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Highlights From New Constructs Investment Research

Feels Like 1999 All Over Again

Feels Like 1999 All Over Again

As an adult, Halloween tends not to be that scary for me usually.
But after last week’s stock market rally in the face of the deteriorating situation in Europe and the rest of the world, I am afraid…for the stock market and am reminded of fall/winter 1999.

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Total Annual Costs Ratings Methodology for Predictive Fund Rating

TotalAnnualCostsTable

Total Annual Costs used to rate a fund’s expenses reflects the all-in cost of a minimum investment in each fund assuming a 3-yr holding period, the average holding period for mutual funds.
This rating reflects all expenses, loads, fees and transaction costs in a single value that is comparable across all funds.
Our goal is to give investors as accurate a measure as possible of the cost of investing in every fund to determine whether this cost of active management is worth paying.

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Asset Allocation Ratings Methodology for Predictive Fund Rating

CashAllocationDistribution2

The Fund Asset Allocation Rating informs investors of each fund’s level of allocation to cash (non-equities) as well as how that level compares to other equity mutual funds.
We assume investors in equity funds prefer those funds to be maximally invested in equities given that investors can much more cheaply invest in cash on their own. We do not believe that most investors want to pay the high fees associated with equity funds to invest in cash.

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DeVry (DV) Very Attractive Risk/Reward Rating for Ask Matt Readers

DeVry (DV) Very Attractive Risk/Reward Rating for Ask Matt Readers

Here is a free copy of our report on DeVry (DV) for Ask Matt read­ers. This report pro­vides details behind Matt’s analy­sis of DV in his recent arti­cle in USA Today.

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Jack Bogle: There Are No Investors Left, Only Speculators

Jack Bogle: There Are No Investors Left, Only Speculators

Mr. Bogle, an invaluable voice of reason for investors over many years, suggests that there is too much speculation in our equity markets.
His comments jibe entirely with my post, Rise of the Speculative Movement.

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ETF Shoppers: Accounting Trickery At Its Worst In Financial Sector

Figure2

There are 25 financial sector ETFs. Per Figure 1, these 25 ETFs have drastically different stock holdings and, therefore, allocations. The lowest number of holdings is 24 while the highest is 496.
For starters, investors interested in the financial sector cannot expect many good investment options given that the sector gets my “dangerous” rating and ranks ninth out of the ten sectors that make up the economy. Details are in our sector roadmap report.

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Large-Cap Value Has 36 Aliases in ETF World

Figure1_largeCap

There are 36 “large cap value” ETFs. Per Figure 1, these 36 ETFs have drastically different stock holdings and, therefore, allocations. The lowest number of holdings is 30 while the highest is 1178.
How do investors pick the ETF that will deliver the best performance?

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Picking The Diamonds Out of The ETF Rough

Figure1

Having too many choices can be intimidating. And there are definitely lots of choices when it comes to ETFs. For example, in the equity market alone, there 30+ technology sector ETFs, or 35 ‘large cap value’ and 20 financial ETFs. A very healthy selection abounds for every category of ETF.
The problem is that these ETFs are not made the same even though they may be in the same category. There are major differences in methodologies between funds, which results in drastically different holdings even within a given sector. See Figure 1.

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Sell Starbucks (SBUX) – Still A Bad Stock

Sell Starbucks (SBUX) – Still A Bad Stock

Similar to my prior interviews on SBUX, I found it easy to make the bear case for a stock that is as expensive as Starbucks (SBUX). As my regular readers know, when I say “expensive”, I back that up with details such as: to justify its $40 stock price (closing price from prior day), SBUX had to grow profits at 10% compounded annually for more than 25 years.

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Stock Brawl on Starbucks (SBUX)

Stock Brawl on Starbucks (SBUX)

In addition to my stock-brawl interview on Thursday (9/29/11), I have commented to the media on Starbucks (SBUX) many times. Below is a list (with links) to my past opinions/comments on SBUX.

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