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Total Annual Costs Ratings Methodology for Predictive Fund Rating

Friday, October 28th, 2011 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

Friday, October 28th, 2011 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

Thursday, October 27th, 2011 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

Thursday, October 20th, 2011 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

Tuesday, October 18th, 2011 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

Monday, October 10th, 2011 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

Friday, October 7th, 2011 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

Tuesday, October 4th, 2011 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)

Tuesday, October 4th, 2011 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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Buy LRCX: More Value Than Meets the Eye

Tuesday, September 27th, 2011 figure1_LRCX

Most of my research and publishing tends to focus on companies manipulating accounting rules to make their reported earnings look better than the real economic cash flows of their business.
It is unfortunately rare that I find a company whose economic earnings are outpacing the reported accounting results and whose stock is cheap.
One such company is Lam Research (LRCX – very attractive rating). One of September’s most attractive stocks, LRCX offers investors hidden value.

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General Electric (GE) Neutral Risk/Reward Rating for Ask Matt Readers

Wednesday, September 21st, 2011 General Electric (GE) Neutral Risk/Reward Rating for Ask Matt Readers

Here is a free copy of our report on GE for Ask Matt read­ers. This report pro­vides details behind Matt’s analy­sis of GE in his recent arti­cle in USA Today. Click here for our report: General Electric (GE) Neu­tral Risk/Reward Rat­ing.

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MarketWatch Features New Constructs’ Rating on Fidelity’s Magellan Fund

Friday, September 16th, 2011 dreamstimefree_6271799_handHoldingLightBulb

MarketWatch’s Chuck Jaffe feature’s New Constructs mutual fund rating system, which has a “neutral” rating on the Magellan fund.
Our fund rating system is the same as our stock rating system, which has received many accolades for its predictive power.

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Sell Baker Hughes Before The Stock Goes Up In Fumes

Tuesday, September 13th, 2011 BHI_Figure3

It is only a matter of time before oil and gas stocks stop moving with the price of oil and start reflecting their underlying economics.
When this happens, Baker Hughes (BHI – “very dangerous” rating) will be among the stocks that fall the hardest.

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Should Directors Ignore Those One-Time Items?

Wednesday, September 7th, 2011 Should Directors Ignore Those One-Time Items?

I do not think so. The question, however, is not so much about what directors ignore. You cannot ignore something about which you are unaware.
The real issue is that most directors and investors are simply unaware of the many one-time items because they are buried deep in the annals of footnotes in annual reports or 10-K filings.

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Buy Clorox: Management Focused On Shareholder Value

Tuesday, August 30th, 2011 Figure1_CLX

I take great pleasure in recommending investors buy Clorox (CLX) – an attractive-rated stock, not just because of its strong profitability and cheap valuation but also because of the unusually high quality and integrity of its financial reporting.

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The Fed’s Bazooka: Fox Business features final policy firepower

Friday, August 26th, 2011 The Fed’s Bazooka: Fox Business features final policy firepower

Great interview this am with Dagan McDowell and Ashley Webster about my recent article: “The Fed’s Bazooka: Revealed As Final Policy Firepower in Jackson Hole”.

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The Fed’s Bazooka: Revealed As Final Policy Firepower in Jackson Hole

Tuesday, August 23rd, 2011 BenBernanke

No more Mr. Nice Guy. It is time for Mr. Bernanke to break out the big guns in Jackson Hole this Friday.

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S&P’s Downgrade Did Us a Favor

Thursday, August 18th, 2011 Figure1_SP

Too much of the rhetoric surrounding S&P’s downgrade of US debt misses the largest and most important point made by S&P’s bold move: the U.S. financial situation is very bad and getting worse with no reconciliation in sight.
It is difficult to deny the poor credit quality of an entity that grossly overspends its revenues, has a mountain of debt (most of which matures within the next few years) and has taken no meaningful steps toward remedying the situation?
By quibbling over S&P’s procedures and calculations, the Treasury and White House reveal that they have no solid rationale for disagreeing with the downgrade.

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Don’t Gamble In Financial Sector ETFs

Tuesday, August 16th, 2011 figure1

The financial sector is one of four sectors to earn our “dangerous” rating and is the worst-ranked sector in the our 3Q11 Sector Roadmap report according to my methodology at New Constructs.

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Research In Motion, Ltd. (RIMM) – Very Attractive Risk/Reward Rating For Ask Matt Readers

Thursday, August 11th, 2011 Research In Motion, Ltd. (RIMM) – Very Attractive Risk/Reward Rating For Ask Matt Readers

Here is a free copy of our report on RIMM for read­ers of Ask Matt.
The val­u­a­tion of RIMM’s stock implies the com­pany’s after-tax cash flow (NOPAT) will permanently decline by nearly 75%.

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