Sunday, March 16, 2008

TradeStation takes crown in Barron's online broker rankings

TradeStation ranks at the top of the list in Barron's latest online brokerage rankings.

What pushes this software-based firm to the top is its incredible trading technology and its powerful analysis, charting and backtesting capabilities. The system, like a Porsche 911GT3, isn't for everyone: The average TradeStation customer puts on 640 trades a year, far more than the typical buy and hold client would ever need. That's why it's our top pick for the frequent trader as well.
Good stuff. I'll have to research the 23 companies that they ranked. My own broker came out near the middle of the pack.

Sunday, March 9, 2008

Mack Daddy retirements

Barron's has an article on how much you need to join the elite in retirement. The answer is $25 million.

After selling an Arizona business that he'd built up over 30 years, he retreated to a 30-acre spread on the coast of Oregon and handed a $10 million investment portfolio to a big, New York-based private-banking outfit. The bank, however, seemed less than impressed. Over three years, he says, he received nary a phone call from the reps in the local office. "There was no 'How are you doing?' or 'Maybe you should buy this' or 'How about some concert tickets in Portland?' There was nothing at all." The retiree eventually reached an inescapable conclusion: "I was considered insignificant."

Yes, it takes more than $10 million to be seen as rich these days. It takes more like $25 million. Not only is that the minimum for the red-carpet treatment at a growing number of banks, it is also, in the view of many experts, the sum needed for a truly cushy retirement, one free of financial worry.

"With $25 million, you can fund college and grad school for the kids, take care of your own parents, travel, start a backyard vineyard and, well, "do whatever you want," says Maria Elena Lagomasino, of GenSpring, which helps some 600 wealthy families manage their money. After all, if you simply stashed the $25 million in municipal bonds, you'd have tax-free income of well over $1 million a year.
This isn't the mass affluent level, it's well beyond that. This article brings to mind the Chris Rock rich vs. wealth joke. Also, the retiree mentioned needs to get a new banker, immediately.
While $1 million was once a sign that you had arrived, plenty of people with up to $10 million nowadays don't think of themselves as rich. Many actually consider themselves "middle class," according to survey work by the authors of a new book, The Middle-Class Millionaire. That's increasingly true as the $10 million crowd finds a new intruder in its gated communities: the weakening economy. The delinquency rate for "jumbo" home mortgages -- a category that includes loans for basic McMansions -- more than doubled last year, to 0.74%, according to Fitch Ratings.

True, only a tiny portion of all Americans meet our definition of rich: Just 0.20% of households have net worths of $25 million or more. But in absolute numbers, the group is considerable. If one representative from each of the 175,400 households filed into an NFL stadium at the same time, they wouldn't all find seats. In fact, they would have to go in two shifts -- and even then, some 15,000 would be left in the parking lots, tailgating in their Bentleys.
I'm planning for my own retirement to be much less costly. You don't need that much to sit on an island beach somewhere, nor do you need much for a little sailboat. Plus, I'll have a doughnut shop that will keep me busy in the mornings.

Saturday, March 8, 2008

130/30 mutual fund performance lagging

There was a blurb in this week's BusinessWeek on 130/30 fund performance:

While these funds have yet to amass the multiyear track records that disciplined investors rely on, they have gotten off to a lackluster start. "We haven't found them to be that compelling," says Marta Norton, an analyst at Morningstar (MORN). According to Norton's data, the two dozen 130/30 mutual funds on the market lost 8.82% so far this year, vs. a decline of 9.05% for the Standard & Poor's (MHP) 500-stock index. Over the past year the average 130/30 fund dropped 8.44%, surpassing the S&P's 3.60% decline.
I'm still interested in these funds, and continue to research them to perhaps invest in one sometime.

While searching for the electronic version of the article (since I couldn't find it through the BW table of contents page for the issue), I found an older article by the same author that gives more of an explanation of 130/30 funds (or 120/20 funds).