Apple Added to the Dow

The DJIA (Dow Jones Industrial Average) is an index of 30 companies that are picked to represent the broad economy. As this Fox Business article notes, Apple is replacing AT&T in the index. Given that Apple is the largest company by market cap, why is Apple just now entering the index? The answer is that the Dow is price-weighted, so Apple's recent 7:1 split brought the price low enough, such that it would not unduly influence the overall index movement.

Warren Buffet Criticizes Money Managers

Warren Buffet, a pillar of active management, suggests that most investors are best served by investing in passive index funds. This is primarily due to the high fees charged by managers, particularly those in hedge funds. See article here, Yahoo.

Blog Central

For those looking for some additional investing blogs to follow, here is a list of the "20 Best Investing Blogs of 2015."

Volatility Adds Risk for Market Orders

With a market order, trades transact at the current market price. With increased high frequency trading, more and more stocks are seeing dramatic swings in prices within a short time period. Such swings add risk for market orders, as investors may get a price vastly different from what they had expected. In such cases, limit orders may be useful to minimize price risk. See article here, WSJ.

2 Days, $1 Million

Options allow investors to generate higher levels of returns (and losses) as compared to taking positions directly in the stocks that the options are derived from. For example,  a recent MSN article discusses a trader that purchased $1.7 million worth of call options on AMAT. The stock price increased 5% in two days, resulting in a profit of $1.4 million, which is an 82% return.

International Investing

Investing is a global activity, so there is often very little difference with regard to many activities (such as how margin works, order types, etc.). The biggest difference, however, is the possible impact of currency on returns. One argument is that currency fluctuations reduce return correlations, so they should not be hedged within a portfolio. Others, however, have recently turned to currency hedged investments to protect against the rising dollar when invested in foreign assets. See article here, Yahoo.

Investing in Sin.....

Socially conscious investing has attracted numerous followers, and this has precipitated the development of many socially conscious mutual funds. In contrast, other investors have taken an alternative approach, opting for so-called "sin funds." As this WSJ article points out, these sin funds have actually performed quite well over the last 10 years.