Moving on

Dec 15, 2006 14:15 UTC

This is my final post on Before the end of the year, I’ll have transferred to a new position within Reuters, to a division that serves institutional money managers. I am excited about this opportunity, but I know I’ll miss the dot-com world. I’ve been writing columns online about investing since 1999.

I’ve met many of you, through e-mail, and often in person at such events as the Money Show and chapter meetings of American Association of Individual Investors (AAII). Getting to know my readers always kept me clear-headed about individual investors during the height of Wall Street scandals and the ascent of now New York Governor-elect Eliot Spitzer. While many depicted these investors as lambs waiting to be fleeced, I saw something quite different: successful, resourceful, astute, curious and independent people who understood the difference between hype and solid analysis, people who continually sought to learn more and who, whether as individuals or through clubs or organizations such as AAII or National Association of Investors Corporation (NAIC), were willing to teach others.

I wish you all continued success in your endeavors and hope you will continue to let serve you. Thank you for having given me such a rewarding opportunity.

P.S. As a parting memento, here are links to a three of my best-received articles, a tutorial series I published on various occasions, most recently in early 2005, that gives prospective on why stock prices are what they are.

Things looking up for Borat

Dec 12, 2006 22:03 UTC

borat_media.jpgThings are looking even more up for comedian Sacha Baron Cohen, better known as his title film character, Borat, the blundering Kazah journalist .Two lawsuits — one by two frat boys, another by Romanians – were thrown out of court. Another man has filed suit, but not against the filmmaker. Instead he’s suing a restaurant, claiming the staff at the eatery allowed the Borat filmmakers to tape him in the men’s restroom.

Cohen’s now getting awards attention. He was named Best Actor of the year in a tie with Forest Whitaker (“The Last King of Scotland”) by the Los Angeles Film Critics Association. And he was a runner-up for the same award from the New York Film Critics Circle.borat_thumbs.jpg

It’s a weak year for lead actors. Can Cohen ride the wave of publicity and hype to an Oscar nomination?

Looking for diversification candidates

Dec 1, 2006 15:45 UTC

Even bullish investors must be starting to wonder how much longer the stock market can maintain its vigor as oil price rallies alternate with corrections and as observers wonder how the Federal Reserve will resolve the tug-of-war between economic sluggishness, especially in the housing arena, and latent inflationary pressures.

The debate is sure to induce many to approach the topic of diversification more systematically. A traditional hard-times script might call for increasing allocation of funds to equities from sectors perceived to be “defensive,” such as consumer products or health care. But we’ve seen how even those stocks can drop hard if earnings disappoint. Health care, meanwhile, has a set of completely different dynamics, especially with the Democrats having just gained control of Congress.

Another, academically purer approach to diversification is statistically based. It suggests investors supplement consideration of potential returns with serious consideration to the way returns on a particular stocks correlate with those of other shares they may be holding. It’s quite possible that Portfolio A, consisting of two stocks with moderate uncorrelated returns may ultimately outperform Portfolio B, which has two very strong but highly correlated stocks.