Archives for September 2009

Insourcing

Jeff Immelt, CEO of General Electric coined this term as he called for a reinvestment in U.S. manufacturing jobs and announced plans to move parts of its aviation components group back to the U.S.

The trend seems to be catching on. Stanley Furniture, an 85-year-old maker of home furnishings will be bringing all of its remaining kid’s line that is produced overseas back the the U.S. It might be that the factors that made offshore production so attractive – cheap goods and labor – might no longer compensate for things like transportation costs, quality control, and intellectual property issues. Case in point, Stanley Furniture had to recall 300 cribs made in Slovenia in 2008. (although the company says that isn’t the reason it is changing course)

Recalls throughout the industry has made consumers wary nonetheless. And more control over the company’s inventory puts them in a better position. Perhaps “Made In The USA” has some appeal after all.

~Tony

Source: FORTUNE

Point to Ponder – US Annual Budget

“In 1909, the US federal government had an annual budget of $US 0.8 Billion. With this it governed a population of just over 90 million people. The cost of government was about $9 per capita. In 2009, the US federal government has an annual budget of $US 3,550 Billion. With this it governs a population of just over 300 million people. That’s a cost of about $11,675 per capita.”

Are we 1,200 times better off?

~Tony

Source: The Privateer

9/11/01 = 9/11/09: No Change for the Dow 8 Years Later

Here is a crazy fact! On both 9/11/01 and 9/11/09, the Dow Industrial Average was at 9605.

Here is a re-post from Barry Ritholtz’s blog:

This has been circulating Wall Street trading desks: On both 9/11/01 and 9/11/09, the Dow industrials were at 9605 (it was the close of the 9/10 in 2001, since markets never opened on 9/11 2001).

Here’s the chart:

>

9.11.01.09

Thanks, Pete!

Point to Ponder – Gold

“Though gold bugs make it sound as such, gold is not the only and not the best alternative if the worst fears come to pass. The best way to deal with the risks of dollar devaluation and high inflation – with a much lower cost to being wrong – is, instead, to own stocks of companies that have pricing power of their product. When inflation hits, they will be able to raise prices and thus maintain their profitability. Also, companies that generate a large portion of their sales from outside the US will benefit from the declining dollar.

Gold bugs look at gold as a currency, but it is not one and unlikely to be one in our lifetime. Here is why: there is not enough of it around, so even if world government were to adopt a fractional system (currency in circulation as a multiple of gold reserves), they will never go for it, because central banks and governments will never give up their monetary tools – inflation is a very addictive tool to fight growing monetary obligations.” – Vitaliy N. Katsenelson, CFA

The ETF Industry is Booming & 4 Reasons I Like ETFs

A few quick facts on the ETF industry:

  • The first ETF ever launched was the SPDR S&P 500 ETF (SPY) which is designed to track the S&P 500 index.
  • Today, the SPY is the largest ETF with nearly $70 Billion in assets.
  • Assets in ETFs are now at a new record of $678 Billion at the end of August.
  • This year, through August ETF assets have risen 25%.
  • There are a total of 846 ETFs from 36 providers.

I like ETFs for the following reasons:

  1. ETFs enable intelligent investing for anyone. Investors can now gain access to many types of investments that previously only the very wealthy could access.
  2. ETFs are cost efficient. You can buy and sell ETFs with very reasonable trading costs.
  3. ETFs offer access to unique markets and asset classes. There is an ETF for nearly any stock or bond market index, sector, country, currency, or commodity.
  4. ETFs are liquid. ETFs trade like a stock. You can buy or sell them very quickly.

For these reasons (and more) I expect ETFs to become even more popular. The industry will continue to see extraordinary growth. If you aren’t aware of the different types of ETFs and the benefits they offer you should take the time to learn more. They are simply great investment vehicles.

~Adam

Source: Investors Are Sweet On ETF Products [The Wall Street Journal]