dow

On Thursday, May 6, 2010, the Dow Jones Industrial Average opened at around 10,860. Later that afternoon, it suddenly fell 9.2%, to 9,869.62. In the space of just a few minutes, it had recovered most of these losses, and closed at 10,520.32. It’s now back to its pre-crash level of around 10,860. The Securities and Exchange Commission (SEC) is investigating the drop, but an exact cause has not yet been found. No matter what caused the crash, some of the trades that occurred between 2:40 p.m. and 3:00 p.m. eastern time have already been cancelled. The New York and Nasdaq exchanges have cancelled all trades that occurred during that window that were more than 60% higher or lower than the stock’s price just before the plunge....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs, but you will quickly make these back because of the low management fees. Shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

Syngenta AG, $51.89, symbol SYT on New York (ADR) (Shares outstanding: 473 million; Market cap: $24.5 billion), was created by the merger of Novartis Agribusiness and Zeneca Agrochemicals in November 2000. Syngenta is a Switzerland-based firm that makes agricultural chemicals. It specializes in herbicides, fungicides and insecticides. The company also sells high-value commercial seeds that require a great deal of research to develop. Syngenta has customers all over the world. The company sells a broad range of seeds and agricultural products, and is a leader in an industry that is dominated by major global companies, including Dow Chemical and Monsanto....

There are many ways to calculate the performance of a stock market newsletter. Some provide far more favourable figures than others. That’s why, in our newsletters, we simply provide the return since our first recommendation, and leave more detailed calculations to independent sources, particularly The Hulbert Financial Digest. (We recently posted returns that were far higher than an index of all publicly traded U.S. stocks — see below for further details.)

Hulbert is the “bible” of stock market newsletter performance measurement

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DIAMONDS TRUST SHARES $98.27 (New York Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. The fund’s top 10 holdings are IBM, Exxon Mobil, Chevron Corp., 3M, Procter & Gamble, McDonald’s Corp., Johnson & Johnson, Caterpillar Inc., United Technologies and Coca-Cola. The fund’s expenses are about 0.18% of its assets. Diamonds Trust Shares are a buy.

While ETFs won’t protect you from the three costliest mistakes an investor can make, they may have a worthwhile place in your portfolio. Unlike many other innovations, ETFs don’t load you up with heavy management fees, or tie you down with heavy redemption charges if you decide to get out of them. Instead, they give you a lower-cost and more flexible and convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell them, but you will quickly make these back because of the low management fees....

U.S.-based ProShares offers a range of short-selling products for U.S. stock indexes. It also sells products that take long positions. ProShares offers three types of exchange-traded funds (ETFs). All have MERs of 0.95%. 1) ProShares Short ETFs are designed to move in the opposite direction of the underlying index....

We still think now is a good time to add some U.S. stocks to your portfolio. And we continue to feel that a well-diversified portfolio of high-quality stocks (like those we recommend as buys in our Wall Street Stock Forecaster newsletter) will outperform index funds over the long term. But we do recommend some low-fee index funds in Canadian Wealth Advisor: 1) S&P Depository Receipts, symbol SPY on the American exchange, hold the stocks in the S&P 500 Index. This index is made up of 500 major U.S. stocks chosen for market size, liquidity and industry group. Expenses are just 0.12% of assets. This is our favourite of the three U.S. ETFs, and it’s a buy. 2) Diamond Trust Shares, symbol DIA on the American exchange, hold the 30 stocks that make up the Dow Jones Industrial Average. Expenses are about 0.18% of assets. It’s a buy, as well....

Growth by acquisition is a risky strategy, but wisely chosen takeovers can bring big gains. Here are two that make sense to us. INTERNATIONAL BUSINESS MACHINES CORP. $117 (New York symbol IBM; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.3 billion; Market cap: $152.1 billion; Price-to-sales ratio: 1.6; WSSF Rating: Above Average) will buy SPSS Inc. (Nasdaq symbol SPSS), whose software helps companies predict changes in customer buying habits and other trends. The price is $1.2 billion, or about 39% of IBM’s second quarter 2009 earnings. IBM is a buy....

Desalination is the process of removing excess salt and other minerals from seawater. It’s also used where saltwater has entered underground fresh-water aquifers. Right now, there are more than 13,000 desalination plants operating in over 120 countries. About three-quarters of them are in the Middle East. That’s because it’s very expensive to build desalination plants, so they are only really cost-effective where there is no fresh water. When fresh water is available, it can be pumped up to 1,600 kilometres and still cost less per litre than water from a desalination plant. Desalination may become more cost competitive over the longer term, however. As the world’s population rises and becomes more prosperous, demand for water for drinking, irrigation and industrial uses will exceed the amount available from natural sources....