Archive for the ‘Grow Page’ Category

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The Housing Market Is Still Stalling

Tuesday, August 3rd, 2010

Homes aren’t selling and construction on new homes is slowing.

  • The stalling housing market can be attributed to global economic turmoil, falling stock prices, and slow labor markets.
  • Signed contracts in May and June have fallen dramatically.
  • Despite low mortgage rates, tighter lending standards are preventing buyers from getting a loan and purchasing a new home.
  • The two major issues in the job market are that there are too many homes and not enough demand.

Facts & Figures

  • An unprecedented number of homeowners owe more than their homes are worth.
  • Demand for mortgages is at a 14 year low.
  • Last week, the average rate on a 30-year fixed-rate mortgage was 4.57%, which is the lowest its been since 1971.

Best Quote

“The sellers think the market’s coming back. They’ve tacked on an extra 5 to 10 to 15%. The buyers aren’t going for it. It’s going to feel like a double-dip because sellers are going to have to lower their prices” – Jim Klinge, a real-estate agent in Carlsbad, California

The SEC Boosts Investors’ Influence Over Management

Friday, July 30th, 2010

In the lopsided world of shareholder voting, investors have to posses incredible gumption to effect any kind of change within a company.

  • In most companies, the management owns the majority of the stock, meaning that shareholders have little influence in a company’s policies.
  • The Securities and Exchange Commission is trying to even the playing field for shareholders, making it easier for them to effect change within a company.
  • The SEC is imposing nonproxy measures – like electronic surveys – to gauge whether or not investors support management. And yet, despite these efforts, because of money and knowledge, the management still wields most of the power.

Best Quote

“Time and again, we have brought opportunities [for mergers or acquisitions] to the attention of the board. Each time, he says, the suggestion was rebuffed or ignored. It’s been a decade of complete nonaction.” – Shareholder, Cadus Corportation

Should We Let Computers Make Our Investing Decisions?

Wednesday, July 21st, 2010

Dissatisfied with human beings’ powers of intelligence, several firms are trying to use AI to create the ultimate investor.

  • Using a branch of artificial intelligence called “machine learning,” some investors are trying to create an AI that can analyze market data, make predictions about the future, decide which stocks to buy and sell, and learn from its mistakes.
  • The advantage of using an AI program is that it can process huge amounts of data in a short time. But there is no guarantee that the program’s calculations will remain accurate if fundamental market conditions change.
  • One of the companies pioneering this type of AI is Rebellion Research, a small hedge fund based in New York run by a quartet of investors in their 20′s. In recent years, the company has performed better than both the Dow and the S&P 500.

Facts & Figures

  • Rebellion Research has beaten the S&P 500 index by an average of about 10% a year since 2007.
  • In 2009, the hedge fund increased by 41%, whereas the Dow only increased by 19%.
  • Star, Rebellion Research’s AI program, keeps track of approximately 30 factors that affect a stock’s market performance. It usually holds between 60 and 70 stocks at any given moment.

Best Quote

“It’s pretty clear that human beings aren’t improving.But computers and algorithms are only getting faster and more robust.” – Spencer Greenberg, one of the founders of Rebellion Research

The Point Of No Return

Monday, July 19th, 2010

It seems that no funds are consistent enough to weather the worst economies, no matter how reliable they seem.

  • In the wake of the economic crisis, more people are investing in “absolute return” funds - portfolios that supposedly deliver gains in any kind of market.
  • Firms advertise these funds as low-risk investments because they focus on short duration and high quality securities.
  • It seems, however, that the name of these funds might be misleading. In recent months they have been gaining little, and in some cases even been posting losses.

Facts & Figures

  • The Aston/New Century Absolute Return exchange-traded fund lost 9.51% in June

Best Quote

“You just have to be careful that absolute return doesn’t turn into no return.” – Mr. Tuttle, Financial adviser

Strong Quarter, Weak Economy?

Friday, July 16th, 2010

Although second quarter reports look strong, the economy may start to level out.

  • Fear of an economic slowdown caused the stock markets to dip.
  • Airlines are expected to make their first annual profit since 2007  due to fuller planes and higher fares.
  • Stronger Asian economies are increasing exports, which helps struggling U.S. shipping companies.
  • Despite all this, there has been poor job growth in the U.S in the past few months.

Facts and Figures

  • New home sales fell 33%, and existing home sales fell 2.2%.
  • Air shipments (mostly Asian exports) increased 30% from last year.

Best Quote

“Bottom line is earnings may hold up, but sales growth is slow and companies aren’t going to invest their record cash holdings until it improves.” – Howard Silverblatt, Senior Index Analyst of Standard & Poor

Young Upstart Divya Narendra on Starting Up on the Web

Thursday, July 15th, 2010

divya-narendra.jpg Divya Narendra is the 28 year old CEO and co-founder of SumZero, a website designed to help professional investors to share their investment ideas and network with one another. Running a business isn’t easy work, and so Divya spends his days generating new feature ideas, consulting with lawyers, forming partnerships with third parties, marketing the website, and yes, even handling the company’s bank accounts. He paused the work whirlwind for a moment to talk with TILE about starting up a start-up.

TILE: How did you get the idea for Sumzero?
Divya: The concept of SumZero was partly inspired by Wikipedia and partly by social networks such as LinkedIn. My co-founder and I wanted to create a universal, user-generated investment idea database consisting of rigorous investment recommendations whereby only professional hedge fund, mutual fund, and private equity analysts were allowed to contribute. This idea database is structured within a transparent social network enabling site members to connect over shared research, educational affiliation, prior employers, asset class expertise, etc.

TILE: What was one of your biggest challenges in starting the company?
Divya: One of the biggest challenges we’ve faced (and one that is faced by nearly all start-ups) has been building a team that is committed to growing SumZero.

TILE: Did you always want to go into business, or did you fall into this career path?
Divya: I first knew I enjoyed entrepreneurship when I was a junior in college. That year, I created a website aimed at connecting college students and alumni.

TILE: What’s in the future for you/ Sumzero?
Divya: We are currently working on raising capital to give SumZero the necessary financial resources to take the company to the next level. We hope to one day become the de facto platform for buyside analysts to exchange research.

TILE: What advice would you give your teenage self?
Divya: I would advise my teenage self to learn web programming to avoid having to hire others to do the job.

>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. To read more, click on Ask the Experts in the TILE Library.

Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!

Benchmarks are…

Wednesday, July 14th, 2010

Benchmarks are measurements used for comparison purposes, often to track the performance of a certain set of securities. A benchmark may be a published securities index or a customized one that serves a particular investment strategy. A popular benchmark used as a reference point for comparing stock performance is Standard & Poor’s 500 Composite Index.

Who’s looking at your trades?

Wednesday, July 14th, 2010

This is a somewhat complicated question that depends largely on the situation you find yourself in. Much like the stock market or investment markets themselves, certain people are privy to certain types of information. But let’s say you bought a share of Microsoft (MSFT) yesterday. Who can see that you did that?

  1. On the most immediate level, you can. You can view your purchase in your account register.
  2. Your financial advisor or private banker can also see the trade because she or he has access to your account.
  3. Things start to get a bit impersonal here: theoretically, the bank or brokerage house that you are associated with can see that one more share of Microsoft was bought for one of their customers.
  4. The market will most likely not be affected with the purchase of your one share, but since it is technically the most recent sale, for a little while (we’re talking less than a second) your purchase will be the last visible sale of MSFT which is visible to anyone who is looking at MSFT at that moment.

The long and the short of it is that only you and your financial advisor/ institution can see that YOU personally bought a share of MSFT; the rest of the world can only see that one share of MSFT was bought by someone, somewhere. The identity of the purchaser is confidential information.

BP May Have Something To Be Optimistic About

Wednesday, July 14th, 2010

BP originally planned to cap the oil leak in the Gulf of Mexico in mid-August, but they now plan to do so by the end of July.

  • BP claims that the clean-up efforts are ahead of schedule.
  • July 27 – the target cap date – is also the day 2nd quarter earnings are reported.
  • BP states that they have several back up plans in case primary capping efforts fail.
  • BP was encouraged by the Environmental Protection Agency to create a new device – an “autonomous subsea dispersant system”– to monitor and measure chemicals used underwater to break up the oil.

Facts and Figures

  • BP has lost almost half of its market capitalization since the spill in April.
  • BP is currently drilling 2 relief wells.
  • Hurricane season – which directly affects the Gulf – is imminent and worrisome.

Best Quote

“Force yourself to think each one will fail. We’re in new territory full of perils, and nothing is a slam dunk.” – Steve Chu, United States Secretary of Energy

A Bump For Small Businesses

Tuesday, July 13th, 2010

A new bill promises higher loans and bigger benefits for those pursuing business on a smaller scale…

  • On June 29th the Senate introduced a small-business jobs bill that guarantees higher and more inclusive government loans for small businesses and provides tax incentives to encourage small business investment.
  • The bill also includes a lending fund that loans money to community banks so that they can then lend to small businesses. It also finances state and local programs that would aid businesses in getting bank credit.
  • The bill is designed to appeal to a bi-partisan crowd. It allows people to pay more taxes strictly by choice, with the hope that this will appeal to both a Republican and Democratic audience and eventually be implemented.

Best Quote

“It is attractive politically because people pay more taxes today only if they choose to do so; ergo no one can complain about the tax increase.” – Roberton Williams, Senior Fellow, Tax Policy Center

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