The idea of micro lending, sometimes called micro-finance, is more typically associated with loans in amounts as little as $25, disbursed to impoverished people in developing countries, ideally helping them to generate their own income to climb out of poverty.
But more recently, microcredit has become a mainstream practice in the U.S., and even though the average Small Business Administration (SBA) microloan size is $13,000, the SBA's program shares a similar mission as traditional microloan programs.
While the microloan program is open to all entrepreneurs, the program especially supports underserved markets. This includes borrowers with little or no credit history, low-income borrowers, and women and minority entrepreneurs who generally don't qualify for conventional loans or larger SBA guaranteed loans, said Pravina Raghavan, director of the SBA's New York District Office
Most banks, large or small, do not bother granting business loans of less than $50,000 because there’s not enough profit to balance the risk. By contrast, microfinance programs in the United States typically lend $35,000 or less to small businesses with five or fewer employees. They charge more than traditional banks, of course, with interest rates ranging from 5 to 18 percent.
When President Obama signed the American Recovery and Reinvestment Act into law in February 2009 to create jobs and promote spending, the law included $56.1 million for microloans for small businesses, to be doled out through the SBA through September.
Targeted toward start-up, newly-established, or growing small businesses, the microloans are short-term loans up to $35,000 each for working capital or inventory and equipment purchases. The intermediary lenders who distribute the loans can choose to lend more than that limit.
Read the full article of Microloans help small businesses on dLoewi Consulting.
3.1.10
Jeremy Siegle’s Bet on Stock’s Long-Run Outperformance
In the late December Jeremy Siegle published an article about his defense on his claim about long-run performance of stocks. It is based on his original article made public on his website jeremysiegel.com in the last summer. It specially responded critic threw by Jason Zweig, a well-known journalist and financial writer for the "Wall Street Journal".
It is always interesting to follow this debate, as it can broaden our perspective and deepen our understanding about long run performance of stocks. The following is the article published on Yahoo.com.
Last summer Jason Zweig questioned the quality of the early 19th century stock data that I used to support the long-run case for stocks. Although he has no problems with my data or my analysis of the stock market since 1871, he claims that the data from 1802 through 1871 is "rotten with methodological flaws." Furthermore, he claims that I inexplicably raised the dividend yield during that period from 5 percent, when my data were first published in academic journals in 1992, to 6.4 percent two years later. This unwarranted increase, Zweig claims, juiced my stocks returns in the early period and gave a much more favorable cast to long-run stock returns.
One could argue whether any of my (or other researchers') conclusions about the superiority of stocks as long-term investments is at all dependent on data that are nearly two centuries old. But I take his challenge to my data and research seriously, and I believe it very important to set the record straight.
Early Returns
My first studies were based on the path-breaking research of Prof. William Schwert of the University of Rochester, who published a paper in 1991 titled "Index of U.S. stocks prices from 1802 to 1897". In that paper, Schwert assumes a 5 percent dividend yield on stocks, borrowing the yield that researchers found in later data, and he admits that he has no evidence to prove whether 5 percent is correct for the early sample.
My first published article on long-term returns in 1992 used Schwert's 5 percent dividend yield. But when I began sampling the dividend yield on stocks from that period, I found that many stocks had a higher return, and I used an average of those returns to make my case.
New Data
Admittedly, Schwert's early data, first compiled in the 1930s by Professors Walter Smith and Arthur Cole, have flaws. But since then we have been graced with some superb research that strongly supports the returns that I used. Two of the top researchers in the field of U.S. stock returns, professors Will Goetzmann and Roger Ibbotson of Yale University. published an article in 2001 titled "A New Historical Database for the NYSE 1815 to 1925: Performance and Predictability". This work is by far the most thoroughly documented research on early U.S. stock returns, collecting monthly price and dividend data on more than 600 individual securities over more than a century of data.
This was a prodigious effort. They reported that it took their research team more than a decade of effort to track down individual share prices and dividends, mostly from original publications found in Yale's Beinecke Rare Book Library. The data that they collected is free from the survivorship bias and other problems that Zweig cites in his critique of Schwert's data.
Ibbotson and Goetzmann determined that the biggest source of uncertainty in these early stock returns is the dividend yield, since many of the sources from which they obtained stock prices did not report dividends. As a result, they formed two series of dividend yields, one assuming that those stocks for which they could not find dividends had zero dividends (their "low income" estimate), and another which uses the dividend yield of those stocks for which they could find dividends (their "high income estimate"). They write:
"The low income returns from the pre-1871 period is 3.77 percent per year. .... When we consider only the dividend paying stock during that era, however, we estimate much higher income returns -- 9.27 percent per year. This higher income return estimate is consistent with the practice of paying out profits to keep stock prices in the early period trading near par values. The true dividend return to a capital-weighted investment in all NYSE stocks is undoubtedly somewhere in between these two extremes."
This midpoint of their high and low estimates is 6.52 percent, higher than the dividend which Zweig criticizes as too high. Furthermore, their estimate of the capital gains for stocks during the period is actually slightly higher than the 0.3 percent per year estimate that I used. So recent research suggests that my estimate of stock returns in the early period is actually quite conservative.
Long-Run Outperformance
Zweig sharply criticizes my statements about long-term stock returns. He points out that "U.S. stocks have underperformed long-term Treasury bonds for the past 5, 10, 15, 20, and 25 years" and it is likely that 30-year under-performance is near. Well, Zweig can scratch 25 years as the market rally has pushed stocks ahead of bonds over that period. And if stocks return only 4 percentage points more than treasury bonds next year (which I consider extremely likely), he can scratch 20 years from his list as well.
The last 30-year period in which bonds beat stocks was from 1831 through 1861. Furthermore, stocks, in sharp contrast to bonds, have never suffered negative after-inflation returns over any 20 year period or longer. That is quite a record, and Zweig does not disagree with either of these statements. Nor does he disagree with any of my analysis of the data over the past 130 years. Nevertheless, he claims that history cannot tell us whether stocks will beat bonds over the long run.
Final World
With a final knock on my research, Zweig proclaims, "Another emperor [Jeremy Siegel] of the late bull market, it seems, has turned out to have no clothes."
On the contrary, I will be most happy to bet my wardrobe against his that stocks' 30-year returns will keep their century and a half record of outperformance over bonds intact in future years. If he takes the bet, I have no doubt that Jason, not I, will be the one running around naked.
It is always interesting to follow this debate, as it can broaden our perspective and deepen our understanding about long run performance of stocks. The following is the article published on Yahoo.com.
Last summer Jason Zweig questioned the quality of the early 19th century stock data that I used to support the long-run case for stocks. Although he has no problems with my data or my analysis of the stock market since 1871, he claims that the data from 1802 through 1871 is "rotten with methodological flaws." Furthermore, he claims that I inexplicably raised the dividend yield during that period from 5 percent, when my data were first published in academic journals in 1992, to 6.4 percent two years later. This unwarranted increase, Zweig claims, juiced my stocks returns in the early period and gave a much more favorable cast to long-run stock returns.
One could argue whether any of my (or other researchers') conclusions about the superiority of stocks as long-term investments is at all dependent on data that are nearly two centuries old. But I take his challenge to my data and research seriously, and I believe it very important to set the record straight.
Early Returns
My first studies were based on the path-breaking research of Prof. William Schwert of the University of Rochester, who published a paper in 1991 titled "Index of U.S. stocks prices from 1802 to 1897". In that paper, Schwert assumes a 5 percent dividend yield on stocks, borrowing the yield that researchers found in later data, and he admits that he has no evidence to prove whether 5 percent is correct for the early sample.
My first published article on long-term returns in 1992 used Schwert's 5 percent dividend yield. But when I began sampling the dividend yield on stocks from that period, I found that many stocks had a higher return, and I used an average of those returns to make my case.
New Data
Admittedly, Schwert's early data, first compiled in the 1930s by Professors Walter Smith and Arthur Cole, have flaws. But since then we have been graced with some superb research that strongly supports the returns that I used. Two of the top researchers in the field of U.S. stock returns, professors Will Goetzmann and Roger Ibbotson of Yale University. published an article in 2001 titled "A New Historical Database for the NYSE 1815 to 1925: Performance and Predictability". This work is by far the most thoroughly documented research on early U.S. stock returns, collecting monthly price and dividend data on more than 600 individual securities over more than a century of data.
This was a prodigious effort. They reported that it took their research team more than a decade of effort to track down individual share prices and dividends, mostly from original publications found in Yale's Beinecke Rare Book Library. The data that they collected is free from the survivorship bias and other problems that Zweig cites in his critique of Schwert's data.
Ibbotson and Goetzmann determined that the biggest source of uncertainty in these early stock returns is the dividend yield, since many of the sources from which they obtained stock prices did not report dividends. As a result, they formed two series of dividend yields, one assuming that those stocks for which they could not find dividends had zero dividends (their "low income" estimate), and another which uses the dividend yield of those stocks for which they could find dividends (their "high income estimate"). They write:
"The low income returns from the pre-1871 period is 3.77 percent per year. .... When we consider only the dividend paying stock during that era, however, we estimate much higher income returns -- 9.27 percent per year. This higher income return estimate is consistent with the practice of paying out profits to keep stock prices in the early period trading near par values. The true dividend return to a capital-weighted investment in all NYSE stocks is undoubtedly somewhere in between these two extremes."
This midpoint of their high and low estimates is 6.52 percent, higher than the dividend which Zweig criticizes as too high. Furthermore, their estimate of the capital gains for stocks during the period is actually slightly higher than the 0.3 percent per year estimate that I used. So recent research suggests that my estimate of stock returns in the early period is actually quite conservative.
Long-Run Outperformance
Zweig sharply criticizes my statements about long-term stock returns. He points out that "U.S. stocks have underperformed long-term Treasury bonds for the past 5, 10, 15, 20, and 25 years" and it is likely that 30-year under-performance is near. Well, Zweig can scratch 25 years as the market rally has pushed stocks ahead of bonds over that period. And if stocks return only 4 percentage points more than treasury bonds next year (which I consider extremely likely), he can scratch 20 years from his list as well.
The last 30-year period in which bonds beat stocks was from 1831 through 1861. Furthermore, stocks, in sharp contrast to bonds, have never suffered negative after-inflation returns over any 20 year period or longer. That is quite a record, and Zweig does not disagree with either of these statements. Nor does he disagree with any of my analysis of the data over the past 130 years. Nevertheless, he claims that history cannot tell us whether stocks will beat bonds over the long run.
Final World
With a final knock on my research, Zweig proclaims, "Another emperor [Jeremy Siegel] of the late bull market, it seems, has turned out to have no clothes."
On the contrary, I will be most happy to bet my wardrobe against his that stocks' 30-year returns will keep their century and a half record of outperformance over bonds intact in future years. If he takes the bet, I have no doubt that Jason, not I, will be the one running around naked.
26.10.09
Golden rules for investing
These 16 golden rules for investing came from a super investor, Walter Scholoss. The full article is posted on GuruFocus.
1. Price is the most important factor to use in relation to value
2. Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
3. Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).
4. Have patience. Stocks don’t go up immediately.
5. Don’t buy on tips or for a quick move. Let the professionals do that, if they can. Don’t sell on bad news.
6. Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for the weaknesses in your thinking. Buy on a scale down and sell on a scale up.
7. Have the courage of your convictions once you have made a decision.
8. Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.
9. Don’t be in too much of a hurry to see. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to reevaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E rations high. If the stock market historically high. Are people very optimistic etc?
10. When buying a stock, I find it heldful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. 3 yeas before the stock sold at 20 which shows that there is some vulnerability in it.
11. Try to buy assets at a discount than to buy earnings. Earning can change dramatically in a short time. Usually assets change slowly. One has to know much more about a company if one buys earnings.
12. Listen to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money, it is hard to make it back.
13. Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have inconnection with purchase and sale of stocks.
14. Remember the work compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 yrs, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.
15. Prefer stock over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.
16. Be careful of leverage. It can go against you.
1. Price is the most important factor to use in relation to value
2. Try to establish the value of the company. Remember that a share of stock represents a part of a business and is not just a piece of paper.
3. Use book value as a starting point to try and establish the value of the enterprise. Be sure that debt does not equal 100% of the equity. (Capital and surplus for the common stock).
4. Have patience. Stocks don’t go up immediately.
5. Don’t buy on tips or for a quick move. Let the professionals do that, if they can. Don’t sell on bad news.
6. Don’t be afraid to be a loner but be sure that you are correct in your judgment. You can’t be 100% certain but try to look for the weaknesses in your thinking. Buy on a scale down and sell on a scale up.
7. Have the courage of your convictions once you have made a decision.
8. Have a philosophy of investment and try to follow it. The above is a way that I’ve found successful.
9. Don’t be in too much of a hurry to see. If the stock reaches a price that you think is a fair one, then you can sell but often because a stock goes up say 50%, people say sell it and button up your profit. Before selling try to reevaluate the company again and see where the stock sells in relation to its book value. Be aware of the level of the stock market. Are yields low and P-E rations high. If the stock market historically high. Are people very optimistic etc?
10. When buying a stock, I find it heldful to buy near the low of the past few years. A stock may go as high as 125 and then decline to 60 and you think it attractive. 3 yeas before the stock sold at 20 which shows that there is some vulnerability in it.
11. Try to buy assets at a discount than to buy earnings. Earning can change dramatically in a short time. Usually assets change slowly. One has to know much more about a company if one buys earnings.
12. Listen to suggestions from people you respect. This doesn’t mean you have to accept them. Remember it’s your money and generally it is harder to keep money than to make it. Once you lose a lot of money, it is hard to make it back.
13. Try not to let your emotions affect your judgment. Fear and greed are probably the worst emotions to have inconnection with purchase and sale of stocks.
14. Remember the work compounding. For example, if you can make 12% a year and reinvest the money back, you will double your money in 6 yrs, taxes excluded. Remember the rule of 72. Your rate of return into 72 will tell you the number of years to double your money.
15. Prefer stock over bonds. Bonds will limit your gains and inflation will reduce your purchasing power.
16. Be careful of leverage. It can go against you.
16.10.09
Index Investing: Track the Market with Passive Strategy
More and more institutional investors, especially pension funds, are applying index-investing strategy by shifting their assets from active managers to index funds.
SmartInMoney reported, there are four major attractions of indexing that motivate investors to track market performance, rather than try to outperform it.
1. They offer a remarkably simple, convenient way to create a diversified portfolio.
2. Index funds typically cost less to manage than actively managed funds.
3. Their performance track record has been impressive, even during bear markets.
4. Index funds are fully invested strategy that keeps investor staying in the game during market recover
Simple
Indexing is a very simple way of gaining exposure to an investment style or the broad market. Index funds can help investors to build a portfolio that's appropriately diversified to meet investors’ goals, time horizon, and tolerance for risk in a convenient way.
Low Cost
Index funds’ main advantage is lower cost than investors would get from an actively managed mutual fund. Index funds win in all three components of investment cost.
Index funds charge low expense ratio, which is the cost of managing the fund. An average non-index fund has an expense ratio of around 1.5%; whereas many index funds have an expense ratio somewhere between 0.15% to 0.5%. Index funds are not actively managed; they are managed largely using computer programs. There are no expensive analysts required to try to figure out what bets to take.
Index funds transaction costs are generally much lower. The costs are incurred as the portfolio manager is managing the portfolio. Indexing is a very low-turnover strategy, relatively low compared to active management. While active strategy involves relatively frequent buying and selling securities, index fund managers only need to maintain the appropriate weightings to match the index performance; the technique is known as passive management.
The third cost is associated with taxes, in the form of capital gains or taxes on dividends. Passive management generates realized capital gains from trading far less frequently than does active management. Consequently, more tax payments could be either deferred of avoided entirely.
What matters to investors are after-cost returns. A fund's return is the total return of the portfolio minus the fees an investor pays for the investment costs. If a fund charges 1.5%, then the portfolio manager have to outperform the fund’s benchmark by that amount just to be even. Anything less, and the fund's returns would lag its benchmark. Studies reveal main culprit for the failure of actively managed funds to beat the indexing is the high costs that they charge. The more you trade, the less you earn, because management fee, transaction costs, taxes and bad decisions always kill returns
Hard-to-Beat Performance
Historically, index funds have performed very competitively against actively managed funds, and frequently outperforming a majority of active funds whether it's a shorter time period, like a year, three years, five years, or extending out ten years.
Over the year 2008, which was a very difficult year in the marketplace, index funds still outperformed a majority of the actively managed portfolios. Over the same period of time, index fund performance was very competitive against the active investments in different segments within the marketplace. In the nine Morningstar "style boxes," such as large-cap value or large-cap growth, indexing outperformed active managers in three of those, according to Gus Sauter, Vanguard's chief investment officer. It underperformed in three, and matched the active managers in three.
Over longer time periods, index funds provided even more competitive performance because that's where the costs of active management get compounded over time. So investors tend to find that over a 10-year (or more) time horizons, most indexes have outperformed the active investments.
Recent studies provided more evidence that the failure of active management in beating their benchmark index is replicated across almost all categories, not only U.S. stock funds but also bond funds and even emerging-markets funds. What's more, a new study found that it is very hard, if not impossible, to justify active management for most individual, taxable investors over a long term. (Detail findings of the studies are elaborated in the "Index Investing Supremacy")
Investing in an index fund doesn't guarantee that you'll never lose money. Index funds will decline in a bear market and up in a bull market, right along with the market. Investors should really think long-term because indexing is a great way to capture the long-term returns of the marketplace with its low-cost benefit. If investors get nervous during a downturn and sell, they’ll probably miss the recovery.
Fully Invested
Index investing can be a great way to capture the typically fast burst that a market experiences when it's making the shift from a bear market to a bull market. A fully invested strategy of index investing positions investors very well to benefit from the large rate of return during the market recovery. It's designed to perform right in line with the market as it goes up. In the last five or six bear markets, particularly the very steep bear markets, the market typically had a very large increase in the first 12 months coming out of a bear market (read "One year after the bear").
Market just witnessed that after months of the most recent cruel bear market, which bottomed in March, the stock markets closed the third quarter ending Sept. 30. 2009 with huge gain and the Dow Jones Industrial Average reclaimed the 10,000 mark on Oct. 14, 2009.
As a bear market turns into a bull market, active managers may suffer from a couple of problems as a bear market turns into a bull market. First, the active managers tend to hold the most cash near market bottoms. Because of the cash drag in an actively managed portfolio, it won't fully benefit in the rebound.
SmartInMoney reported, there are four major attractions of indexing that motivate investors to track market performance, rather than try to outperform it.
1. They offer a remarkably simple, convenient way to create a diversified portfolio.
2. Index funds typically cost less to manage than actively managed funds.
3. Their performance track record has been impressive, even during bear markets.
4. Index funds are fully invested strategy that keeps investor staying in the game during market recover
Simple
Indexing is a very simple way of gaining exposure to an investment style or the broad market. Index funds can help investors to build a portfolio that's appropriately diversified to meet investors’ goals, time horizon, and tolerance for risk in a convenient way.
Low Cost
Index funds’ main advantage is lower cost than investors would get from an actively managed mutual fund. Index funds win in all three components of investment cost.
Index funds charge low expense ratio, which is the cost of managing the fund. An average non-index fund has an expense ratio of around 1.5%; whereas many index funds have an expense ratio somewhere between 0.15% to 0.5%. Index funds are not actively managed; they are managed largely using computer programs. There are no expensive analysts required to try to figure out what bets to take.
Index funds transaction costs are generally much lower. The costs are incurred as the portfolio manager is managing the portfolio. Indexing is a very low-turnover strategy, relatively low compared to active management. While active strategy involves relatively frequent buying and selling securities, index fund managers only need to maintain the appropriate weightings to match the index performance; the technique is known as passive management.
The third cost is associated with taxes, in the form of capital gains or taxes on dividends. Passive management generates realized capital gains from trading far less frequently than does active management. Consequently, more tax payments could be either deferred of avoided entirely.
What matters to investors are after-cost returns. A fund's return is the total return of the portfolio minus the fees an investor pays for the investment costs. If a fund charges 1.5%, then the portfolio manager have to outperform the fund’s benchmark by that amount just to be even. Anything less, and the fund's returns would lag its benchmark. Studies reveal main culprit for the failure of actively managed funds to beat the indexing is the high costs that they charge. The more you trade, the less you earn, because management fee, transaction costs, taxes and bad decisions always kill returns
Hard-to-Beat Performance
Historically, index funds have performed very competitively against actively managed funds, and frequently outperforming a majority of active funds whether it's a shorter time period, like a year, three years, five years, or extending out ten years.
Over the year 2008, which was a very difficult year in the marketplace, index funds still outperformed a majority of the actively managed portfolios. Over the same period of time, index fund performance was very competitive against the active investments in different segments within the marketplace. In the nine Morningstar "style boxes," such as large-cap value or large-cap growth, indexing outperformed active managers in three of those, according to Gus Sauter, Vanguard's chief investment officer. It underperformed in three, and matched the active managers in three.
Over longer time periods, index funds provided even more competitive performance because that's where the costs of active management get compounded over time. So investors tend to find that over a 10-year (or more) time horizons, most indexes have outperformed the active investments.
Recent studies provided more evidence that the failure of active management in beating their benchmark index is replicated across almost all categories, not only U.S. stock funds but also bond funds and even emerging-markets funds. What's more, a new study found that it is very hard, if not impossible, to justify active management for most individual, taxable investors over a long term. (Detail findings of the studies are elaborated in the "Index Investing Supremacy")
Investing in an index fund doesn't guarantee that you'll never lose money. Index funds will decline in a bear market and up in a bull market, right along with the market. Investors should really think long-term because indexing is a great way to capture the long-term returns of the marketplace with its low-cost benefit. If investors get nervous during a downturn and sell, they’ll probably miss the recovery.
Fully Invested
Index investing can be a great way to capture the typically fast burst that a market experiences when it's making the shift from a bear market to a bull market. A fully invested strategy of index investing positions investors very well to benefit from the large rate of return during the market recovery. It's designed to perform right in line with the market as it goes up. In the last five or six bear markets, particularly the very steep bear markets, the market typically had a very large increase in the first 12 months coming out of a bear market (read "One year after the bear").
Market just witnessed that after months of the most recent cruel bear market, which bottomed in March, the stock markets closed the third quarter ending Sept. 30. 2009 with huge gain and the Dow Jones Industrial Average reclaimed the 10,000 mark on Oct. 14, 2009.
As a bear market turns into a bull market, active managers may suffer from a couple of problems as a bear market turns into a bull market. First, the active managers tend to hold the most cash near market bottoms. Because of the cash drag in an actively managed portfolio, it won't fully benefit in the rebound.
15.10.09
Current bull is still below the median
As of Oct 14, 2009, the current bull market that started on Mar 9, 2009 has gained 61.41% within 219 calendar days. The current bull is still below the median in terms of both gains and days. The median gain for all bull markets has been 68%, and the median length has been 308 days, wrote Seeking Alpha.The table shows historical S&P 500 bull markets since index data begins in 1927. The table is sorted by bull market length. The bull markets had at least a 20% gain that was preceded by at least a 20% decline.
Table: Courtesy of Seeking Alpha
14.10.09
Confidence returned, Dow reclaimed 10,000 mark
U.S. stocks soared higher sparked by earnings news on Wednesday, Oct. 14, pushing the Dow Jones Industrial Average to close above 10,000 for the first time in more than year. The sharp rally signaled investors' confidence that the economy is recovering from the financial crisis and recession.
SmartInMoney reported that the Dow finished up 144.90 points, or 1.5%, to close at 10,015.86, its highest level since global markets plunge on Oct. 6, 2008, when the Dow fell below 10,000 amid the outbreak of financial crisis on Wall Street. The Dow first closed above 10,000 in May 1999 but retreated in the years after the dot-com bubble deflated. It then regained the 10,000 mark in late 2003 before peaking at 14,000 in October 2007.
Other indexes hit fresh one-year highs as well. The broader S&P 500 stock index gained 1.8% to end at 1,092.02, while the Nasdaq Composite rose 1.5% to 2,172.23.
The Dow is still more than 4,000 points off its all-time highs; while S&P 500, a broader measure of the market, are down 30 percent from their peaks.
The sharp rally was fueled by surprisingly better than expected results from two blue chips, Intel and J.P. Morgan Chase and a smaller decline than anticipated in U.S. retail sales.
SmartInMoney reported that the Dow finished up 144.90 points, or 1.5%, to close at 10,015.86, its highest level since global markets plunge on Oct. 6, 2008, when the Dow fell below 10,000 amid the outbreak of financial crisis on Wall Street. The Dow first closed above 10,000 in May 1999 but retreated in the years after the dot-com bubble deflated. It then regained the 10,000 mark in late 2003 before peaking at 14,000 in October 2007.
Other indexes hit fresh one-year highs as well. The broader S&P 500 stock index gained 1.8% to end at 1,092.02, while the Nasdaq Composite rose 1.5% to 2,172.23.
The Dow is still more than 4,000 points off its all-time highs; while S&P 500, a broader measure of the market, are down 30 percent from their peaks.
The sharp rally was fueled by surprisingly better than expected results from two blue chips, Intel and J.P. Morgan Chase and a smaller decline than anticipated in U.S. retail sales.
13.10.09
Three providers control ETF market
Among 95 ETF providers, the trio of iShare, State Street Global Adviser (SSgA) and Vanguard control more than 71% of the worldwide asset under management and 85% of the U.S. assets at the end of August 2009, reports SmartInMoney.
As a the largest ETF provider in terms of both number of products and asset, iShare alone controls 48.2% global market and 52.9% U.S. market with $429.32 billion asset under management from 391 ETFs. SSgA is second with 15.6% market share followed by Vanguard with 15.6% market share.
SPDR (SPY) leads the ETF markets with $73.3 billion asset under management as of the end of August 2009. SPDR from the State Street Global Adviser tracks S&P 500 index, an index of 500 largest businesses in the U.S.
At the second place is iShares MSCI EAFE Index (EFA) that track MSCI EAFE index, an equity benchmark for its international stock performance, with $33.5 billion net assets. Tracking performance of the MSCI Emerging Markets index, iShares MSCI Emerging Markets Index (EEM) trails closely at the third with 30.7 billion net assets. These three U.S. ETFs top the ranks in both U.S. and global markets.
This rank is not surprising as investors commonly use these three ETFs as vehicles to diversify their equity investment. Adding equity exposure of both developed nations outside of North America and emerging countries to equity of largest U.S. companies provides investor with a broad diversification covering global equities. This ability to offer exposure to such a wide variety markets and sectors with relative ease and cheap is EFTs’ main strength that is not offered by other investment vehicles. As a result, ETFs continue to enjoy considerable momentum.
As a the largest ETF provider in terms of both number of products and asset, iShare alone controls 48.2% global market and 52.9% U.S. market with $429.32 billion asset under management from 391 ETFs. SSgA is second with 15.6% market share followed by Vanguard with 15.6% market share.
SPDR (SPY) leads the ETF markets with $73.3 billion asset under management as of the end of August 2009. SPDR from the State Street Global Adviser tracks S&P 500 index, an index of 500 largest businesses in the U.S.
At the second place is iShares MSCI EAFE Index (EFA) that track MSCI EAFE index, an equity benchmark for its international stock performance, with $33.5 billion net assets. Tracking performance of the MSCI Emerging Markets index, iShares MSCI Emerging Markets Index (EEM) trails closely at the third with 30.7 billion net assets. These three U.S. ETFs top the ranks in both U.S. and global markets.
This rank is not surprising as investors commonly use these three ETFs as vehicles to diversify their equity investment. Adding equity exposure of both developed nations outside of North America and emerging countries to equity of largest U.S. companies provides investor with a broad diversification covering global equities. This ability to offer exposure to such a wide variety markets and sectors with relative ease and cheap is EFTs’ main strength that is not offered by other investment vehicles. As a result, ETFs continue to enjoy considerable momentum.
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