Posts filed under “Index/ETFs”

5 Biggest Market Caps As % of S&P500

Why cheap Apple shares can’t gain any traction
click for larger graphic


Source: Barron’s

 

 

The chart above shows the 5 largest market cap firms as a percentage of the S&P500 index.

Barron’s points out that when companies hit 5% of the S&P500, it often acts as a cap on further valuation growth. The Trader column points out that “General Electric (GE) and ExxonMobil (XOM) neared the 5% level in the third quarter of 2000 and the first quarter of 2009, respectively, before dropping back. IBM (IBM) got as high as 6% at the end of 1985. That preceded a long down period in terms of its percentage of the S&P’s market value.”

Despite a P/E below 15, when “Apple’s price was $700, its market value was almost 5% of the S&P 500′s.” The reason?

“Investors, particularly professionals, diversify their portfolios, and few are willing to commit more than 6%-7% of their portfolios to one stock, Cohen [Aaron Cohen, president of money manager Financial Partners Capital Management] says. Not everyone can own Apple, and at a certain point, “there was nobody left to buy the stock” who didn’t already have a full position, he adds.”

Hence, argues Barron’s, the difficulty in AAPL powering higher . . .

Category: Index/ETFs, Valuation

Wacky Email of the Month: Obama to Rejigger DJIA

Since its the Friday before a 3 day weekend, let me share with you the goofiest email I have received this month, from somewhere in the Netherlands. The full email (which is all over the Internet in its original language) is reproduced below, immediately following my response.   My response: That is hilarious. I presume…Read More

Category: Index/ETFs, Really, really bad calls

A Breakdown Of ETF Assets & Flows

MarketWatch – Investors win as ETF wars heat up The ETF wars are once again heating up to the benefit of everyday investors. BlackRock, the leader and pioneer of ETFs through its famous iShares products, is feeling the pressure of increased competition in the ETF space and is likely to lower their pricing. Comment Recently we pointed…Read More

Category: Index/ETFs, Investing

Top 10 Investor Errors: Mutual Fund vs ETFs

Welcome to post number six in our continuing series of most common investor errors.

Today, we are going to look at something that relates back to several of our earlier bullet points on fees and active management relative to investor structures.

Mutual Fund vs ETFs: The average mutual fund charges far more than the average ETF does. Whenever possible, I recommend substituting a low cost ETF over the more expensive Mutual fund.

The fund industry seems to have figured this out. Some have put out ultra-low cost mutual funds that typically mimic broad indexes. Others have ETF-ified their existing mutual funds, converting them into Exchange Traded Funds. Over the next decade, it would not surprise me to see nearly half of the existing mutual fund offerings morph into ETFs.

The bias against mutuals over ETFs is in the many ways that mutual funds can tag you with hidden costs, taxes, 12b-1 fees, and expenses. With ETFs, you pretty much get what you pay for.

Do note however: Even within the ETF universe, there are a wide range of internal fees. These expenses come off of the top of your investment performance, so it pays to watch them closely.

Reducing your costs is a surefire way to improve long term results. Consider what ETFs you can substitute instead of mutual funds.

 

 

Previously:
Top 10 Investor Errors
1. Excess Fees
2. Reaching for Yield
3. You Are Your Own Worst Enemy
4. Asset Allocation vs Stock Picking
5. Passive vs Active Management

Read More

Category: Apprenticed Investor, Index/ETFs, Investing

Case-Shiller Home Price Indices (November 2011)

Through November 2011, the S&P/Case-Shiller1 Home Price Indices declined 1.3`% for both the 10- and 20-City Composites in November over October. For a second consecutive month, 19 of the 20 cities covered by the indices also saw home prices decrease.

For year over year data, the 10- and 20-City Composites posted losses of -3.6% and -3.7% versus November 2010. These are worse than the -3.2% and -3.4% respective rates reported for October.

Click to enlarge:

More charts after the jump

Read More

Category: Index/ETFs, Real Estate

Index Funds Don’t Pick Themselves!

I was sitting on Friday’s hilarious Dilbert, expecting to post it Saturday, but so many friends and colleagues mailed it in to me, I was compelled to post it today: >

Category: Index/ETFs, Investing

2011 Dow Dogs & Daredevils

In this week’s Barrons, Mike Santoli takes a closer look at the 30 individual Dow Industrial stocks. A few observations worth noting: The winners were stable, defensive companies, while the losers were financials and the more cyclically sensitive names.  The 2011 winners marked their second consecutive successful year: McDonald’s (MCD), Home Depot (HD) and Kraft…Read More

Category: Index/ETFs, Investing

Barron’s: Buy Emerging Markets

Where the Buys Are Emerging markets are cheaper than their developed counterparts with far more growth. Earnings for the MSCI Emerging Markets index are expected to grow at 15% over the long term, versus 12% for MSCI World index. Recent Change P/E** 2011** Market Index Level YTD 1-Yr 3-Yr* 2011 2012 Price/Book Brazil Bovespa 52,482.82…Read More

Category: Index/ETFs, Investing, Markets

Trannie Swan Dive to Take Down Crude Oil

The Dow Transportation Index was down almost 4 percent Tuesday and if there is any silver lining  in the current market turmoil is that Trannies usually lead crude down, which will drop gas prices.  The chart below shows the 12.2 percent swan dive in the Dow Transports since July 7th with crude oil barely moving. …Read More

Category: Index/ETFs, Technical Analysis

The New Nasdaq

Nasdaq OMX is rebalancing the Nasdaq-100 index (QQQs), which currently has one company — Apple (AAPL) as more than 20% of the index. The WSJ notes “Apple’s market capitalization is roughly $300 billion, twice that of Google. But its weighting in the index was five times that of Google. After the rebalancing, Google’s share of…Read More

Category: Index/ETFs