect negative correlation between the dollar index .DXY, which tracks the greenback against a basket of major currencies, and world stocks as measured by MSCI .MIWD00000PUS in September and early October.
In other words, when the dollar was weak, global stocks nearly always rose, or vice versa.
While this link has eased a bit in the last week, it is still very strong — meaning that dollar-boosting comments such as those on Thursday from Federal Reserve chief Ben Bernanke still have a particularly strong spillover potential.
Bernanke reminded investors that the Fed had the tools at hand to pull back the flood of money it has released into the market — the so-called exit strategy — although it was not likely to act immediately.
Dollar weakness has also been behind the sharp rise in gold prices, which are now at record non-inflation adjusted highs well above $1,000 an ounce. Read the rest of this entry »
Yen Strengthens as Stock Declines Boost Demand for Safer Assets
Posted by Oksana Grebenjuk in Currency, Favourites on Июнь 16th, 2009
The yen rose against higher-yielding currencies and advanced the most in two weeks versus the dollar as stocks declined and the Bank of Japan said the nation’s deepest recession since World War II is easing.
Japan’s currency made the biggest gains against the Australian and New Zealand dollars and the Mexican peso as speculation the global economic crisis is far from over spurred investors to cut holdings of riskier assets. The greenback fell for a second day against the yen on concern the leaders of Brazil, Russia, India and China meeting today will call for less reliance on the dollar as the world’s reserve currency.
“Stocks are falling, indicating risk-aversion among investors,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The yen is being bought.”
The yen climbed to 133.46 per euro as of 7:40 a.m. in London from 134.99 yesterday in New York. It earlier rose to 132.74, the strongest level since May 28. The yen advanced 1.5 percent to 96.35 per dollar, the biggest gain since May 29. Japan’s currency rose 1.6 percent to 60.76 against the New Zealand dollar, and strengthened 1.8 percent to 76.44 versus Australia’s currency. Read the rest of this entry »
Britain’s Millionaire Club Shrivels by Half on Slump
Posted by Oksana Grebenjuk in Budget on Июнь 1st, 2009
The U.K.’s millionaire club has shriveled by half because of the slump in property prices, falling stock prices and smaller bonuses, the Centre for Economics and Business Research said.
There are currently 242,000 people living in Britain with assets of at least 1 million pounds ($1.6 million), compared with 489,000 estimated in the CEBR’s previous report in 2007, the research group said today in London.
The financial crisis cost British households 1.9 trillion pounds of their wealth since July 2007, according to a report in March by PricewaterhouseCoopers LLP. With the property market extending its slump and the economy mired in a recession forecast by the government to be the worst since World War II, the number of millionaires may keep falling this year.
The drop “reflects the collapse in the property market, the fall in the values of shares and the 70 percent drop in City bonuses,” Douglas McWilliams, chief executive of the CEBR, said in a statement. “With property prices near to bottoming out, we would expect the number of millionaires to start to rise again in 2011.” Read the rest of this entry »
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