Stock Focus: Electronic Arts (ERTS)
Posted on December 31, 2007 - Filed Under Investing, Stocks | Leave a Comment
If you tried to get a Wii this holiday season then you understand that if there’s one tech niche that should be immune to a slowdown, it’s videogames. Videogame sales rose 39% in October, according to the NPD Group, after a 64% rise in September.
Electronic Arts stock has stagnated since 2004, with earnings falling and critics charging that EA was too reliant on aging franchises like Madden N FL. But things started to look up in early 2007 when ex-president John Riccitiello returned as CEO. Riccitiello reorganized EA into four divisions and spent $860 million to acquire BioWare and Pandemic, two smaller game studios that improved EA’s lineup.
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Stock Focus: Berkshire Hathaway (BRK.B)
Posted on December 30, 2007 - Filed Under Investing, Stocks | Leave a Comment
Berkshire’s insurance businesses have benefited from unusually benign weather - namely, the dearth of U.S. hurricanes. And Berkshire stock has already risen 22% since August. So why are we recommending Berkshire now? Simple. Warren Buffett knows how to exploit panics.
He bought 5% of American Express in 1963, following a financial crisis that had cut AmEx’s stock price in half. He started buying up shares of Geico in 1976 when claim-cost miscalculations left the auto insurer teetering near bankruptcy. And he picked the pocket of financially troubled energy company Dynegy in 2002, paying $928 million for a natural gas pipeline that Dynegy had bought for $1.5 billion only months earlier.
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Stock Focus: Annaly (NLY)
Posted on December 29, 2007 - Filed Under Investing, Stocks | Leave a Comment
Annaly is a hedge fund disguised as a real estate investment trust that makes its money by investing in mortgage-backed securities. What distinguishes Annaly from its out-of-favor Wall Street peers is the fact that it doesn’t take credit risk, only interest-rate risk. It buys mortgage-backed securities issued by government-sponsored enterprises like Fannie Mae and Freddie Mac; in other words, it has no exposure to subprime mortgages.
What makes Annaly’s business model so compelling right now is the widening gap between its borrowing costs and the yields on the mortgage securities it holds. In the third quarter, that interest-rate spread more than doubled, from 0.32% to 0.67%.
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How To Build A Conservative Investment Portfolio
Posted on December 18, 2007 - Filed Under Bonds, Investing, Mutual Funds | 1 Comment
This is in first in a series of posts where we will design and build investment portfolio’s based up different risk levels. The first one we will build is a conservative investment portfolio.
Typical Investor: The Conservative Portfolio is designed for income-oriented investors who are willing to accept only modest volatility and who seek only limited exposure to growth.
Portfolio Volatility: Low
Return Potential: Low
Asset Allocation:
- 25% Stocks
- 45% Fixed Income
- 30% Cash
Description: This kind of portfolio is designed to provide the investor with the income they need through the combination of cash and fixed income securities. The portfolio does offer some growth potential through conservative stock funds.
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Building a mutual fund portfolio
Posted on December 9, 2007 - Filed Under Investing, Mutual Funds | 1 Comment
When building their mutual fund portfolio many new investors make two common mistakes.
The first mistake that investors make is not putting their most aggressive growth funds in their retirement accounts. By law, mutual funds must pass to shareholders at least 98% of dividends and capital gains earned in a year. If you hold your aggressive funds in a tax-deferred account you will not have this tax burden, giving you maximum growth from your investments.
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How to pick a mutual fund
Posted on December 5, 2007 - Filed Under Investing, Mutual Funds | Leave a Comment
As an investor looking to buy a mutual fund, your goal should be to buy the mutual fund that will best allow you to reach your goal. With the thousands of mutual funds available today, finding the right one can be a daunting task.
The five filters that are explained below are designed to help you to narrow down the universe of mutual funds to one or two top performers. To give you an example of how these steps work together, I have included an example, at the end of this article, of how I used the filters in conjunction with Yahoo Finance to find a quality high-yield bond mutual fund.
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Lose The Small Funds
Posted on December 5, 2007 - Filed Under Investing, Mutual Funds | Leave a Comment
No I don’t mean that you should not invest in small-cap funds. What I mean is that many investors have a habit of collecting funds.
Over time they pick up funds. These could be funds that that maybe they invested in through a previous employer’s 401(k) savings plan that they’ve held onto, or because that fund just seemed like a good idea at the time.
The problem is that a lot of these funds have a small balance, often around $500. Even if that fund averages 12% a year for the next 30 years, you still will only end up with $15,000.
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Why Expense Fees Matter
Posted on December 3, 2007 - Filed Under Investing | Leave a Comment
When looking at their own portfolio’s performance, many investors fail to take into account the impact that management fees are having on their performance.
According to Morningstar the average stock fund that invests only in U.S. stocks has a 1.4% management fee. For illustrative purposes I will use the Vanguard Total Stock Market Fund which has management fee of only 0.19%.
Consider that you invested $10,000 in the Vanguard Total Stock Market Fund (VTSMX) and a fund with an average management fee.
If both funds earned an average rate of return of 8% before expenses for the next 25 years then you would have:
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Stock Market Commentary – Dec 3
Posted on December 3, 2007 - Filed Under Commentary, Investing | Leave a Comment
There seems to be a lot of bears appearing on Wall Street as worries about the credit crisis and rising oil prices continue to geow:
“The bond market is begging for rate cuts, while the stock market is expecting rate cuts,”
Randy Diamond, trader at Miller Tabak
“We’re in a high-risk situation, probably one major shock away from recession,”
Ethan Harris, chief economist at Lehman Brothers.
The market clearly is not pricing in $100 oil and the economic restraint on growth that would be implied in that,”
Stuart A. Schweitzer, the global markets strategist at JPMorgan Private Bank
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