Opinion

John Wasik

In times of trouble, investors can build a bridge

Mar 26, 2012 13:20 UTC

CHICAGO (Reuters) – Having been a stock market investor during the worst downturns over the past quarter century, I’m naturally cautious about national economic shocks like recessions, inflation, bubbles and wars.

None of those threats have disappeared from my radar screen. But being a squeamish investor, as I’m watching the steady ascent of the U.S. stock market this year, I have one question: What should you be most afraid of?

I share the caution espoused by former Treasury Secretary Robert Rubin, whom I heard speak at the Chicago Council on Global Affairs on Thursday. “I’m an investor – a troubled investor – with a very deep concern,” Rubin said. “If we (the U.S.) don’t get on a sound fiscal trajectory, there will be a severe crisis in the bond and currency markets.”

I also share Rubin’s other concern that markets could be tripped up by a European debt default. That seems less likely with the passage of time, although it’s certainly on the table. Even though I have issues with Rubin’s role in overseeing disastrous financial deregulation in the 1990s, he’s still a keen observer of markets.

MORE CONCERNS LOOM

Will there be another U.S. debt-ceiling brouhaha? We have about eight months before that might happen, and it could be another grotesque event for the markets. There’s also the threat of trouble with Iran leading to higher oil prices, although the stock market hasn’t quite reacted to that yet. What about the prospect that investors buying U.S. debt will demand higher interest rates because of the increasing perils of investing in an overleveraged country? That one is beginning to give me agita.

COLUMN: In times of trouble, investors can build a bridge

Mar 23, 2012 20:55 UTC

CHICAGO, March 23 (Reuters) – Having been a stock
market investor during the worst downturns over the past quarter
century, I’m naturally cautious about national economic shocks
like recessions, inflation, bubbles and wars.

None of those threats have disappeared from my radar screen.
But being a squeamish investor, as I’m watching the steady
ascent of the U.S. stock market this year, I have one question:
What should you be most afraid of?

I share the caution espoused by former Treasury Secretary
Robert Rubin, whom I heard speak at the Chicago Council on
Global Affairs on Thursday. “I’m an investor – a troubled
investor – with a very deep concern,” Rubin said. “If we (the
U.S.) don’t get on a sound fiscal trajectory, there will be a
severe crisis in the bond and currency markets.”

The tech siren is calling: Should you listen?

Mar 20, 2012 13:43 UTC

CHICAGO (Reuters) – Once again the seductive siren call of technology stocks beckons investors. Especially after Apple announced a huge stock buyback Monday along with its first dividend since 1995.

Should you follow that call, or put wax in your ears the way Odysseus’s crew did when they passed the island of the seductive sirens?

There is always a safer course. Sure, technology share returns may be singing a pretty song right now. The S&P North American Technology Sector Index (Total Return) is up about 18 percent year to date through March 16, according to Standard and Poor’s. The sub-index for technology that tracks hardware has risen about 25 percent.

Column: The tech siren is calling: Should you listen?

Mar 19, 2012 21:31 UTC

CHICAGO (Reuters) – Once again the seductive siren call of technology stocks beckons investors. Especially after Apple announced a huge stock buyback Monday along with its first dividend since 1995.

Should you follow that call, or put wax in your ears the way Odysseus’s crew did when they passed the island of the seductive sirens?

There is always a safer course. Sure, technology share returns may be singing a pretty song right now. The S&P North American Technology Sector Index (Total Return) is up about 18 percent year to date through March 16, according to Standard and Poor’s. The sub-index for technology that tracks hardware has risen about 25 percent.

Is a ‘quickie’ refinancing deal worth it?

Mar 16, 2012 21:11 UTC

By John Wasik

(Reuters) – I got a letter from my bank the other day offering a streamlined refinancing deal for my current home mortgage. It was one of those “quickie” offers tailor-made for my loan situation and designed to net swift business for the bank.

What was advertised in the letter seemed like a decent deal — a 30-year, fixed-rate loan at a 4.16-percent annual percentage rate — so I called the bank for more details.

As it turns out, there was a lot of fine print that made it seem less decent, but I had to ask a lot of questions to find that out. While mortgage rates are still at generational lows, making it tempting to refinance, you have to scrutinize any deal that is offered. You may not even qualify for the appealing rates that get dangled in front of you.

Getting cash-cow corporations to share their wealth

Mar 12, 2012 20:48 UTC

CHICAGO (Reuters) – When a profitable company is sitting on tens of billions of dollars in idle cash, why can’t it automatically raise dividends to reward its shareholders? After all, with savings yields at dismal levels – and likely to remain so – those on fixed-incomes could use a boost.

But companies won’t share the wealth, and the reason why they won’t is an indictment of the U.S. government’s inaction on corporate tax loopholes.

The problem in Washington: Corporations are offshoring more than $2 trillion in corporate cash.

Getting cash-cow corporations to share their wealth: Wasik

Mar 12, 2012 20:09 UTC

CHICAGO, March 12 (Reuters) – When a profitable
company is sitting on tens of billions of dollars in idle cash,
why can’t it automatically raise dividends to reward its
shareholders? After all, with savings yields at dismal levels -
and likely to remain so – those on fixed-incomes could use a
boost.

But companies won’t share the wealth, and the reason why
they won’t is an indictment of the U.S. government’s inaction on
corporate tax loopholes.

The problem in Washington: Corporations are offshoring more
than $2 trillion in corporate cash.

Riding up the yield curve in bonds

Mar 9, 2012 21:51 UTC

CHICAGO (Reuters) – Should you be “riding up” the bond yield curve to boost returns in your income portfolio?

While some investors may think that bonds are tame beasts, higher yields always translate into higher risks. There may be some interesting opportunities available to boost income, but you need to be careful. Longer-maturity corporate and Treasury bonds can still give you a rodeo-horse kick.

With the Federal Reserve expected to leave interest rates in the basement for the next two years or so, it’s only natural that you look outside of short-term Treasuries and insured deposits. Many investors have already moved from U.S. short-maturity bonds to longer-maturity issues in corporate, high-yield or corporate “junk bond” funds, according to data from Lipper, a Thomson Reuters company.

What you should know about your adviser

Mar 5, 2012 22:26 UTC

By John Wasik

(Reuters) – In an ideally-transparent world, you’d know as much about your broker as you know about the ingredients in packaged junk food label: All of the bad stuff would be instantly on display.

But in the U.S., some of the most important information about a broker is off limits to individual investors.

At present, you can do broker background checks through a web-based system run by the Financial Industry Regulatory Authority, the trade group that regulates the securities industry (FINRA), called BrokerCheck (brokercheck.finra.org).

What they should tell you about your broker

Mar 5, 2012 21:14 UTC

March 5 (Reuters) – In an ideally-transparent world,
you’d know as much about your broker as you know about the
ingredients in packaged junk food label: All of the bad stuff
would be instantly on display in some kind of nutritional label.

But in the U.S., some of the most important information
about a broker is off limits to individual investors.

At present, you can do broker background checks through a
web-based system run by the Financial Industry Regulatory
Authority, the trade group that regulates the securities
industry (FINRA), called BrokerCheck ().
Or contact your state securities regulator. FINRA’s site
contains incomplete records, since it’s self-reported. And while
state regulators often have fuller reports, most investors will
probably not know that they are available, and those regulators
may not always be accessible nor may their reports be
user-friendly.

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