Josh Stern

E*Trade Total Client Asset Gain Trails S&P500 In April

ETFC has heavily promoted its roster of good cash mgmt. options over the last year - e.g. 5% savings, free high interest checking, etc. I'd guess that retail investors lagged because they were significantly in cash. ETFC makes money on interest spreads with the cash, and more funds currently in cash also means more trades are required to reinvest. Besides all that, it is possible to debit Fed and State taxes directly from ETFC brokerage accounts...taking those things all together, I would be cautious about interpreting this as bearish for ETFC income.

The Case Against Leveraged ETFs

Re: Relation to interest rates -
In order to profit from opening an options contract, a trader has to either exercise the option or close the contract. In the former case they need a lot of capital to do that. In the latter case they are paying the bid/ask spread. So current borrowing costs are factored into the bid/ask spread.

Re: Portfolio insurance -
Long term maintenance of synthetic option positions is clearly too complicated and not cost effective for retail investors. But I wonder why brokerages, especially electronic ones, don't offer user-friendly portfolio insurance to their clients based on synthetic option positions. They could charge X$ to open plus Y%/month to maintain. I bet it would be a money maker for them both in terms of direct fees and encouraging higher levels of investment participation from nervous investors and ones with shorter time horizons until they made need the money.

The Case Against Leveraged ETFs

This is a well written article which I enjoyed even though I was already familiar with most of the concepts and material. I'm also a software guy at heart and appreciate an analytical approach to these topics.

Biovail Chairman Melnyk Gets Slammed In Legal Rink

BVF seems like a classic contrarian bet...It has endless negative news stories, none of which apparently having a material effect on future earnings or balance sheets.

Are Closed-End Funds Overshadowed By ETFs?

I like MXF here. The underperformance on your chart is totally attributable to its discount to NAV, which is now at 17% and well below historical norms.

www.etfconnect.com/sel...

Where is Capital Expenditure Spending?

I have no expertise to comment on this issue, but I'll throw out the obvious and see if anyone wants to refute it...

When production and is outsourced to another country, the implicit capital expenditures happen there, not on the balance sheet.

Housing and Recession -- Does it Really Matter?

I've had similar thoughts about the "all cash industry" side of residential contracting.

Another point though is that both financial analysts and economists are not demographically distributed throughout the economy, so they may miss important trends until it is late in the game. For example, we have lately been in a boom time for farmers and farming equipment. If one tries to find a pure play in farming equipment, the name CNH pops up. But am I early or late to the game? Yeah, pretty late:

finance.yahoo.com/char...;range=5y;indicator=vo...

Business is undoubtably terrible if you are in residential construction, but undoubtably good if you are building barns or other stuff for farmers. And if your company builds engine parts, maybe one side of the business is slow and another side is good...Likewise, the trend for the whole economy is a composite of a lot of different sector trends.

Covered Call Funds: The Whys and Hows

According to the data at www.etfconnect.com RCC, ECV, and BEP all trade at substantial premiums to their NAV: 6.59%, 9.90%, and a whopping 18.74% respectively. Obviously other people out there are enthusiastic about this concept and the industry is probably going to generate some additional products of this type.

The Greatest Risk in Today's Market: 'Settling'

I've also observed this in my own use of quantitative screens over the years.

The implication for deep value investors who *do* use absolute value metrics is also bad - under these conditions, the odds that there is something really wrong with a company that passes the metrics are higher now.

Compact Disc Sales Plummet 20% Since Start of Year

Let's think as investors - how do we feel about putting money into a company where the CEO and BOD have no idea which, if any, of their next generation products will appeal to their customers? Most of us would say "drop dead" to such an idea. Since music is about the most subjective and personal product there is, it's lunacy to think that the industry drive to every greater consolidation and corporate control of the product is going to increase overall sales. Anyone planning those mega-mergers should have assumed that sales would decrease and asked themselves whether some compensating efficiency or pricing power would make up the difference. Evidently it has not. The idea of the mega-media company is itself every bit as misguided as the much maligned TimeWarner AOL merger.

Will Subprime Fallout Lead to a Depression?

I'm in the Twin Cities MN area and I recently heard that permits for new construction were running 44% below last year (when the overall housing market here was already slumping). For me, the economic story is about how far we have yet to go in the unwinding of the whole residential home market including, but not limited to, construction, materials, mortgage financing, home furnishings, real estate sales, etc., etc. Making it harder for whoever was getting those sub-prime loans to buy more houses is probably a bigger impact on the economy than those defaults.

Too Many ETFs? Maybe -- But Why Should We Care?

If the company managing an ETF is going to close it and/or is generally struggling, I would worry as an investor in that fund about both the NAV discount until they eventually return the money (i.e. having "dead money" in it) and also whether the NAV performance will be worse when the management is less motivated to do well. If your point is that overall market which isn't related to the ETF industry shouldn't worry, I agree with that.

Selling Scottish Power: Like Their U.S. Cousins, European Utilities Now Also Overpriced

"With p/e ratios roughly equal to that of the general market, I think utilities in the US are vastly overvalued. "

Compared to the general market, utilities pay higher dividends, have a greater financial "moat" around them, have less risk of bankruptcy, and participate in markets that are among the most likely to exhibit organic growth. Perhaps, like casual dining stocks, they are just no longer out of fashion. Disclosure: I am long the Cohen and Steers Select Utility Fund ETF - ticker UTF - which trades at over 14% discount to its NAV and pays over 5% dividends (dividend is enhanced by both the discount and leverage).