Archive for February 2009

ETF’s – Are They Performing Better in a Bear Market?

Dark times aheadIt is notorious that most of the US mutual funds have had to incur losses last year (many of them between -30% and -20%, some of them even lower). And the story got even worse – due to their massive losses, most of these mutual funds were forced to sell big chunks at their assets at a loss and reimburse the capital gains to the investors. Who in turn incurred even more losses because the of the capital gains taxes.
This was very bad for an investor, indeed. And those burned investors started to looking for alternatives. One of them, close in concept, is to invest in ETF’s (exchange traded funds). Unlike mutual funds, ETFs incur zero capital gains until an investor actually sells his shares. While turnover in an ETF’s holdings can be high, it is done through in-kind exchanges of one security for another rather than through selling and buying fractions of the funds assets. Read more

U.S. Economy Seen from a Far-Away Future

back-to-the-futureWell, there is no shortage of the mish mash news today, in a nice avalanche of disasters hitting the once largest economy in the world.

We at were chatting – when we will look from the future to these days, how will they look like? How would look the $22 billion asked today by GM from the U.S. government as a further support to run its operations? How will the new Obama housing plan, unveiled soon today, appear to our eyes?

General Motors Corp and Chrysler LLC requested nearly $22 billion in additional U.S. government loans and said they had reached tentative deals with the United Auto Workers union to reduce labor costs. Of course they should do so, two days after they just received $3 billions which just saved their backs from bankrupcy. With $14 billion in debts to the bondholders, GM must look now more like a b Read more

Euro Poised to Increase, European Stocks Better than Forecasted

Currencies picture at doitinvest.comI was reading today some analysis about the euro currency prospects in the incoming day somewhere on Bloomberg. And boy, the things do not look good at all.
The prospects for the Euro are grim. The analsysts said on several web stories that the European currency is supposed to go down, from their current levels of 1,26 USD/EUR to 1,25, which is a psychological level (since it has not been achieved for more than 3 months, and even then – accidentally. The reason would be the bad results of the European banks, especially those of ING. Read more

Record Fall in the U.S. Home Prices

Home prices fell 12.4% during the fourth quarter of 2008, the largest year-over-year decline since the National Association of Realtors began keeping comprehensive records in 1979. The median price for a U.S. home sold during the fourth quarter of 2008 fell to $180,100, down from $205,700 during the last quarter of 2007.

Distressed properties, the foreclosures and short sales that invaded the market represented 45% of all deals. That has driven sales volume up in Nevada, California and other states hit hard by foreclosures, but these heavily discounted homes have also pushed median prices down. Read more

What To Do with the Toxic Bank Assets – Give Them for Free to Citizens

banker-cat Let’s say that the trillion or so of toxic assets would face two choices – go bankrupt or be offered for free to willing persons. What should the U.S. government do?
Some other blogs said that they should be given to the bank executives, instead of their salaries. Nice try. But they knwo how to do with them, and they would squeeze more money out of the government big pockets, in the form of another smart bailout plan.
No, we at don’t like the idea. But what if we would start another system of getting rid of those assets? Read more

Big Avoidance Speech from Geithner, Markets Falling

djia-feb-2009US Treasury Secretary Timothy Geithner held yesterday a speech on the foreseen bailout measures which failed to reassure the markets. The Dow Jones fell 200 points from the start of his 30 minute speech to the end and finished yesterday 382 points behind the day before. Indeed, stock traders made him pay for the lack of specific details in his speech. Read more

Bailout Plan for the Auto Loans and Mortgages

volkswagenGeneral Motors, Ford and Chrysler LLC will be some of the biggest beneficiaries if the new bailout bill will be passed by the Senate. The bill intedns to create a provision of $11 billion which would allow the U.S. taxpayers to deduct for tax purposes interest paid for auto loans and mortgages. Read more