May 05, 2012 - The Changing Face of Retirement - by Morningstar Investment Research
Morningstar recently spoke with Olivia Mitchell, a professor at the Wharton School of the University of Pennsylvania, is an expert on retirement issues and executive director of The Pension Research Council. As the first wave of baby boomers enters its mid-60s, many plan on working longer, whether by choice or necessity. Meanwhile, the social safety net is showing frayed edges. Just this week the Social Security Board of Trustees released revised estimates showing the program is scheduled to run out of money in 2033, three years earlier than previously thought. Mitchell responded to Morningstar's questions about retirement issues confronting the baby boom generation and other topics, particularly financial literacy.
Estimating Stocks' Fair Values a Complex Process
On Morningstar's individual stock pages, I see your analysts' fair value estimate for a stock, along with Consider Buying and Consider Selling prices. How do Morningstar analysts arrive at these numbers, and how do they relate to the Morningstar Rating for stocks, or star rating?
Morningstar assistant site editor Adam Zoll addressed this question, stating to determine a stock's fair value, Morningstar analysts examine factors such as estimated future cash flow, competitive positioning, and even the degree of certainty the analyst has in making his or her evaluation. Analysts typically are assigned to track the comp anies within specific sectors and revise their fair value estimates whenever information becomes available that affects their outlook for a stock. As for how analysts arrive at a fair value estimate, and how a stock gets a given star rating, Zoll provided a breakdown of the process.
Among the other topics we addressed this week:
Introducing Morningstar's New Stewardship Rating for Stocks. Our new rating system gets right to the heart of the matter: evaluating whether management teams are good stewards of shareholder capital.
Who's Running the Most Money? For every Contrafund, there's a Magellan out there.
Approach Single-Country Emerging-Markets Funds With Your Eyes Wide Open. These funds come with notable risks as well as ample potential rewards.
The Correlation Conundrum and What to Do About It. With the rise in correlations, diversification is more important than ever.
This ETF Offers a Bastion of Stability in an Uncertain Market. Despite the limited upside, utilities are often looked to for stability during periods of heightened market uncertainty.
Manager Steps Down at Restructuring Fund. Plus, Matthews makes a manager change and more.
You've Probably Never Heard of This Go-Anywhere Fund, Despite Its Track Record. Guggenheim Strategic Opportunity Fund places few investment restrictions on its ace portfolio manager.
Van Eck Launches 'Wide Moat' ETF. State Street rolls out three actively managed ETFs, iShares debuts two corporate bond funds, and UBS launches a commodity ETN. Plus, the week's best and worst performing funds.
Is the Age of Austerity Over? Investors should expect more turbulence as elections in France and the fall of the Dutch government are shaking Europe's political footing.