Anonymous 2

Analyzing the U.S.'s Four Largest Banks

Any comments as to the extent to which each of the 5 banks are exposed to (A) "unexpeted" or "hard to value" coomercial real estate and or (B) what is now high debt to CURRENT income conventional AND jumbo (residential) mortgages and (C) the extent to which - absolute and percent of total holdings) each of these banks holds any mortgages which are "past due" and or "in foreclosure" and (D) to what extent each of these banks have 30 year Mortgages offered with 1 to 10 year "interest only" ARMs sold at the highs in 2005 to 2008 time period and due to expire within 6 to 8 years. This would be an interesting chart to show: the total value of ARMs which will be reset during each of the years between now and, lets say, 2016 0r 2018.
Depending on the rates (at the time ) these mortgages are reset, many of the current homeowners with such ARMs might be in deep do do - especially those who will become retired and therefore "no longer qualified" to take out any conventional or jumbo loan based on the Current Debt to Current Income ratio requirement which generally do NOT ??? take into consideration the potentially significant income producing assets of homeowner's investment portfolios and or especially the income generated and available from their IRA 401K or other retirement plan's annual minimum required distributions.

Mutual Fund Fee Datapoint of the Day

speaking of FEES
Just FYI: Following is an interesting comment on the recent Schwab ETF launch.
In My Opinion - Very innovative - and will cause many industry changes for the better of individual investors - especially among other ETF sponsors and financial entities using and offering ETFs. Somewhat negative for most - all? - continued growth of Mutual Funds.

Tal Fletcher

news.morningstar.com/a...

Investing Specialists: ETF Investing
Investors Win with Schwab's Entry into ETFs
By Scott Burns | 11-05-09 | 08:40 AM |
I have to admit, Schwab's Nov. 2 announcement that it would not charge trading commissions to clients purchasing Schwab ETFs on its online trading platforms was a bit of a shock to me.
I have long theorized that it was only a matter of time until one trading platform or discount brokerage launched its own line of ETFs and used subsidized trading costs to fuel asset growth. I had initially figured that said company would offer discounted trades--say, $3 a trade instead of $12 a trade. It was hard for me to see a scenario where a for-profit group of firms would offer its funds with a $0 trading cost. So, it was a huge surprise when Schwab not only came out with what can only be described as ultracheap offerings from an expense-ratio perspective but also dropped trading costs to $0.
Overall, this is an incredibly investor-friendly move. In fact, I will go so far as to say this is one of the most investor-friendly actions by a fund company ever. Is it at the same level as Jack Bogle founding Vanguard or the rise of discount brokerage platforms? Probably not, but it is up there. I say it is one of the top-five most investor-friendly moves by a fund company or financial company, but others can feel free to disagree.
What's in It for Chuck?
Now, let's not kid ourselves and think that Schwab simply did this out of the goodness of its heart. Last I checked, it was a publicly traded company and not the Salvation Army. Of course, this will help Schwab grow assets in its funds--jump-starting their liquidity and removing one of the major humps that all new ETFs face.
From a business perspective, Schwab was staring down a world where advisors and investors alike were using low-cost ETFs to circumvent the wholesaler costs charged by mutual fund supermarkets. Schwab's One Source platform is among the largest of these supermarkets, which means that it had a front-row seat to witness the phenomenon. Worse, as more and more advisors and investors adopted passive management strategies, Schwab was likely to get hit with a double whammy of losing fees from the wholesale business, while not making it up in trading commission. You see, in passive management, investors would buy their ETFs, set their allocations, and maybe rebalance once or twice a year. So, in theory, Schwab would gain assets, but the ETF providers would be the ones making all of the money. Given all of the baby boomer money that is set to roll out of tax-deferred accounts (IRAs and 401(k)s), Schwab needed to position itself better to deal with the needs of both its Registered Investment Advisor client-base and self-directed individual investors. All of them report, in any survey that I've seen, that they plan on using ETFs more and more in their portfolios.
In addition to alleviating the situation mentioned above, Schwab can attract new clients and is providing a much appreciated service to existing ones. With this the firm can continue to gather assets and sell other services such as cash deposits, margin accounts, and trading costs on other non-Schwab products, be they ETFs, mutual funds, or individual securities.
Even after laying out all of the reasons Schwab may have done this for itself, I say, "So what?!" Investors are the big winners here. If Schwab is willing to split the economic rents from providing low-cost, transparent, liquid ETFs to investors by offering those funds free of transaction costs, then I honestly don't care why it did it.
Teaser Rate?
The biggest concern for most people out there is that this is a bait-and-switch teaser rate to attract assets in the short-run. We had some representatives from Schwab come in to Morningstar HQ to talk about their ETF offerings and their strategy. I asked them point-blank if this was a teaser rate. Their response (and I am paraphrasing) was that this was absolutely not a teaser rate and that Schwab was committed to keeping these products commission-free for the long haul. I then asked if that was in writing somewhere, and I received an answer that I interpreted as it was written down somewhere ... but don't consider it legally binding. So, I will tell the folks at Schwab this: As long as your ETFs remain commission-free to your clients, then I will continue to describe this as one of the most investor-friendly moves ever. Because you reserve the right, so do I. In the end, it most likely won't even matter if it wanted to rescind it because ...
The Competitive Response
People in the financial world must be livid with this move. ETF providers are beside themselves because, with the possible exception of Vanguard, they don't have a trading platform with which to waive fees. They are all looking to advisors and individual investors to fuel their assets-under-management growth over the next 10 years. Other discount brokerages are mad because they had planned on trading costs from ETFs to be a huge driver of future revenue. Wirehouse platforms are ticked because this is just another reason for their best advisors to go independent on them, and they had thought ETFs would be the best of both worlds for themselves (wrap fee plus trading commissions). The traditional fund companies can't like the fact that, without commissions, you lose that transaction-cost friction that kept ETFs out of 401(k) plans or made them unsuitable for dollar-cost averaging strategies.
Game theory would tell us that this move cannot stand unmatched. Really, that is what leads me to call this a "shot heard around the world" type of event. The ETF providers can't sit by and watch this upstart new entrant gather the assets that they've been counting on--especially with the price BlackRock paid for iShares/BGI. The other discount brokerages won't be able to let Schwab woo their clients with a promise to remove the one thing that investors and traders alike despise: trading costs. Frankly, I'm not really sure what the wirehouse firms can do about this.
So, what will they all do? The ETF providers are going to need to either build trading platforms or find some partners. Finding partners would most likely be the more cost-effective move in the long-run. Imagining a BlackRock and E*Trade merger or partnership is not out of the question. The bigger discount brokerages and investing platforms are going to need to either develop their own competing ETF products or similarly find partners to split the costs with. I think the bigger ones with larger RIA clearing operations like TD Ameritrade or Fidelity are more likely to develop their own products. Short of banning the products from their platforms, I'm not sure how wirehouse firms can respond. I would advise them not to do that, as it would only tick off their clients and advisors. If I were them, I would match the $0 commissions and be content with the wrap fee and other service fees that are charged. In fact, wirehouses could adopt that for all ETFs and perhaps stem the tide of asset and advisor outflows.
Overall, ETFs are a commodity product--especially if they track passive indexes. That may sound strange coming from someone who likes ETFs as much as I do, but that is exactly why I like them. In commodity products, the lowest cost wins; that's just Econ 101. This kind of competitive price pressure will invariably push the cost of investing down for all levels of participants investing in ETFs and funds in general. Even if Schwab wanted to rescind this offer three years down the road, it won't matter. If its competitors match it, then it won't really have the choice. To do so would invite the same outflows that its competitors now stand to face with the launch of these new ETFs.
Challenges for Chuck
For all the positives this brings to investors, it won't matter much if Schwab can't execute a successful investing experience for its clients. That means these funds have to perform as advertised, and, more importantly, the market makers and authorized participants (the folks responsible for arbitraging ETF premiums and discounts) have to do their part. If investors get bad trade execution or the funds' performance lags competing offerings, then this will be all for naught. While there may be some stumbles early on, I don't think this is a major long-term concern. The Schwab team has hired some pretty experienced and well-known folks from competitors and the exchanges to make sure that this operation runs as smoothly as possible. That said, the standards are pretty high these days in terms of both execution and performance, so the margin of error is pretty slim.
Put One on the Board for Investors
Combine the value added for Schwab clients with what the most likely competitive response will be from the industry as a whole, and investors are the real beneficiaries here. This move has all the makings of redefining ETF investing for the smaller investor and the potential to redefine fund investing in general.
I have a saying, "When fund companies compete, the investor wins." This week, the investor won and won big.

Emerging Market Rally to Continue, ETF Gurus Agree

Just FYI: Following is an interesting comment on the recent Schwab ETF launch.
In My Opinion - Very innovative - and will cause many industry changes for the better of individual investors - especially among other ETF sponsors and financial entities using and offering ETFs. Somewhat negative for most - all? - continued growth of Mutual Funds.
Tal Fletcher

news.morningstar.com/a...

ETF Investors Weren’t Spooked in October

Just FYI: Following is an interesting comment on the recent Schwab ETF launch.
In My Opinion - Very innovative - and will cause many industry changes for the better of individual investors - especially among other ETF sponsors and financial entities using and offering ETFs. Somewhat negative for most - all? - continued growth of Mutual Funds.
Tal Fletcher

news.morningstar.com/a...

Investing Specialists: ETF Investing
Investors Win with Schwab's Entry into ETFs
By Scott Burns | 11-05-09 | 08:40 AM |
I have to admit, Schwab's Nov. 2 announcement that it would not charge trading commissions to clients purchasing Schwab ETFs on its online trading platforms was a bit of a shock to me.
I have long theorized that it was only a matter of time until one trading platform or discount brokerage launched its own line of ETFs and used subsidized trading costs to fuel asset growth. I had initially figured that said company would offer discounted trades--say, $3 a trade instead of $12 a trade. It was hard for me to see a scenario where a for-profit group of firms would offer its funds with a $0 trading cost. So, it was a huge surprise when Schwab not only came out with what can only be described as ultracheap offerings from an expense-ratio perspective but also dropped trading costs to $0.
Overall, this is an incredibly investor-friendly move. In fact, I will go so far as to say this is one of the most investor-friendly actions by a fund company ever. Is it at the same level as Jack Bogle founding Vanguard or the rise of discount brokerage platforms? Probably not, but it is up there. I say it is one of the top-five most investor-friendly moves by a fund company or financial company, but others can feel free to disagree.
What's in It for Chuck?
Now, let's not kid ourselves and think that Schwab simply did this out of the goodness of its heart. Last I checked, it was a publicly traded company and not the Salvation Army. Of course, this will help Schwab grow assets in its funds--jump-starting their liquidity and removing one of the major humps that all new ETFs face.
From a business perspective, Schwab was staring down a world where advisors and investors alike were using low-cost ETFs to circumvent the wholesaler costs charged by mutual fund supermarkets. Schwab's One Source platform is among the largest of these supermarkets, which means that it had a front-row seat to witness the phenomenon. Worse, as more and more advisors and investors adopted passive management strategies, Schwab was likely to get hit with a double whammy of losing fees from the wholesale business, while not making it up in trading commission. You see, in passive management, investors would buy their ETFs, set their allocations, and maybe rebalance once or twice a year. So, in theory, Schwab would gain assets, but the ETF providers would be the ones making all of the money. Given all of the baby boomer money that is set to roll out of tax-deferred accounts (IRAs and 401(k)s), Schwab needed to position itself better to deal with the needs of both its Registered Investment Advisor client-base and self-directed individual investors. All of them report, in any survey that I've seen, that they plan on using ETFs more and more in their portfolios.
In addition to alleviating the situation mentioned above, Schwab can attract new clients and is providing a much appreciated service to existing ones. With this the firm can continue to gather assets and sell other services such as cash deposits, margin accounts, and trading costs on other non-Schwab products, be they ETFs, mutual funds, or individual securities.
Even after laying out all of the reasons Schwab may have done this for itself, I say, "So what?!" Investors are the big winners here. If Schwab is willing to split the economic rents from providing low-cost, transparent, liquid ETFs to investors by offering those funds free of transaction costs, then I honestly don't care why it did it.
Teaser Rate?
The biggest concern for most people out there is that this is a bait-and-switch teaser rate to attract assets in the short-run. We had some representatives from Schwab come in to Morningstar HQ to talk about their ETF offerings and their strategy. I asked them point-blank if this was a teaser rate. Their response (and I am paraphrasing) was that this was absolutely not a teaser rate and that Schwab was committed to keeping these products commission-free for the long haul. I then asked if that was in writing somewhere, and I received an answer that I interpreted as it was written down somewhere ... but don't consider it legally binding. So, I will tell the folks at Schwab this: As long as your ETFs remain commission-free to your clients, then I will continue to describe this as one of the most investor-friendly moves ever. Because you reserve the right, so do I. In the end, it most likely won't even matter if it wanted to rescind it because ...
The Competitive Response
People in the financial world must be livid with this move. ETF providers are beside themselves because, with the possible exception of Vanguard, they don't have a trading platform with which to waive fees. They are all looking to advisors and individual investors to fuel their assets-under-management growth over the next 10 years. Other discount brokerages are mad because they had planned on trading costs from ETFs to be a huge driver of future revenue. Wirehouse platforms are ticked because this is just another reason for their best advisors to go independent on them, and they had thought ETFs would be the best of both worlds for themselves (wrap fee plus trading commissions). The traditional fund companies can't like the fact that, without commissions, you lose that transaction-cost friction that kept ETFs out of 401(k) plans or made them unsuitable for dollar-cost averaging strategies.
Game theory would tell us that this move cannot stand unmatched. Really, that is what leads me to call this a "shot heard around the world" type of event. The ETF providers can't sit by and watch this upstart new entrant gather the assets that they've been counting on--especially with the price BlackRock paid for iShares/BGI. The other discount brokerages won't be able to let Schwab woo their clients with a promise to remove the one thing that investors and traders alike despise: trading costs. Frankly, I'm not really sure what the wirehouse firms can do about this.
So, what will they all do? The ETF providers are going to need to either build trading platforms or find some partners. Finding partners would most likely be the more cost-effective move in the long-run. Imagining a BlackRock and E*Trade merger or partnership is not out of the question. The bigger discount brokerages and investing platforms are going to need to either develop their own competing ETF products or similarly find partners to split the costs with. I think the bigger ones with larger RIA clearing operations like TD Ameritrade or Fidelity are more likely to develop their own products. Short of banning the products from their platforms, I'm not sure how wirehouse firms can respond. I would advise them not to do that, as it would only tick off their clients and advisors. If I were them, I would match the $0 commissions and be content with the wrap fee and other service fees that are charged. In fact, wirehouses could adopt that for all ETFs and perhaps stem the tide of asset and advisor outflows.
Overall, ETFs are a commodity product--especially if they track passive indexes. That may sound strange coming from someone who likes ETFs as much as I do, but that is exactly why I like them. In commodity products, the lowest cost wins; that's just Econ 101. This kind of competitive price pressure will invariably push the cost of investing down for all levels of participants investing in ETFs and funds in general. Even if Schwab wanted to rescind this offer three years down the road, it won't matter. If its competitors match it, then it won't really have the choice. To do so would invite the same outflows that its competitors now stand to face with the launch of these new ETFs.
Challenges for Chuck
For all the positives this brings to investors, it won't matter much if Schwab can't execute a successful investing experience for its clients. That means these funds have to perform as advertised, and, more importantly, the market makers and authorized participants (the folks responsible for arbitraging ETF premiums and discounts) have to do their part. If investors get bad trade execution or the funds' performance lags competing offerings, then this will be all for naught. While there may be some stumbles early on, I don't think this is a major long-term concern. The Schwab team has hired some pretty experienced and well-known folks from competitors and the exchanges to make sure that this operation runs as smoothly as possible. That said, the standards are pretty high these days in terms of both execution and performance, so the margin of error is pretty slim.
Put One on the Board for Investors
Combine the value added for Schwab clients with what the most likely competitive response will be from the industry as a whole, and investors are the real beneficiaries here. This move has all the makings of redefining ETF investing for the smaller investor and the potential to redefine fund investing in general.
I have a saying, "When fund companies compete, the investor wins." This week, the investor won and won big.

Which Dividend Stocks Are Relatively Safe?

To what extent would (A) Percent of COVERAGE of quarterly and annual dividend payouts along with (B) a record of quarterly and annual increases in EPS for past 5 years be to help screen for those investors investors significant superior risk adjusted (Vs the S&P500 index) "Total Return" from ability of company management to generate Consistent Growth (in investment value) plus Consistent Growth in Income Payout.
Maybe Hao Jin could look into this?

30 High Dividend Stocks and ETFs

I believe it might be of interest if you were able to screen out ETFs which since inception did not have an increasing 12 month dividend payout. We all know the Aristocrats have had 25 years of annual dividend payout increases- without exception. One would think that if the managers of ETFs which include the words Dividend and Growing in the title should also have the same profile.
In any event, some screen should be used to indicate the "volatility" of the following 12 month actual dividend payout rather than a
current yield" based on an annualized return based on the most recent (monthly or quarterly) declared dividend payout.
In addition,another way of indicating the volatility of the dividend payout record would be to provide a range of past 12 month dividend payouts as well as the most recent past 12 month payout and yield based on current price.
Just some thoughts suggestions.

Bank Leverage: Forever Blowing Bubbles

For another rather bleak but also well researched view on financial companies google "Reggie Middleton Wells Fargo Bank of America"
a start surfing some big waves

Dollar Update: Inflation Forces Are Brewing

So the prudent investor should continue to be long accumulating selected "Emerging market economies" does that mean their "Government Debt" and or their "Equity" securities/ETFs or Mutual funds?
With regard to "Equities in General" does this include "growth companies" OR "Value Companies? and/OR "Growing Dividend Income" securities, ETFs or Mutual funds?
And presumably is it OK to buy TIPs - but NOT the non inflation protected T bills, Notes and bonds?
And how about US Short term - no more than 5 years) Corporate - High quality and/or Junk Debt orConverts?


"Emerging market economies should continue to do better than industrialized countries, since they benefit from a weaker dollar and rising commodity prices, and many of them (e.g., Brazil, Chile, China, Peru, Singapore, Thailand) have managed to keep their currencies quite strong relative to the dollar in recent years. Equities in general should do well, since markets are still braced for recession and fear continues to distort investment decisions. The things to avoid like the plague are the "risk-free" investments such as T-bills, T-notes, and T-bonds."

Major Banks Now Much Too Big to Fail

maybe too big to fail but not too big to short (or hedge):
see below for list of recent research comments by an analyst who has been quite accurate with his investment researched conclusions

seekingalpha.com/autho...

I still have a small oddlot position of JPM from a recent deferred comp distribution (I retired from Bear Stearns) and have no relationship with Reggie Middleton but have seen his research on the internet and find it to be value added and informative.

Goldman Sachs's Hedge Fund Report: A Must Read

I forgot to include the site

seekingalpha.com/autho...

Goldman Sachs's Hedge Fund Report: A Must Read

the following is a web site of an independent analyst who has been providing such research for many years via the internet. He warned of FUNDAMENTAL problems at both Bear Stearns and Lehman years before they went their way - and continued to warn of their deteriorating fundamentals until they became history. The same goes for his bearish views on many of the major corporations most all street analysts remained bullish on these major companies as they went into steep bearish trends during past few years
It would be interesting to find out what the GS analysts have to say FUNDAMENTALLY regarding Reggie's bearish conclusions. point for point counter arguments.

A High-Ranked Momentum Stock Portfolio

I'd be inerested in seeing similar screens applied to the various sector ETFs.
If buying individual stock, suggest to do so only if and when the 7 (below) momentum indicators APPLIED TO THE SECTOR ETF were ALSO positive would probably help in terms of averaging into or out of positions;
Bullish indicators:
1. stock/ETF price up
2. 50 day up
3. Stock/ETF Price above 50 day
4. 200 day up
5. Stock/ETF price above 200 day
6. 50 day > 200 day
7. stock/ETF price within 5% of 52 day high
Bearish indicators= If opposite (Down or below)
Action:
one or two of any of indicators = initiate;
3, 4, 5 indicators = accumulate;
6 or 7 indicators complete weighting of position.
Begin to liquidate from position as the indicators reverse
This system would be "guaranteed" to NEVER get one in at the bottom and get one out at the top.
But likewise, it would help one stay in the position for the major portion of any intermediate/long term move.

52-Week High Momentum Investing ETF Portfolio Shows Promise

it would be interesting to know if "anyone" has used this 52 week high momentum in conjuction with the traditional use of the SIX 50 day and 200 day momentum signals bull bear indicators for indices, ETFs or MFs and or individual stocks
1. Price is up for the day = bullish
2. 50 day MA is UP for the day = bullish
3. Price is ABOVE the 50 day MA = Bullish
4. 200 day is UP for the day = bullish
5. Price is ABOVE the 200 day MA = Bullish
6. 50 day MA is ABOVE the 200 MA = bullish

The indicator is Bearish if DOWN or BELOW

Obviously if one were to use such simple indicats, they would put the odds in their favor if they also used the same analysis for their benchmark index or sector index.
Obviously, like all momentum indicators there WILL BE a lag in terms of getting in and getting out and thus this will NOT get anyone IN at the bottom or OUT at the top but if FUNDAMENTALS are used to determine a bull or bar investment, then such indicators will help invest with more conviction.
Obviously it may make some sense to include the 52 week high indicator to help fine tune the bull/bear indicators. Like how close to the high ? start what % below? or wait until what % above? or ?

A Look at Q2 Hedge Fund Asset Flow

It would be interesting to see similar measures of performance and inflows vs liquidations in the various Mutual fund sectors using Lipper or Morning Star or other managed index of managed funds in terms of annual net after fee performance and AUM vs the indices

Why Dividend ETFs Can Help You Through Hard Times

To what extent have these "growing Dividend" ETF's generated "Growing dividends" since inception based on a rolling 12 month payment of monthly or quarterly dividends?
I believe this statistic should be provided by all ETFs based on their record of dividend of income from their underling holdings - and NOT including any "distributions" from short or long term capital gains from trading.
Does everyone agree with this?
and if so, I'd appreciate a site from which I could get such data to compare