STOCK MARKET BECOMING A REAL SWINGER THESE DAYS
Swings are becoming business as usual for the stock market. In January, stocks swung at least 1 percent on most trading days. Since 1948, swings of 1 percent or more have happened just five times a month, on average. In January, 14 of 21 trading days — 67 percent — reached that threshold. In February, the frequency dipped slightly, to eight of 20 trading days, or 40 percent.
Commissions “not going up”
On May 1, 1975, the New York Stock Exchange lifted a rule that guaranteed brokers a minimum commission on trades. Within a few months of the “May Day” decision, as it became known, commission rates fell 40 percent on large trades, according to B. Mark Smith, author of “A History of the Global Stock Market.”
Today, the three major discount brokerages routinely offer rates of $10 a trade or less. But competition may be waning. E-Trade is widely believed to be considering a sale of its brokerage to TD Ameritrade or Charles Schwab. Yet Richard Repetto, analyst with Sandler O’Neill, says commissions “certainly are not going up” even if E-Trade is picked off, because small competitors could quickly pounce and take market share.
Computer program for IRAs?
Can the finest minds in investing create an unbiased, easy-to-use computer program able to winnow tens of thousands of investment choices into a personalized portfolio?
The U.S. Labor Department posed this challenge to financial firms and some technology companies in 2006. With dozens of responses in hand, it’s gearing up for an answer that could affect anyone with an individual retirement account.
Today, IRA holders can’t get direct advice from their financial institution under rules aimed at preventing conflicts of interest. But the law provides an exception for advice based on computer modeling. If the department decides that a model can’t be built, then it could decide to relax the rules allowing for advice.
Financial firms would prefer to offer advice directly and just disclose any potential biases. Most have told the Labor Department that a computer modeling approach isn’t feasible for IRAs. Would-be providers of such a system, such as Palo Alto, Calif.-based Financial Engines, are more optimistic.
Recession here, says economist
After two months of shrinking employment, the chief U.S. economist of JPMorgan now believes the economy is in a recession. Previously, the economist, Bruce Kasman, merely predicted slower growth. As a result, the firm’s stock strategists see the Standard & Poor’s 500 index rising to 1,450 by December, down from a prior projection of 1,590. On Friday, it closed at 1,293.37.
D. Sorid, J. Qi, The Associated Press
