Goldman Sachs is known for its emerging-markets acumen. But that doesn’t seem to have helped its effort to peddle mutual funds targeting these stocks. On Thursday, the company which coined the term “BRIC” as an acronym for “Brazil, Russia, India and China,” filed with the Securities and Exchange Commission detailing plans to shutter mutual funds […]
No one might have expected it, but one of the most controversial proposals in the recent Jumpstart Our Business Startups — or JOBS — Act, is to lift the decades old ban on hedge-fund advertising. The bill, which passed with big majorities in both houses in Congress and was signed by President Obama in April, was touted as a way to create jobs.
That has many observers wondering: How exactly will letting George Soros and John Paulson peddle their wares on CNBC translate into paychecks for guys in the breadline?
The Fed’s latest stimulus program, QE3, has boosted risky assets like stocks and commodities at the expense of the dollar. The greenback dropped 6.5% between late July– when investors became more certain the Fed would take action – through mid-September, a more precipitous decline than following the prior two rounds of stimulus. During that same time, the S&P 500 rose nearly 10%.
Behind the dollar’s decline was investors’ growing sense in midsummer that central banks on both sides of the Atlantic would take action. European Central Bank president Mario Draghi vowed to save the euro at all costs, sparking a rally in the currency. In the U.S., currency investors saw further stimulus by the Federal Reserve as increasingly likely and began to price in a devaluing of the dollar. As expected, the Fed launched its third round of so-called quantitative easing earlier this month, a program that will increase the money supply as the Fed buys mortgage bonds with money it has created.
Charles Schwab won headlines Friday with its promise to cut annual investment fees on its line of market-tracking exchange-traded funds. But investors hoping to score a deal still need to do the math.
The online brokerage, which began offering its own ETFs in late 2009, has always used price as a selling point. The company now plans to slash fees to levels not previously seen. For instance, the annual levy on the $890 million Schwab U.S. Large-Cap ETF (SCHX), will be cut to just $4 a year per $10,000 invested, from $8. The new rate is less than half the $10 a year charged by the widely followed $118 billion SPDR (SPY), which tracks the same slice of the stock market. “We want to offer investors the lowest-cost solution,” says Schwab’s Managing Director of ETFs Eric Pollackov. “It’s the one thing we can contol.”
Investors who are contemplating the iPhone sales surge that will kick off this month as the new model goes on sale might feel compelled to buy Apple (AAPL) stock.
They could do worse; it sells for 16 times projected earnings for Apple’s fiscal year ending this month, versus 14 times for the broad market. But with some slight math contortions — using next year’s higher, projected earnings and subtracting the company’s cash and investments from its stock price — the valuation drops to 11 times earnings.
Corporate governance advocates have long tried to persuade investors they can have it both ways: Do good, and you end up doing well too. New research suggests that advice may not hold true.
Some of corporate reformers’ pet moves, like allowing shareholders to vote on directors each year and avoiding special provisions to thwart takeovers, can boost the value of a company, a new Harvard University study finds. But there’s a big catch: The market may have already factored any benefits tied to these moves into the stock price. While at one time knowing whether a company had good governance might have been valuable information for investors, ever since a wave of public attention brought these issues to the fore in the 1990s, it hasn’t been effective as a guide for picking stocks. “Just because something is a good governance provision doesn’t mean it’s a good investment,” says co-author Lucian Bebchuk.
Now that scientists have revealed that the huge swaths of genetic code once dismissed as “junk DNA” are not so worthless, investors may wonder if there’s similar hidden value in the biotech sector. The short answer: maybe.
Though analysts say it’s too soon to tell what impact the discovery will have on stocks, the recent breakthrough may eventually lead to new techniques for the early detection of diseases and to the development of new drugs. And that could be a boon to firms at the forefront of biotechnology and molecular diagnostics.
BlackRock’s chief executive, Laurence Fink, may be ready to cry uncle. The company’s iShares unit plans to cut prices on some offerings in its popular line of exchange-traded funds, Reuters reported Monday.
The move, which SmartMoney predicted in July, comes after years in which Vanguard Group’s relentless focus on low fees chipped away at iShares’ once seemingly insurmountable lead in the ETF business. iShares’ U.S. market share, which peaked at about 60% five years ago, has slipped to about 40% today.
Gold rallied sharply on Friday morning, approaching $1,750 an ounce, on the heels of a disappointing employment report and new bond-buying program in Europe. But how long before the yellow metal goes dull again?
Overall, gold futures are up more than 3% for the week and 13% since their lows in May, as upbeat news in Europe and disappointing job news in the U.S. have combined to stoke inflation fears. The Labor Department Friday morning reported that the U.S. added a fewer-than-expected 96,000 jobs in August — news experts say that may spur the Federal Reserve to launching another stimulus program, including further bond buying, when it meets next week. Friday’s surge continued a rise that started Thursday after the European Central Bank announced an unlimited bond-buying program to bail out some of the region’s most troubled governments.
Regulators are reconsidering “quiet period” rules that prevent companies from acting like pitchmen ahead of initial public offerings of stock, but that can also restrict the release of new information that would warn investors away from shares.
Recent performance, meanwhile, offers a not-so-quiet reminder of why investors should approach IPOs cautiously.
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