The Stingy News Weekly (08/04/2013)
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The case for low-fee balanced funds
"While balanced funds aren't a cure-all for the ails of market timing, they do represent a useful tool for new investors and for those who get a little jittery in downturns. When shopping for balanced funds it is important to keep a close eye on the fees they charge. All too many funds offered to Canadians charge outrageously high fees."
Did Goldman Sachs overstep?
"A month after ace programmer Sergey Aleynikov left Goldman Sachs, he was arrested. Exactly what he'd done neither the F.B.I., which interrogated him, nor the jury, which convicted him a year later, seemed to understand. But Goldman had accused him of stealing computer code, and the 41-year-old father of three was sentenced to eight years in federal prison. Investigating Aleynikov's case, Michael Lewis holds a second trial."
The weather rock
"When asked for shorter-term predictions, I always respond candidly that I can guess what's going to happen from year to year but I don't know. Nobody does despite the proliferation of forecasts that our industry produces for each coming quarter, six months or year. And stock market returns from the past several years illustrate this nicely."
America has changed the way it measures GDP
"The problem is that there is scant information on investment costs. Moreover, the asset - the right to the music, manuscript or TV format - is rarely sold. Rather it is used to create a future stream of products, like books and TV shows. So the BEA must estimate likely future royalty fees, and translate them into today's money to value the investment."
The romantic appeal of savers
"The desire to attract a romantic partner often stimulates conspicuous consumption, but we find that people who chronically save are more romantically attractive than people who chronically spend."
Consuelo interviews Jason Zweig
"'There's no doubt that the pursuit of yield is bordering on a mania' says Jason Zweig, The Wall Street Journal's Personal Finance Columnist. Don't miss Consuelo's discussion when she asks Zweig about dangerous investor behavior and why he is concerned as investors are abandoning bonds and flocking to dividend-paying stocks."
Quality could still be underpriced by markets
"The researchers measured value creation with their own metric that they call CFROI, for cash flow return on investment. It is based on cash flows (not earnings, on which accounting manipulations are possible and which are affected by leverage), adjusted for inflation, as a proportion of operating assets - a measure that excludes accounting devices such as depreciation allowances. By taking inflation and different accounting rules out of the equation, the metric allows comparisons across time, countries and industries. It produces some fascinating findings."
Who should try to beat the market?
"Instead, Zweig thinks Graham would have advised those who have an edge at stock-picking to do so, while recommending those who don't take a passive approach with index funds"
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