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Showing posts from March, 2011

Time the Market at Your Peril

by Laura Rowley

Stocks have been fluctuating sharply since the Japan earthquake, tsunami and subsequent nuclear crisis. As Peter Cardillo, chief market economist at Avalon Partners, told the Associated Press Tuesday: "It's a situation where you sell, and you ask questions later," he said. That's why it may be helpful to look at what happened to investors who bailed out during the last sharp market decline.

T. Rowe Price recently did an analysis of investor returns based on the financial crisis in the fall of 2008. On Oct. 6, a well-known television commentator (unnamed in the analysis) advised viewers to take any money out of the stock market they might need in the next five years and put it into safe-haven investments. The analysis assumed investors who heeded this advice on that day shifted their money in short-term Treasury bills. T. Rowe Price then compared those returns to stocks and a diversified portfolio through Dec. 31, 2010.

U.S. stocks indeed continued to fal…

How to Stash $1 Million+ in Savings

by Jessica L. Anderson

Dane Lacey, 49, a radiologist from San Diego, has saved nearly $1.4 million for retirement in eight years by living below his means.

Did you always have a goal to front-load your savings? Yes. I want to retire when I am still young enough to travel, hike and body surf. It was a race for me to put a large amount away so that I could enjoy it. I knew that if I got it in early, it could grow.

You've been in practice for 14 years. Why the big push for the past eight? During the tech bubble, I put every cent into Cisco and other tech stocks. Within two years, I had accumulated $300,000, while I was living on about $35,000 a year. I went on vacation and came back to find that my $300,000 was worth $10,000 because the bubble had burst. So I started over at age 41.

How did you make it happen? As a resident physician, you get paid about $26,000 a year for four years. Then when you're in practice, you start making big money. My first job paid $220,000 a year, so I had…

Motive for Stock Leak Can Be Respect, Love

Testimony in Galleon Case Shows Greed Isn't Everything

Blame it on the money. On the love. Or just a primal need to be liked.

As testimony began last week in the Raj Rajaratnam insider-trading trial, the question hanging over the courtroom was why rich, powerful people would leak inside information and risk going to jail for it.

Some answers started to emerge in the testimony of 52-year-old Anil Kumar, who served as a technology adviser for the prestigious consultancy McKinsey & Co.

Greed appears to be a top motivator for Mr. Kumar and others, testimony and court documents show. But other less-obvious factors seemed to have played a role for the sources of Galleon Group's Mr. Rajaratnam, including friendship, romance and a yearning for greater respect.

Speaking eruditely, with a pained, hangdog expression, Mr. Kumar described his descent from the pinnacle of the business world to become a self-admitted felon aiding Mr. Rajaratnam.

He described how Mr. Rajaratnam, a longtime frie…

An Easier Way to Bet on the Next Facebook

Good news for wealthy investors looking to get in on the ground floor of the next Facebook or Twitter: The risky but potentially lucrative world of "angel" investing is getting easier to navigate, and tax breaks are making it more attractive.

Angel investors put money in privately held, high-growth start-up companies.

In the past year, the number of investing groups catering to angel investors has jumped by 13%, to 340, according to the Angel Capital Education Foundation, an education and research group. Many of the groups make the process easier by allowing investors to share the work of researching particular investments.

Just be warned: Angel investing can be devilishly dicey. While the basic requirement is that investors be "accredited," having a $1 million net worth excluding the value of their primary residence, they also should have the stomach for blowups.

In a recent study done with a researcher at the Federal Reserve Bank of Atlanta, , a banking and finance p…

Busting Retirement Myths

by Linda Stern

Our nation's retirement system is a hot topic. In addition to frequent surveys finding that Americans are ill-prepared and worried about retirement, there are statehouse disputes about whether public pensions are too fat.

There is debate in Washington on how to fix Social Security, and if that is even necessary. And policy wonks, including some in the Treasury Department, are discussing how to tinker with 401(k) plans to make them better.

In the midst of all that talk -- but not, at this point, much action -- it seems worth examining some of the assumptions underlying the debate. It turns out they may not all be true.

Here are a few candidates for "Mythbusters."

Everyone used to have a pension. That is far from the truth. Until pension law changed in 1974, companies used to require decades of vesting for employees; many folks spent 15 or 20 years on the job and were let go just before they vested. So while they technically "had" a pension, they never …

How Recent Disasters Affected Markets and Economies

The biggest earthquake to hit Japan in 140 years has killed at least 44 people and sent stock markets across the globe sharply lower, while the yen and oil prices also fell.

The quake was followed closely by a 10-metre tsunami and auto plants, electronics factories and oil refineries were shut across large parts of the country. The death toll is expected to rise.

Several airports, including Tokyo's Narita, were closed and rail services halted. All of the country's ports were closed.

While it is still very early to tell what the impact of the Japanese earthquake will be, it is likely that the events will not derail the country's stock market over the longer term, Olgerd Eichler, co-head of asset management at MainFirst Asset Management, told CNBC Friday.

The disaster is another challenge to Japan's recovery, but it may provide a jolt to the economy over the short term, Lawrence Summers, president emeritus of Harvard University and former director of the White House National…