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Full-Text Articles in Business
Are Etfs Good Or Bad?, Steven D. Dolvin
Are Etfs Good Or Bad?, Steven D. Dolvin
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Like many questions, the right answer is probably, "it depends." Whether ETFs are the best investment vehicle for a particular person likely depends on their goals and needs. However, with trillions of dollars being held by ETFs, their size has necessitated a broader discussion of their merits. This is particularly true in light of recent pricing issues where ETFs traded well below their NAV (such as in August of this year, as well as during the "flash crash" in May 2010). See a good summary article here: WSJ.
Are Junk Bonds Signaling Trouble Ahead?, Steven D. Dolvin
Are Junk Bonds Signaling Trouble Ahead?, Steven D. Dolvin
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High-yield (or so-called junk) bonds are set to experience their first annual loss since the recent credit crisis. Because of the higher risk involved with these borrowers, they tend to be the first to experience trouble. Thus, many investors believe that they represent a leading indicator for overall market performance. If this is true, it could indicate trouble to come. See article here: WSJ.
Lower Minimum Investment, Steven D. Dolvin
Lower Minimum Investment, Steven D. Dolvin
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Charles Schwab cut the initial minimum investment from $2,500 to $100 for most of the mutual funds on its Mutual Fund OneSource platform, which charges no transaction fees. At the same time, it cut the minimum for subsequent investments from $500 to $1. See article here, Financial Advisor Magazine.
Nyse To Stop "Stop Orders", Steven D. Dolvin
Nyse To Stop "Stop Orders", Steven D. Dolvin
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On August 24, many stocks fell by large percentages, only to recover shortly thereafter. Investors with standing stop-loss orders likely didn't fair well. And, in fact, many are blaming these orders for the volatility. The NYSE plans to eliminate stop orders, but brokerage firms can still facilitate these for their customers, as long as the final order is sent at market. See article here, Bloomberg.
Consumer Confidence Keeps Rising, Steven D. Dolvin
Consumer Confidence Keeps Rising, Steven D. Dolvin
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According to a recent article from US News, consumer confidence is at an 8-year high. It will be interesting to see how this impacts the economy and markets in light of the negative impacts of international problems, particularly in China.
Circuit Breakers, Steven D. Dolvin
Circuit Breakers, Steven D. Dolvin
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The U.S. has had market-wide circuit breakers in place since the late 1980s, and individual stock circuit breakers were put in place more recently. Given the increasing volatility in Chinese markets, they are now following suit. See article here, Reuters.
Margin Loans, Steven D. Dolvin
Margin Loans, Steven D. Dolvin
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Traditionally, margin loans were used by investors to allow them to buy additional shares of stock. Recently, however, many investors have used such loans as a simple way to borrow money for purchases outside their investment portfolio. Even so, they are still subject to margin calls should the value of the securities pledged as collateral fall. See article here, WSJ.
Early Recession Signs, Steven D. Dolvin
Early Recession Signs, Steven D. Dolvin
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In economics, leading indicators are believed to give a forecast of the direction of the economy. In a recent survey, the CFA Institute asked its members which early warning signs (or leading indicators) they follow.
Behavioral Biases, Steven D. Dolvin
Behavioral Biases, Steven D. Dolvin
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The CFA Institute recently conducted a member survey regarding which behavioral biases are most impactful.
Interest Rate Positioning, Steven D. Dolvin
Interest Rate Positioning, Steven D. Dolvin
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Municipal bonds are a special type of bond that are particularly attractive to wealthy investors due to the tax benefits they provide. However, like other bonds, their prices will drop if interest rates rise. With many experts expecting the Fed to raise rates, bond managers are increasing cash holdings to position themselves for the impact of the rate increase. See article here, Reuters.
Financial Advisor Fee Structure, Steven D. Dolvin
Financial Advisor Fee Structure, Steven D. Dolvin
All Chapters
Historically, most advisors earned their income based on commissions; however, to reduce churning and to better align interests with clients, most advisors have moved to a fee based platform, with many charging an annual fee of 1% of assets. Given the compounded impact of this cost over time, as well as the lack of value added, we may see another change, as some advisors are moving to a fee for service model. See article here, WSJ.
Triple Crown -- Does It Matter For The Market?, Steven D. Dolvin
Triple Crown -- Does It Matter For The Market?, Steven D. Dolvin
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For the first time in 37 years, a horse (American Pharoah) has won the Triple Crown. The previous ten times this has happened, the stock market has lost an average of 9% over the remainder of the year. This adds to the expanding debate of Behavioral Finance vs. Market Efficiency.
Target Date Funds: Benefits And Disadvantages, Steven D. Dolvin
Target Date Funds: Benefits And Disadvantages, Steven D. Dolvin
All Chapters
Target date (i.e., lifecycle) funds are increasing in popularity, particularly among unsophisticated investors. These funds provide key benefits, as they automatically rebalance through time and also generally limit return chasing. Given the dollar cost averaging effect, the result may also be a higher (dollar-weighted) average return. On the downside, the target date funds may choose underlying funds in each category that benefit the fund family more than the investor. However, for most investors, the benefits would generally outweigh the potential disadvantages. See article here, WSJ.
China Cuts Interest Rates, Steven D. Dolvin
China Cuts Interest Rates, Steven D. Dolvin
All Chapters
In an attempt to spur growth, the People's Bank of China (i.e., the Chinese central bank) recently cut interest rates. As a result, the Chinese stock market rose another 3 percent. See article here, Yahoo.
Battle Of The Sexes, Steven D. Dolvin
Battle Of The Sexes, Steven D. Dolvin
All Chapters
As this recent WSJ article points out, men and women approach investing differently. The best investors may be those who are able to capture the "best of both worlds."
Here's A Good "Tips", Steven D. Dolvin
Here's A Good "Tips", Steven D. Dolvin
All Chapters
Treasury Inflation Protected Securities, or TIPS, offer investors a lower coupon rate; however, in exchange, investors receive protection against the negative impact of inflation. Higher inflation leads to a loss in purchasing power, as well as higher interest rates, which reduce bond prices. The inflation protection offered by TIPS offsets these impacts by increasing the face value (called the accrued principal) in line with inflation, meaning that periodic coupon payments rise with inflation, as does the return of principal at maturity. See this Bloomberg article for a discussion of why TIPS are back in favor.
Etf Trading, Steven D. Dolvin
Etf Trading, Steven D. Dolvin
All Chapters
ETFs are designed to track a particular underlying index. As these "baskets" of securities are traded, excessive demand or supply of shares can cause a disparity between the price of the ETF and the underlying value of securities held. However, because of the ability of large institutions to trade directly with the ETF firm to create and redeem shares, arbitrage keeps prices in line. See article here, WSJ.
Apple Added To The Dow, Steven D. Dolvin
Apple Added To The Dow, Steven D. Dolvin
All Chapters
The DJIA (Dow Jones Industrial Average) is an index of 30 companies that are picked to represent the broad economy. As this Fox Business article notes, Apple is replacing AT&T in the index. Given that Apple is the largest company by market cap, why is Apple just now entering the index? The answer is that the Dow is price-weighted, so Apple's recent 4:1 split brought the price low enough, such that it would not unduly influence the overall index movement.
Warren Buffet Criticizes Money Managers, Steven D. Dolvin
Warren Buffet Criticizes Money Managers, Steven D. Dolvin
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Warren Buffet, a pillar of active management, suggests that most investors are best served by investing in passive index funds. This is primarily due to the high fees charged by managers, particularly those in hedge funds. See article here, Yahoo.
Blog Central, Steven D. Dolvin
Blog Central, Steven D. Dolvin
All Chapters
For those looking for some additional investing blogs to follow, here is a list of the "20 Best Investing Blogs of 2015."
Volatility Adds Risk For Market Orders, Steven D. Dolvin
Volatility Adds Risk For Market Orders, Steven D. Dolvin
All Chapters
With a market order, trades transact at the current market price. With increased high frequency trading, more and more stocks are seeing dramatic swings in prices within a short time period. Such swings add risk for market orders, as investors may get a price vastly different from what they had expected. In such cases, limit orders may be useful to minimize price risk. See article here, WSJ.
2 Days, $1 Million, Steven D. Dolvin
2 Days, $1 Million, Steven D. Dolvin
All Chapters
Options allow investors to generate higher levels of returns (and losses) as compared to taking positions directly in the stocks that the options are derived from. For example, a recent MSN article discusses a trader that purchased $1.7 million worth of call options on AMAT. The stock price increased 5% in two days, resulting in a profit of $1.4 million, which is an 82% return.
International Investing, Steven D. Dolvin
International Investing, Steven D. Dolvin
All Chapters
Investing is a global activity, so there is often very little difference with regard to many activities (such as how margin works, order types, etc.). The biggest difference, however, is the possible impact of currency on returns. One argument is that currency fluctuations reduce return correlations, so they should not be hedged within a portfolio. Others, however, have recently turned to currency hedged investments to protect against the rising dollar when invested in foreign assets. See article here, Yahoo.
Investing In Sin....., Steven D. Dolvin
Investing In Sin....., Steven D. Dolvin
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Socially conscious investing has attracted numerous followers, and this has precipitated the development of many socially conscious mutual funds. In contrast, other investors have taken an alternative approach, opting for so-called "sin funds." As this WSJ article points out, these sin funds have actually performed quite well over the last 10 years.
Growth In Etf Assets Continues, Steven D. Dolvin
Growth In Etf Assets Continues, Steven D. Dolvin
All Chapters
Given the advantages of liquid trading and lower management fees, ETFs continue to add assets. As a recent Wall Street Journal article discusses, US ETF assets surpassed $2 Trillion and more asset managers are rolling out ETFs.