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.
of fast-growth CEOs see weak market demand and the uncertain economy as their primary business issues.
SOURCE: PriceWaterHouseCoopers' "Trendsetter Barometer"
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.
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.
of outside directors and board chairs say they serve on board for nonfinancial reasons.
SOURCE: Christian & Timbers
"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.
- Investor Solutions Inc.
(800) 508-8500, www.investorsolutions.com
- New York Private Placement Exchange
(203) 422-5000, www.nyppe.com