Investing
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Despite the rise of ETFs and other new types of investments, mutual funds remain a popular long-term investment option for all types of investors. An important aspect for investors to keep in mind is to diversify their holdings. I will give the top 5 mutual funds, one from a different investment category so you can get a well-rounded portfolio.
I will take Money Magazine’s top mutual fund from five different categories to create this portfolio.
Large Cap
Vanguard Windsor II (VWNFX)
It combines the best 3-year performance numbers of all the Money Magazine’s top large cap mutual funds with a low expense ration of 0.34%.
Mid Cap
Vanguard Mid Cap Index (VIMSX)
This is an index fund that outstrips most professional managed mid cap funds while having a miniscule 0.22% expense ratio
Small Cap
Vanguard Small Cap Index (NAESX)
Another index fund proves its worth with a 17.6% annualized 3-year return with a small expense ration of 0.23%.
Specialty
T. Rowe Price New Era (PRNEX)
This fund focuses on a blend of growth and value large cap natural resource companies. It has agrnered almost 33% annualized over the past 3 years and has a nice low expense ratio of 0.67%.
Foreign
Vanguard Emerging Markets Stock (VEIEX)
Foreign mutual funds have been hot lately, but few have hotter than VEIEX. 37.4% annualized return for the past three years with an unbelievably low 0.41% expense ratio.
Written by Nagel on July 7th, 2007 with no comments.
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I try hard to be a rational investor and not panic when I hear bad news about a company I invest in. I have try even harder to ignore the nattering nabobs of negativity when broad economic news is released, and it looks bad.
However, the murmurs I heard last year about how the stock market is due for a reversal have turned into roars. As I have said before, being a contrarian can be very profitable. I have also said it is impossible to time the market and get in and out at exactly the precise time. But sticking in the market is getting to be a tougher proposition for me in the short term. More and more pundits or investment professionals see at least a small downturn coming if not a huge 10% slide. Wall Street has a heard mentality, and no matter if the negativity is created out of real or perceived problems; soon it will not matter.
A tipping point will occur soon, if it has not already happened, that the stock market must have a period of negative returns to appease the investing gods. Once that happens a small downturn like at the end of February could turn into to a massive exodus from the market, especially if investors behave as they did and do in regards to the housing market.
What do you think?
Written by Nagel on July 3rd, 2007 with no comments.
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The U.S. stock market most mostly unchanged most of the day yesterday, overreacting to the some “bad” news from China and in anticipation of the release of the minutes from the latest Fed meeting. At the end of the trading session the Fed news was interpreted as very positive and stocks roared at the end with indices ending up about 0.8% up for the day. The S&P500 broke through its all-time high set several years back.
These signals point to a higher return for this morning’s trading session. In the long run it adds to the bullish arguments out there stating the stock market is primed to make a big move.
Written by Nagel on May 31st, 2007 with no comments.
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I do watch Jim Cramer’s Mad Money, but I do not watch it for stock tips. I watch it for the investing learning experience. Though I consider myself rather savvy as an investor, I always learn something new about investing.
Cramer gives thumbs up or down to callers stock picks. The problem with his picks are that he influences stocks. If you watch the after hours trading or early next morning market trading you often see Cramer’s positive pick shoot up. So if you are interested in investing in one of his picks you can miss out on an initial percent or two. Sometimes, if you wait for the first couple hours of trading the stocks can come back to earth.
But does it really matter? To me, it currently does not because of my stock market views. I think the sky might be falling and getting out of the stock market is what I think is prudent. So if you are bullish, stick with Cramer; if you are bearish then forget about it.
Written by Nagel on May 11th, 2007 with no comments.
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Commodities are something produced for purposes of trade or commerce, and often they are things that are mined or agriculturally produced. Commodities have value, and are of uniform quality, that were produced in large quantities by many different producers. Commodity investing involves contracts and are traded on regulated exchanges.
Derivatives markets, part of commodity investing, will have participants enter into an agreement to exchange money, assets or some other value at some future date based on the underlying asset. Examples of assets could be anything from bars of gold, to a stock, or even an interest rate. A futures contract: an agreement to exchange the underlying asset at a future date. The exact terms of the derivative depend on the performance of that asset.
Commodity Exchanges
- Chicago Board of Trade
- Euronext
- London Metal Exchange
- New York Mercantile Exchange
Commodities Investing Examples
- Foodstuffs
- Livestock & Meat
- Fuels
- Precious Metals
- Industrial Metals
Written by Nagel on May 3rd, 2007 with no comments.
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Socially responsible investing (aka SRI) is a new buzzword on Wall Street, mostly due to America’s the tipping point of interest in the issue of global warming. SRI is the practice of aligning a your investment policies with your attidues in life. This may include making program-related investments and refraining from investing in corporations with products or policies inconsistent with the your values.
Consumers in America know what they want, and more and more are choosing to invest in a socially responsible business rather than one that is not. They are literally putting their money where their mouth is when it comes to their investment dollars. Because of this interest, socially responsible mutual funds (SRI funds), socially responsible index funds and socially responsible investments in general are in high demand.
Socially responsible investing started out as a niche business, however, it has received a lot of exposure lately. This exposure has led to more socially responsible investments being available.
Beware that in a capitalist society, it is often more difficult to meet the demands of stockholders and Wall Street. This often is reflected in the fact that socially responsible investments might have a difficult time meeting your performance needs, Remember, if socially responsible investing is essential to your life you must do extensive homework to find investments that will give you an acceptable rate of return.
socially responsible index funds
socially responsible investments
socially responsible business
Written by Nagel on May 1st, 2007 with no comments.
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We all have mutual funds, be it in your 401 (k) or investing non-retirement money for capital gains. What most do not consider is the actual mutual funds stocks, that are in the portfolio. We all want our mutual funds returns to do well, but unless we know what the stocks are contained in the mutual fund it can be difficult to know where your fund is going in the future.
Examine in yahoo finance, stocks that are currently in your funds Top 10 holdings. Often these are derived from the previous end of quarter report of stock holdings. Examine those top ten stock holdings and find out if they possess qualities that you want to be invested in. Also, try calling up your mutual fund and asking what the current top holdings are. They may or may not divulge that information, but it sure does not hurt to ask.
Yes, this is a lot of work, especially when most mutual fund investors want to “set it, and forget it,” but if you have a significant amount of money in mutual funds you want to keep up with what mutual funds stocks are in your portfolio.
Written by Nagel on April 27th, 2007 with no comments.
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Same Store Sales, or Comparables (comps), allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of new stores. Same store sales are important because, although new stores are good, a saturation point–where future sales growth is determined by same store sales growth - eventually occurs. They also measure sales growth at stores that have been open for over a year.
So for a store to be able to count monthly comps for December 2006, it must have been open for the full month of December 2005. If the store opened December 15th 2005, comps couldn’t be counted until January 2006, a year after the store’s first full month.
The two main factors that affect same store sales are prices and number of paying customers. Revenue=price x sales, and if prices go up and volume stays the same, sales will increase. And if volume increases but prices stay the same, sales will also rise. However, when a company has a bad month, it does not blame that fact to price or volume problems.
Falling comps often stem from weather extremes or holidays on an unfavorable day of the week for sales. Rising comps are great and mean that more people are coming to buy goods, or paying more for those goods than they did a year ago, or a combination of the two. So basically,sales are rising without the added costs associated with new stores.
Increase revenues at existing stores or increase the number of stores are the ways to increase revenue. Increased revenues at existing stores is less expensive and that makes rising same store sales excellent news for companies.
Decreasing comps=
- Brand is losing strength and people aren’t shopping at the company’s stores.
- The economy is moving downward and people aren’t shopping.
- Too many items at discount prices.
There are a few ways to deliniate between short-term and long-term problems with same store sales. Decreasing comps for an extended period is not good. Comparing that to competitors’ performance is important to examine because if they are doing poorly as well it might not be a company-specific problem. However, it could be an industry-specific problem
Listen to the quarterly earnings report call and see what the company says the problem is and what they are doing to fix it. This can guide you to stay with the company or dump it.
Good comps do not mean to jump in and begin investing and vice versa with bad comps. Look same stores sales as one data point in a myriad of data points that can lead you to your conclusion.
Written by Nagel on April 25th, 2007 with no comments.
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A couple weeks ago Altria (MO) spun off Kraft (KFT). I owned so MO at that time so I was entitled to 17 shares of the newly solo Kraft. I held the stock for those next two weeks and watched it rise a few percent and then Friday I put in a limit order to sell my 17 shares. It was executed and now I am free to use that cash for my next purchase.
More and more data comes out saying that we are due for a larger hit to the stock market than the February 27 one. The rest of the economy is supposed to take a hit as well. Moreover, polls show that this is the mood in America as well. This does not bode well for stock investors because no matter perceived or real, the market is more apt to take a hit if people think it will.
Therefore, I might keep this money on the sidelines for a while to see what happens, but I doubt I will because I am still bullish.
Written by Nagel on April 17th, 2007 with no comments.
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I purchased some Altria (MO) stock a couple months back. It had been underperforming, but it has a great dividend and I had high hopes for its future. I bought it around $88 and now was around $84. I was watching Jim Cramer’s Mad Money and he suggested that since Atria (MO) was soon going to let Kraft (KFT) go you should purchase Altria When Issued stock. I had never heard of When Issued stock before so I was intrigued. I did some homework and discovered that when you buy When Issued stock, e.g. Altria, when it lets Kraft (KFT) go you would only own the Altria stock and no Kraft stock. I loaded up on this MO_WI stock and just last week the split was finalized. I purchased the When Issued stock at around $64 and is now above $70. My Altria split up into Altria and Kraft. I have kept the Kraft stock for now, but soon will sell.
It was a learning and money-making experience.
Written by Nagel on April 10th, 2007 with no comments.
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