(Headlines - scroll down for full stories)
1. Buffett's Berkshire Hathaway Stock Tops $100,000
2. How Switching from MFs to ETFs Boosts Performance
3. Weekly Chain Store Sales Slow
4. India's September Exports Up 22%
1. Buffett's Berkshire Hathaway Stock Tops $100,000
A single share of Warren Buffett's company Berkshire Hathaway became the first
stock ever to close in the six figures. Berkshire Hathaway Class A shares closed
at a record $100,000 yesterday.
According to Ned Davis Research, the second most expensive stock in history was
Allegiant Physician Services, which closed at $15,250 on January 7, 1993, based
on data going back to 1972.
Story Continues Below
For that kind of money, points out USA Today, you could buy a Mercedes-Benz
CLS63 AMG coupe or a 74-day cruise around the world in a Royal Suite on the
Queen Mary 2. Or, to put it in investing terms, you could buy nearly 208 shares
of Google, which also hit its all-time high yesterday at $480.78.
Berkshire Hathaway stock is up 18 percent from its 52-week low on October 25,
2005, and has more than tripled in a decade.
Many pundits were asking if Warren Buffett, at 76 years old, had lost his Midas
touch. During the tech bubble, the Oracle of Omaha stuck to his value-investing
approach and his stock suffered for it. But since hitting a low of $41,300 as
the Nasdaq rose to new highs, the Nasdaq is down 53 percent compared to
Berkshire's gain of 142 percent, notes USA Today.
Berkshire, a holding company, owns about 50 companies including GEICO, Dairy
Queen, Fruit of the Loom, National Indemnity Corp., and many others. Berkshire
also invests heavily in Coca Cola, American Express, H&R Block, Anheuser Busch,
and others.
Berkshire's latest deal to take over the liabilities of Lloyd's of London's
Equus arm has obviously pleased investors. MoneyNews told readers about the deal
on Friday, pointing out that the insurance business is Berkshire's bread and
butter.
The tame hurricane season also helped Berkshire's bottom line. The company,
instead of pulling out of historically hard-hit areas, wrote more policies and
raised premiums. When no severe hurricanes hit, the gamble paid off.
If you're looking to buy a piece of Berkshire Hathaway, but can't afford the
$100,000 price tag, the B shares are now trading at $3,333. Thirty B shares can
be converted into one Class A share.
Editor's Note:
2. How Switching from MFs to ETFs Boosts Performance
One fund manager learned that he could spread risk and boost performance by
switching from mutual funds to exchange traded funds, a case study by Investors
Business Daily shows.
Carl Delfeld, who runs Chartwell Partners in Colorado Springs, Colo., has six
model portfolios, all of which employ exchange traded funds rather than mutual
funds. Delfeld switched to ETFs four years ago.
"They're easy to use to build a global portfolio," Delfeld tells IBD. "ETFs are
also lower cost and more tax-efficient. And they're also more flexible as well
as more transparent than mutual funds."
Delfeld's most conservative portfolio is outperforming the S&P 500 by more than
twice as much. It's up 12.9 percent compared to 5.4 percent for the S&P as of
October 1.
"The goal for this portfolio is to preserve capital," says Delfeld. "We've got
about 20 percent of its stock assets in international markets right now."
The conservative portfolio includes iShares MSCI EMU Index, iShares S&P Global
Energy, and CurrencyShares Swedish Krona Trust. Of the krona, Delfeld says,
"It's a strong currency that has outperformed the euro. The krona is very stable
and it's a good way for U.S. investors to diversify a little as a hedge against
the dollar."
The conservative portfolio also contains domestic ETFs such as the iShares S&P
100 Index, and iShares Dow Jones Select Dividend Index as well as the ProFunds
S&P 500 Inverse, which acts as a "shock absorber and evens out the portfolio for
a smoother performance." The portfolio also has 20 percent in fixed income and
20 percent in cash.
As for Chartwell's aggressive portfolios, its Asian Opportunity portfolio gains
are almost triple those of the S&P 500. The portfolio is up 15.9 percent for the
year as of October 1.
Delfeld looks at five factors when choosing an ETF: momentum, holdings,
fundamentals, macro view, and money flows.
In his criteria, Delfeld looks for ETFs that trade above their 200-day moving
average. He also takes the top 10 holdings in the ETF and makes a composite
analysis of the holdings. He also looks at the interest rate environment,
currencies, economic growth, and political trends. And, ultimately, he follows
the money.
"Right now, investments into emerging markets have been pulling back. At the
same time, money managers have been investing more heavily in blue chip U.S.
stocks," Delfeld tells IBD.
Editor's Note:
3. Weekly Chain Store Sales Slow
Are consumers finally feeling the fatigue of the crumbling housing market and
relatively high energy prices?
According to Redbook Research, sales at major U.S. retailers rose 3.2 percent
from a year ago in the week ended October 21. That's down from the 3.5 percent
year-over-year gain posted the week before.
"Retailers said demand for seasonal clothing continued along with cooler
weather, boosting traffic and average sales tickets especially in department
stores. Discount store apparel sales, however, were disappointing," said Redbook
in a statement.
A separate survey of chain stores by the International Council of Shopping
Centers and UBS Warburg said that year-over-year growth in sales fell to 2.9
percent, a nine-week low for the week ended October 21.
Compared to a week ago, chain store sales fell 1.1 percent, reversing the gains
of the prior two weeks, according to Moody's Economy.com.
"The ISCS reported that its monthly survey continued to show a significant drag
on spending, from high gasoline prices, of low income households," said Moody's.
Moody's continues, "While the recent decline in long-term interest rates is
supporting cash out refinancing, consumers have reduced their borrowing through
home equity lines of credit. Effective house prices are falling in many parts of
the country, reducing positive wealth effects and dampening mortgage equity
withdrawal."
The Johnson Redbook Index is a sales-weighted index of year-over-year same-store
sales growth in a sample of large U.S. general merchandise retailers
representing about 9000 stores.
Editor's Note:
4. India's September Exports Up 22%
India's merchandise exports rose 21.9 percent in September from a year ago, the
government said Tuesday, as Indian companies continued to tap new markets in
Africa and Asia.
Exports totaled US$10.3 billion (euro8.2 billion) in September compared with
US$8.5 billion (euro6.8 billion) in the same month a year earlier, according to
provisional data released by the trade ministry.
During the six months ending in September, the first half of the fiscal year,
exports totaled US$59.3 billion (euro47.2 billion), up 23 percent on year.
The latest data added weight to expectations India would meet its target of
raising exports to US$125 billion (euro100 billion) in the current fiscal year
that ends in March, 2007.
"It should be feasible for us to meet the export target," said Shubhada Rao,
chief economist with Yes Bank. "Targeting regions like Africa, and oil exporting
countries has also helped India maintain its (export) growth momentum."
India's exports have surged over the past year as the country has increasingly
looked to explore markets beyond its traditional trading partners such as the
United States and Europe.
The government and businesses have moved in recent years to improve economic
ties with Asian neighbors and the mineral-rich countries of Africa.
Still, India exports only a fraction of what China sells in overseas markets.
China's September exports totaled US$91.6 billion (euro72.9 billion).
Also, India's trade gap, however, widened during the first half of the fiscal
year as imports rose faster than exports.
Trade deficit during the period was estimated at US$24.6 billion (euro19.6
billion) compared with US$22.2 billion (euro17.7 billion) in the same period
last year.
Imports grew 24.5 percent to US$15.6 billion (euro12.4 billion) in September
driven by the increase in global crude oil prices.
The widening trade deficit was mostly a result of high oil prices. India imports
more than 75 percent of the crude oil it processes.
"The trade deficit figures are disappointing, but we think it will narrow in the
coming months as the significant fall in oil prices bode well for the economy
and trade," said Shuchita Mehta, an India-based economist with Standard
Chartered Bank.
The provisional figures released by the government Tuesday often undergo
significant revision.
Also, the figures do not include export of services, including outsourcing jobs
done by India's information technology companies, which is projected to touch
US$35 billion (euro27.88 billion) this year.
© 2006 Associated Press.
Editor's Note:
Editor's Notes:
