Money Buzz 11/01
Smart stock tips in a bear market and a new private placement exchange for businesses seeking capital
Feeling lost in the tumultuous, unforgiving market? If
you're not sure which individual stocks to keep, compare your
current holdings to their respective indices. You may be convinced to abandon individual stocks altogether in
favor of index funds, which invest in the average of the stocks in
a sector. The S&P MidCap 400 Index, for example, is a benchmark
consisting of 400 stocks. If you own shares in an S&P 400
company (see www.advisorinsight.com for a complete listing), and
the stock's value has increased by 5 percent but the
index's value has grown by 20 percent in the same time, the
stock is underperforming its category.
24%
of fast-growth CEOs see weak market demand and
the uncertain economy as their primary business issues.
SOURCE: PriceWaterHouseCoopers'
"Trendsetter Barometer"
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Don't be surprised if your portfolio isn't performing as
well as the indices, says Frank Armstrong, president of Miami-based
Investor Solutions Inc. In most cases, he says, investors would
fare far better by investing in an index. "By just picking a
few stocks, what you're doing is picking up an enormous load of
risk," says Armstrong, "but no real additional
return." Unless you just happen to buy the next Microsoft. Content Continues Below
For a complete listing of the indices and how they're
performing, check out www.indexfunds.com. A Private Exchange As investors in private securities and VC funds clamor for
liquidity in a stagnant, anti-IPO market, the New York Private
Placement Exchange (NYPPe) is hoping to convince investors and
companies that are searching for private capital that its exchange
is the way to go. The NYPPe, an electronic communications network started by a
group of Bear, Stearns alumni (which is petitioning for exchange
status with the Securities and Exchange Commission), trades a
variety of restricted stocks similarly to the public market.
Companies seeking private capital can go one of two routes. With
the first, entrepreneurs get access to some 4,000 institutional and
accredited individual investors, with NYPPe assuming an investment
banker's role.
89%
of outside directors and board chairs say they
serve on board for nonfinancial reasons.
SOURCE: Christian &
Timbers
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"We actively solicit investors," says Laurence G.
Allen, CEO of NYPPe, which charges between 7 and 10 percent of the
capital companies raise. For that fee, businesses get research
coverage, meaning an analyst will examine their stock and give it a
rating (e.g., buy/hold) for investors, investment banking services,
and additional independent broker dealers and market-makers. Plus,
businesses can create their own portal pages on NYPPe's Web
site. If you'd rather pay upfront instead of offering a cut of
the amount raised, you can opt for the "discount"
version, which costs $25,000 flat and allows companies seeking
capital to post deals on the NYPPe Web site and get exposure to
investors shopping the site for opportunities.
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