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Fund Manager Thinks Bull Market Will Last a Year
BEFORE SWITCHING TO WALL STREET, TOM O'HALLORAN worked in the mid-1980s for Rhode Island's Department of the Attorney General, where he successfully prosecuted people accused of murder, rape, robbery and arson. "I loved being a D.A.," says O'Halloran, who spent two-and-a-half of his five years in the state's employ as a district attorney. "Very, very exciting stuff." His current position is no doubt more lucrative, but O'Halloran, 54, hasn't sworn off excitement: He's traded the thrill-ride of criminal prosecution for the roller coaster of the market, running the Lord Abbett Developing Growth Fund A (LAGWX). It's safe to say it's been a compelling -- but wildly uneven -- period for the kind of small-capitalization emerging-growth companies that his fund buys. "We've always warned that this fund will be prone to dramatic swings in performance on occasion," Morningstar noted in a research analysis last month. "And the past two years have illustrated that fact in stark terms." O'Halloran's emerging-growth fund, which he took over in 2003, recorded a tremendous gain of 36% in 2007, versus the 7% increase in the Russell 2000 Growth Index. But his fund suffered a big hangover in 2008. "We got hit hard in the first part of 2008," O'Halloran says. "What happened is that the stocks that had become fully valued in a 'glass-that's-half-full' market got crunched." The Jersey City, N.J.-based fund lost more than 15% in the first two months of 2008, preceding a 47.5% drop for the year. Developing Growth, with $855 million under management, has acquitted itself better -- much better -- in 2009, having generated a 27% return through July, Morningstar noted. O'Halloran pursues a growth-at-a-reasonable-price strategy. One of the shortcomings of this approach: Stocks can get expensive. "My view is that if you really want to own the best companies when they are doing well, you aren't going to own many of them if you insist on getting them at a discount," he says. "They tend to be reasonably valued and go to extremes when they have the big moves." These are trends that bull-market moves can exacerbate, as happened in 2007 and leading into 2008. Compounding the difficulties, the fund didn't have much discipline in selling positions. It's a problem O'Halloran has addressed. For instance, Developing Growth snapped up shares of Crocs (CROX) at its initial public offering at about $10 a share. "Nobody believed that it was anything other than a fad for the first nine months," O'Halloran says. "But we owned it pretty big." Yet once sales growth slowed from about 150% to just 40%, O'Halloran started selling. The fund also recently sold its Green Mountain Coffee Roasters (GMCR) holdings, which had jumped 140% in the four months from March through early July. Now, "we have a selling process which is the mirror image of the buying process," O'Halloran says. That buying process usually involves screening a universe of 3,000 stocks for parameters including size, growth rate and financial strength. The criteria generally excise about 80% of that universe, leaving O'Halloran and his research team to focus on about 600 companies. The typical portfolio includes about 120 names at any one time. The biggest individual issue in the portfolio is EnerNoc (ENOC), an alternative-energy provider that offers excess capacity to utilities and other network-grid operators. It's one of the handful of names in the portfolio that isn't yet profitable. EnerNoc lost $1.88 a share in 2008, and is going to lose 82 cents a share this year, according to O'Halloran, who has about 8% of the portfolio in alternative energy. "But they are going to make money next year, so we can see a path to profitability," he says. Shares of EnerNoc climbed from less than $8 a share in January of 2009 to above $30 earlier this month. O'Halloran's predominant theme is the Internet. He estimates 15% of the portfolio would be either pure Internet businesses, such as online jeweler Blue Nile (NILE), or those conducting their principal up-front customer relationships over the Internet, such as Netflix (NFLX). While he regards himself as a jack-of-all-trades, high-tech is a particular passion. After finishing up at Columbia Business School, he started at Wall Street brokerage Dillon Read, where he spent 12 years. When Dillon Read was taken over by UBS, O'Halloran moved to Lord Abbett, eager to try his hand at managing money. But the job that was offered him was tech analyst for small-cap growth -- which he worked at from 2001 until taking over the Developing Growth Fund a couple of years later. AMONG HIS TECH-RELATED HOLDINGS is the commercial printer VistaPrint (VPRT). Printing usually is a commoditized business, but the Internet allows VistaPrint to reach an extraordinary number of small businesses and achieve economies of scale. O'Halloran notes VistaPrint has boosted its sales to $500 million in the latest fiscal year, from about $6 million in 2001. Other top holdings include Concur Technologies (CNQR), a developer of software that handles employee expenses, and MercadoLibre (MELI), which O'Halloran describes as the "eBay of Latin America." "Tech is going to be the leader of the cyclical bull market, and we think that will continue to be the case," O'Halloran says. "The companies that were stung by the bust in 2001 and 2002 have gotten very cash-rich, very efficient in operating costs and capital costs. The product cycles and innovation in tech have continued," he added. O'Halloran is optimistic about the prospects for the market in the coming year, and for his particular type of investing. "We are positioned for a cyclical bull market that I believe is going to last at least another year," he says. But he believes this is "a cyclical bull market within a secular bear market." His biggest complaint is the amount of leverage in the U.S. economy, which is going to continue to constrain consumer spending. He also criticizes the Obama administration's plans for health care and taxes. "I'm very concerned about the growing role of government, because I've worked in government," says the former prosecutor. "I know government is not a good economic model for running a business." SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


10 Things Your Therapist Won't Tell You (10 Things)
Excerpted from the book “1001 Things They Won’t Tell You.” 1. “My title may not mean much.” If you’re looking to start therapy, you know that a psychiatrist (an M.D. who can prescribe medication) or a psychologist (typically a Ph.D.) has probably mastered his discipline. But with many other confusingly labeled providers, you can’t be so sure. The fact that licensing requirements for therapists vary by state doesn’t help matters. In New York, for example, psychoanalysts and family and marriage counselors in training are required to practice under supervision and pass an examination before launching into the profession. Sounds about right. But since the state recently revamped its regulations, many “experienced” therapists who trained under lessstringent guidelines were “grandfathered” into certification, via submission of an application and without ever taking the exam, according to Ruth Ochroch, past president of the New York State Psychological Association. And still, she says, the current regulations are inadequate. “Some of these people will be a danger to the public because they won’t be trained enough,” Ochroch says. “The term ‘therapist’ is no longer legitimate.” Before picking a therapist, investigate the credentials of any candidate. Get referrals from your primary-care doctor, visit the websites of the American Psychological Association (www.apa.org) and the American Association for Marriage and Family Therapy (www.aamft.org), or check with a district branch of the American Psychiatric Association (listed at www.psych.org). To learn your state’s requirements or the status of individual therapists, try your state’s licensing and medical boards. 2. “My fees are negotiable.” The more education a therapist has, the more he usually charges. In a comparison of fees by industry newsletter Psychotherapy Finances, marriage and family therapists charge around $60 to $90 per session; psychologists, $70 to $100 per session; and psychiatrists, $90 to $150 per session. Rates run even higher in pricey areas such as New York City. If you have only partial insurance coverage or pay outof- pocket, your bill can run pretty high. What you might not know is that you can request a reduction in the rate. In fact, some practitioners see it as, well, therapeutic. Christine Ryan, a San Francisco editor, was seeing a therapist who disclosed, two years into treatment, that she would be raising rates. The therapist asked Ryan to think about the increased charge and discuss it later. The upshot: Ryan, who was considering increasing the frequency of her sessions, negotiated a break in the price hike to offset the cost of the added sessions. “She approached it as a learning opportunity,” says Ryan. “And it really underscored that this was the right therapist for me.” Another way to save money is to find a therapist who offers a sliding scale of fees based on need or who charges lower rates for hard-to-fill time slots, such as midmorning and midafternoon. And if you’re willing to consider a therapist-in-training, you’ll really save on sessions. In New York City, for example, training clinics, like those at the William Alanson White Institute (www.wawhite .org) and the National Institute for the Psychotherapies (www.nipinst.org), offer low-cost psychoanalysis. Universities that offer postdoctoral programs in psychoanalysis are often another good resource for reduced rates. 3. “I don’t know anything about your condition.” If you’re suffering from a particular problem, say, anxiety attacks, you’ll want to see someone who takes a special interest in treating the problem. A diabetic wouldn’t sign on with a lung specialist, right? Unfortunately, some therapists will take on all comers. “Not every therapist is well trained in every disorder,” says Richard Dana, a psychologist in Newton, Mass. “Someone who is referred with obsessive-compulsive disorder may find that his therapist was not really trained in that area.” According to Herbert Klein, editor and publisher of Psychotherapy Finances, many therapists lost substantial income during the 1990s, when businesses shifted to managed-care insurance. As a result, some practitioners don’t feel they can afford to turn away patients. Talk with your prospective therapist. For confidentiality reasons, he can’t provide the names of clients as references. But you can describe your issues or symptoms and ask whether he has worked with patients like you before. 4. “I use one approach—and it might not be the one you need.” Therapy comes in many flavors. Among the classic approaches, “cognitivebehavioral” focuses on changing the patient’s thought and behavior habits, while “psychodynamic” stresses the role of early and current relationships, often with an emphasis on the one between patient and therapist. Then there are the newer, less mainstream approaches. For example, Emotional Freedom Techniques stimulate the body’s meridian points, as in acupuncture, and Eye Movement Desensitization and Reprocessing, often used to treat victims of trauma, uses objects waved in front of the eye to reduce stress. “Different problems need different techniques,” says Tina Tessina, a psychotherapist in Long Beach, Calif. Before starting therapy, ask your provider about his methodology. It’s also possible to set up an initial trial period—anywhere from one to several sessions—to see if a given therapist’s approach suits you. 5. “I’m just a pawn to your insurance company.” Managed-care companies have clamped down relentlessly on psychotherapy, requiring extensive reporting by practitioners and “a lot of time devoted to paperwork justifying treatment,” says Daphne Stevens, a clinical social worker in Macon, Ga. What’s more, patients tapping their insurance to pay for treatment generally sign a release at the outset giving the managed-care company the right to see their records and discuss aspects of their treatment with the therapist. Several years ago, Stevens says, she started seeing a suicidal patient who was in the throes of an emotional crisis. After six months of therapy, “the managed-care company started asking when I was going to wrap it up,” she says. When she insisted that the patient still required treatment, the insurer said okay—as long as Stevens checked in after every session. Finally, Stevens worked out a fee agreement that allowed the patient to pay out-of-pocket. A less-charitable therapist might have let a patient go untreated. You can’t do much about your managed-care company’s access to your files, but you can discuss your concerns with your therapist and ask to see any correspondence he has with your care manager. At least you’ll be able to know what’s being said about you. 6. “Our conversations aren’t necessarily confidential.” If you think conversations between therapists and patients are always private, they’re not. Court decisions have found that the confidentiality of records should be determined on a case-by-case basis. Should you end up in a court case in which you’ve raised the issue of emotional health, your records can be subpoenaed by the other side. It’s common in child-custody suits, for example. “Those records can become part of the legal fodder if parents are divorcing,” says Leah Klungness, a psychologist in Locust Valley, N.Y. In addition, the federal Health Insurance Portability and Accountability Act, which was originally meant to safeguard patient privacy, was amended in April 2003 to remove a patient’s right to give consent before certain “covered entities”—i.e., providers, insurers, and health-information clearinghouses—could access his medical records. As a result, confidential information about you can easily be disseminated without your ever knowing. What to do? Ask to see what’s in your records so you know what information could be passed on. While your therapist can’t change what he has written, you can ask that he put in positive factors as well, such as your efforts to change. 7. “I’m every bit as crazy as you are.” Therapists generally receive some form of therapy themselves before treating patients. It is a requirement for becoming a practicing psychoanalyst, for instance. But that doesn’t mean the person you see is necessarily a beacon of mental health. “Some therapists may have their own set of emotional problems, which, in some cases, could interfere with successful therapy,” says Los Angeles psychologist Yvonne Thomas. The real problems arise when a therapist has unresolved emotional issues and takes them out on you. One writer in Santa Fe, N.M., for example, recently saw a psychologist who, she says, came late to every session. When the patient finally called her on it, she says the therapist responded by angrily lashing out. “She told me this is an issue she was trying to work on, and I had no right to criticize her for it,” the writer says. If you feel your therapist is behaving inappropriately, bring it up. Bottom line: “A person should feel comfortable confronting the therapist and trying to have the problem improved,” Dana says. If that can’t happen, move on. 8. “I’m a drug pusher . . . and it pays.” Antidepressants and other psychotropic drugs have helped millions of people. But they’re not right for everyone. Managedcare companies, however, encourage psychiatric consultations, in which patients are routinely prescribed drugs, in part because it’s often cheaper than long-term therapy. Meanwhile, more psychologists are moving toward practicing psychiatry, in part because it’s so profitable, says George Goldman, a psychologist in New York City. “A psychiatrist can see a patient for 15 minutes, for what’s essentially medication management, and get the same fee as a therapist that spends 50 minutes with a patient,” Goldman says. Your best move: Before you start working with a psychiatrist or psychopharmacologist, ask him to describe his philosophy about prescribing medication. If he suggests that you go on drugs, ask what the rationale is for the recommendation, how the two of you can monitor the treatment, and whether he has been pressured by insurers. If you don’t feel comfortable with his answers, consider getting a second opinion. 9. “I’ll exaggerate your diagnosis to get you covered.” To qualify for insurance coverage, patients must be given a specific diagnosis, drawn from the Diagnostic and Statistical Manual of Mental Disorders, known as the DSM, published by the American Psychiatric Association. And since the level of coverage may depend on the diagnosis, therapists will sometimes assign a more serious condition when given two similar options—“because then there’s the need for more therapy,” Goldman says. Indeed, some states, such as California and Massachusetts, allow certain psychiatric disorders to receive a higher benefit level, which is generally assigned to medical visits. “So [therapists] might give someone the diagnosis of ‘panic disorder’ when the milder ‘adjustment disorder with anxiety’ may also be appropriate,” says Steven Sultanoff, a psychologist in Irvine, Calif. But an exaggerated diagnosis can have negative implications as well. A diagnosis of depression, for example, could make it difficult to get disability insurance. To avoid diagnosis backlash, discuss the options before you begin therapy. Many practitioners are not inclined to put labels on their patients for a variety of therapeutic reasons but are forced to provide one before insurance companies will cover their services. Pay for your treatment out-of-pocket, and the need for any diagnosis—and certainly for an inflated diagnosis—may disappear. 10. “I’m going to drag this out as long as possible.” If your health plan doesn’t impose treatment limits, you have more freedom to resolve your problems at your own pace. But you might also find your therapy goes on too long. “Unless you have a serious problem, you should see some improvement within a few weeks and considerable headway in a couple of months,” says psychotherapist Tina Tessina. At the same time, don’t delude yourself that your last visit signals a cure for whatever sent you there. “These tend to be chronic relapsing conditions,” says Darrel Regier, executive director of the American Psychiatric Institute for Research and Education. Discuss with your therapist how long your treatment is estimated to last. Then set up a schedule for evaluating your progress to determine if it should continue. If you feel things are dragging on without much progress, discuss your concerns with your therapist, and if you don’t get a satisfactory answer, consider moving on. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


New Benefits to Members
Dear SmartMoney Insider, We are excited to announce the arrival of the newest benefits available to members of our exclusive reader panel. The next time you log in to your Insider page you will notice an updated design featuring three additions: Insider Videos SmartMoney writers take you behind-the-scenes in interviews following their TV appearances, to provide further insight and to recap what you missed. Insider Mini-Profiles As an Insider you now have the opportunity to make yourself known as an influential user. Upload an avatar and add an alias to your profile and both can be displayed when you comment on any article or poll results! Insider Factoids Searching for a quick way to find general site stats? Visit the Insider Facts section to get a glimpse of the most popular site tools or most traded tickers in SmartMoney Portfolios, all in real-time! Check back often to see the newest facts available. Log in to your Insider account to see the new additions: http://www.smartmoney.com/insider As always, you have exclusive access to the SmartMoney Insider Report, which contains a number of proprietary research studies as well as a heavily discounted SmartMoney Magazine annual subscription of $6 for 12 issues! We appreciate your participation and look forward to hearing your insights in the future. Thank you, The SmartMoney Insider Team SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Return of the First-Time Homebuyers
Here’s one more way the housing bust has changed the rules of the real-estate world: In this market, first-time buyers are getting VIP treatment. Indeed, they’re the star players in a nascent market revival. New buyers accounted for almost half of all sales during the first part of the year, well above historic levels, according to the National Association of Realtors. Tanking prices have certainly drawn the newbies in; J.K. and Nicole Harvey, for example, just snagged a three-bedroom Dutch colonial in Trumbull, Conn., on a corner lot—after bidding $50,000 less than the asking price. Low interest rates and a new federal tax incentive are making a difference too. But more than anything, first-timers are benefiting from not being homeowners. They don’t have to worry about selling their current homes, most likely in a down market, to raise money for new ones. “The world is their oyster right now,” says Mike Larson, real estate analyst with Weiss Research. Small wonder that agents are now gladly tagging along as the “kids” kick the tires on starter homes. That’s a big change from the way things used to be: For most of this young century, the real estate scene was dominated by homeowners trading up, flipping properties or snapping up vacation homes. Bubble-driven prices meant that even “starter homes” were out of reach for younger couples. Brokers and agents shunned first-time buyers because they needed too much hand-holding and, of course, because they weren’t that lucrative—why waste time peddling $150,000 condos when you could make seven times as much money selling a single $1 million McMansion? But today, new buyers with humbler aims are just as likely to get the red-carpet treatment. Right now, of course, buyers of all stripes face what seems like an unprecedented opportunity. This year the housing affordability index reached its highest point in almost 40 years. But not every “SOLD” sign is a marker on the path to prosperity. Despite signs of improvement in a growing number of markets, hardly anyone expects a quick return to boom times. That’s partly because first-timers are more willing to scoop up bargains at the bottom end of the market than jump into a bidding war. And buying a home can be trickier and scarier than ever. Still, virtually everyone agrees that the housing market won’t fully recover until buyers soak up the bloated inventory of available homes—in other words, until the rookies come through. Tax Breaks for Rookies First-time buyers owe some of their time in the sun to Congress and President Obama. This year’s stimulus bill included an $8,000 tax credit aimed at first-time buyers—and it wasn’t long before those newbies got wooed by a business-starved real estate industry. Phoenix-area builder Fulton Homes blasted its mailing list with information about the tax credit and material promoting homes tailored to young couples. Over a recent 12-week period, the company sold 120 homes to first-time buyers, says Dennis Webb, Fulton’s vice president of operations. Brokerages like Watson Realty, in Jacksonville, Fla., have issued buttons to their agents that read “Ask me about the $8,000 tax credit!” Mike Crowley, a broker in Spokane, Wash., even hosts a regular seminar for first-time buyers. He provides pizza and soft drinks, but that’s a pittance compared with the $3,000 he budgets each month to promote the classes on radio and television. These days the seminars focus special attention on the tax break. Crowley says the workshops have helped his office sign up more than 30 clients in the past year. “We’ve got it dialed in now,” he says. But for all the love it’s getting, some say the credit’s impact is limited. For one thing, $8,000 is a drop in the bucket for shoppers in expensive housing markets in places like the Northeast and California. The credit’s income ceiling—it phases out completely for couples earning more than $170,000—isn’t mentioned on those buttons. And the credit often isn’t enough to get a first-timer over the down-payment hump. In fact, the typical newbie can come up with only a small fraction of the 10 to 20 percent that most banks are looking for these days. All of which means that many first-timers are getting into real estate in a more traditional way—with help from Mom and Dad. Erik and Jessica Wackenstedt of San Diego shopped for months before finding a row house with Pacific Ocean views, marked down to $530,000 from $700,000. Erik’s father, Lars, loaned the couple $225,000 to make a hefty down payment. Lars’s motives weren’t entirely unselfish; he says he felt that payments from a loan to his son could provide a more reliable income than any of his other investments. There were other strings attached to the assistance: When Erik originally asked for help a year ago, Lars refused, saying that prices were “on the stupid side.” (In this case, obviously, Dad was vindicated.) The Bank of Mom & Dad While nobody tracks loans like these, some families see them as a win-win. The youngsters receive financing at a rate much cheaper than they would find at a bank, while the older lenders get to help their kin and still collect an income. Elders who are feeling flush can still make gifts, of course. Each donor can give up to $13,000 each year to each relative, tax-free. In the Harveys’ case, Nicole’s family gave her money from a trust that was supposed to remain sealed until Nicole, who’s now 33, turned 40. Ultimately, it was Nicole’s father, Oscar Marcos, who decided that giving up a few years of investment gains was a tolerable price to pay for getting a home, cheap. While their parents may be stepping up to the plate with help, some new homebuyers say real estate agents are only making their lives harder. Michael McLane, a 23-year-old educational consultant from Tempe, Ariz., started shopping for a home online in March and attracted a swarm of brokers. “As soon as I put my information in, they were on me like chicken hawks,” says McLane, who wound up needing a new e-mail address for all the spam he got from desperate agents. His answer? Sidestepping them and buying a home directly from a builder. But some buyers say it isn’t always that easy, especially when the relationship with the agent gets further along. They tell stories of agents pushing them to buy from their brokerage’s listings (as opposed to the complete local inventory), while others report sellers’ agents who call several times a day. Once a deal gets to the contract stage, many cash-strapped brokers have been adding “document preparation” fees and other vague surcharges, according to Barry Zigas, director of housing policy for the Consumer Federation of America. Zigas adds that many first-timers are unaware of cozy ties between agents and the lenders, home inspectors and title companies they recommend—relationships that can boost a buyer’s costs. (A spokesperson for the National Association of Realtors says such fees and relationships should always be disclosed to consumers.) Looking for “Move-Up” Buyers Even well-meaning brokers aren’t all thrilled by the influx of first-timers, with some complaining that they offer a toxic mix of cluelessness and arrogance. But others have a deeper economic worry: By focusing on cheaper homes, the thinking goes, the new buyers are pushing average prices down, which in turn discourages “move-up buyers”—growing families and upwardly mobile types who would normally be trading up to something more luxurious. “For the overall market to recover, we’ve got to get people into that move-up market,” says Jim Gillespie, president and chief executive of Coldwell Banker Real Estate. Gillespie is among the throng of real estate honchos pressuring Congress to increase the current tax break from $8,000 to $15,000, extend its duration, and make it available to all buyers, regardless of their income or whether they’ve bought before. The price tag: an estimated $36 billion. Naturally, among the beneficiaries would be people who overpaid and overborrowed for the houses they’re in now. By comparison, this generation of first-time buyers is more cautious. The kids want fixed-rate mortgages they can easily afford, and they aren’t merely looking for a property to flip. A National Association of Realtors survey showed that the average first-timer hopes to stay in the home for 10 years, up from seven at the peak of the boom. Regardless of how long first-timers stay, many economists believe these buyers can tip the first domino and kick-start the rest of the market. As Mark Markelz, a broker in Fairfield, Conn., puts it, “Without first-time buyers, you are going nowhere.” Help for That First Down Payment Until recently, the typical first-time buyer paid less than 5 percent as a down payment; now most banks are asking for 10 or even 20 percent. Here’s how buyers are making up the difference. The Feds Loans insured by the Federal Housing Administration permit down payments as low as 3.5 percent. They make up 18 percent of the market, up from 4 percent in 2006. The catch: Borrowers must pay mortgage insurance, usually 1.75 percent of the loan up front—or $5,250 on a $300,000 loan—plus an annual 0.5 percent premium. Glenn Kelman, chief executive of discount broker Redfin, says some sellers shun FHA-backed offers because they take longer to close. Family money Parents can give up to $52,000 to a couple tax-free (if each parent gives $13,000 to the child and his or her spouse). Most lenders require a “gift letter” explaining that the money does not have to be paid back, says Keith Gumbinger, vice president with HSH Associates, and some require the borrowers to come up with cash of their own. If the family money comes in the form of a loan, the IRS sets minimum rates—currently just above 4 percent on longer-term loans—to ensure it isn’t merely a run around the gifting laws. Tax credit The much ballyhooed $8,000 tax credit is set to expire Nov. 30, though industry groups are pushing to extend or expand it. Typically, the credit can be used for closing costs but not the down payment itself. One often overlooked plus: The government defines a first-time buyer as anyone who hasn’t owned a home in the past three years, so some former owners can qualify. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


4 Growth Stocks for Leaner Times
JOE MILANO, WHO RUNS THET. Rowe Price New America Growth Fund (PRWAX), has guided the portfolio through some treacherous stretches, most recently last fall. The portfolio was down 38% in 2008, slightly worse than the Standard & Poor's 500. However, Milano managed to outperform two-thirds of his peers in Morningstar's large-cap-growth category. The 36-year old took over the fund seven years ago, and his longer-term record is evidence of a steady hand and an ability to pick stocks. For example, the fund's five-year annual return of 4.35% bests the S&P 500 by 3.29 percentage points, and places it in the top 15% of its category. Milano's short-term outlook is bullish, but he is much more cautious longer term. Hence his preference for companies that sell compelling products -- think iPod -- and that gain market share. Barron's interviewed him recently for his view of the market, stocks and other topics. Barron's: With the market having had such a big rally since March, is it harder to find good growth stocks these days? Absolutely, especially when we just spent nearly six months, from last October through March, where you could buy almost anything you wanted and you could pick your price. So the stocks I was buying in March are now up 30%, 40%, 50% in some cases. Of course, it is harder to get excited about Electronic Arts [ERTS] at 21 than when it was at 15, and Henry Schein [HSIC] at 52 than when it was at 35. How much of your portfolio is made up of healthy growth companies versus the ones that are out of favor? Even the ones that are out of favor are growth companies. For example, Monsanto [MON] has had its stock price cut in half because it is out of favor, but it is still very much a growth company. So, in terms of names that are beaten up and out of favor, it's maybe a quarter of the portfolio, which currently has about 95 names. What changes have you made to the portfolio in the past year? The market really started to swing after the Lehman filing in September. Basically, what I did in October/November was to upgrade the quality of the portfolio. I do have a valuation framework. So there were names like Apple [AAPL] and Research in Motion [RIMM] that, prior to the fall, had gotten away from us in terms of valuation, but I had another chance to reload in the fall. The biggest changes in the last 12 months occurred within a very short period of time. During a six- to eight-week period last fall, we were buying beautiful growth names that were down 50%, 60%, 70%. Going forward, I expect it to be a much more selective market as far as what works. What are some of the growth companies that you bought when the market tanked last fall? Priceline.com [PCLN] had gone from 150 into the 40s last fall, and now it is back to around 150. We bought a lot of Priceline.com in the fall. I would put Research in Motion and Apple in that category, as well. I was just a kid in a candy store in the fall, though I didn't think these stocks were going to work within a quarter or two. I was buying all these companies with the notion that they were going to work in 2010, not 2009. So the timing is somewhat surprising, but that's why it is important to highlight the time horizon. It is really important -- because had I focused on the next couple of quarters, there is no way I would have bought any of these companies in the fall. You had a tough year last year, though you did better than many of your peers. What lessons did you take away from that experience? The lesson learned is that these six-standard-deviation events really do happen. In 2008, up until mid-September, the portfolio was doing fine. We have a bias toward very high-quality names, and they had done well up until Lehman Brothers filed for bankruptcy. Until then, it had been a selective market where high-quality companies worked and low-quality ones didn't. But when Lehman filed, all bets were off. So there is one lesson that's very clear to me. What I should have done was sell all my high-quality stuff in the fall. But I wouldn't have done that anyway, in practicality. As I have studied what accounted for why the fund was down 38% last year, that's actually the biggest reason -- that we had a pure-growth portfolio with high-quality names. Basically, the entire underperformance came in October and November; up until that point, the fund was in the top decile. The real big-picture lesson learned is that crazy things really do happen, and you have to respect that. What's your sense of where the economy is going? I am very optimistic in the near term and a little bit more subdued longer term. The reason I'm optimistic for the near term is that [a] move back to normal, even if we don't reach normal, is going to equate to some growth. We've come down so far in every economic metric you can find. On top of that, this inventory destocking turning to restocking is going to matter. Another factor that leaves me optimistic is a sense that most companies have cut so much. Just consider the recent corporate-earnings results. Almost every company has announced the same thing: They've missed on their top line, but they've beaten on their earnings. Why are you more cautious longer term? You have to be realistic, and I try to be realistic. I think we are heading into a multiple-year period of slower growth, characterized by a consumer who's really changing. Consumers don't have the same firepower that they had coming out of the last couple of recessions. We are going to have higher taxes, and we are going to have more regulation. So I look at the longer-term picture and I think, as a growth manager, you are not going to be able to rely on a tailwind from the economy as much as you have in the past. How are you positioning the portfolio in terms of consumer names? It probably isn't all that different from what it was three, six, nine months ago. It might be up modestly, because the group has actually performed reasonably well. But in a world where growth is going to be subdued, the next logical question is, "How do you invest in that environment?" Well, you have to find companies that sell a compelling product, and you have to find companies that are taking market share. That applies to any sector. But in the consumer sector, that means you need to have companies like Apple. Everybody owns Apple because it has a compelling product, the iPhone, and people are investing in Research in Motion because it has a compelling product, the BlackBerry. Then, on the other side, there's market share. Who is taking market share? Right now, it is anybody that speaks to the value-oriented consumers. So Wal-Mart Stores [WMT] is gaining share, as is Carnival [CCL]. Again, it's value, in this case by offering a cheaper way to take a vacation. Let's talk about some of your holdings. Among our health-care holdings, we own several of the dental companies, including Henry Schein, a distributor, and Dentsply [XRAY], which makes consumable dental supplies. Early this summer, Barron's ran a cautious story about the dental distributors ("The Dental Industry Gets a Toothache," June 29), including Henry Schein, arguing that the economic slump was taking a big toll on these companies. Why are you bullish? I think the story made a good point. It is very clear that the very high end of the dental world is being impacted by the economy. For example, dental implants are not really covered by insurance. If you want to get an implant, one tooth costs $3,000, mostly out of pocket. That part of the market has slowed significantly. And the dental-equipment market has also slowed. So, there are parts of that industry that are a little bit more cyclical. But overall, Henry Schein is going to grow its earnings by double-digits this year. Stepping back, the demographics for the dental industry just look really good to me over time. I'm just not that worried about things like insurance reimbursement the way I have to worry about other device companies or pharmaceuticals. What about another health-care name in the portfolio? One is Medco Health Solutions [MHS], a pharmacy-benefits manager, otherwise known as a PBM. What matters to Medco, quite simply, is just the continued shift from branded drugs to generic drugs. So in this health-care debate, you want to own the solutions, not the problems. Medco is going to be viewed as a solution provider, not a problem provider. They are encouraging companies and their employees to use generic drugs where possible, and it is a much better solution. It is much cheaper for everybody involved, including the whole system, and they are the industry leader by far. In the next couple of years, we will see a huge wave of major drug brands coming off patent, opening up opportunities for generic drugs. These PBMs have been growing their earnings by double digits, even before this big wave of patent expirations hits. The prospects of growing earnings 15%, 20% or higher over each of the next three years look pretty good to me. How does Medco's valuation look? It is another name that is not as good as it was a month-and-a-half ago. But the stock, which was in the low-50s recently, trades at 19 times this year's estimate of $2.75 a share and 16 times next year's estimate of $3.25 a share. It's not a dirt-cheap stock. But as a growth manager, presumably you are willing to pay up for that growth if you think it is legitimate. Exactly. The power of growth investing is compounding. So if you can find something that cannot just grow earnings 15% to 20% in one year, but can do it for five straight years -- something Medco will be on track to do, if I'm right for the next three years -- it's that compounding effect that is really attractive. So I'm willing to pay more for something that I think can compound than I am for something that can do it for just one year. What's your next pick? I like Monsanto. The stock has been in the low- to mid-80s, but it is almost down 50% from where it peaked in June of 2008. The short version of the Monsanto story is that, as the developing world continues to grow, it is demanding more protein. And when you eat protein, it requires a lot of grains, such as corn and soybeans, in order to grow the meat you need for protein. But there is only so much fertile land in the world to grow corn and soybeans. So the only way around that is to find seeds that grow corn and soybeans with a much higher yield, and that's what Monsanto's mission in life is -- to come up with technology that takes corn seeds, for example, that enable farmers to grow more per acre than they were able to do last year. What do you like about Monsanto's prospects? The real killer app is drought-resistant seeds they are working on that won't be ready for another three years. But it is so powerful that it is worth talking about. Most areas of the world that need the most in terms of grain -- China and India, in particular -- don't have a lot of fresh water. You need a lot of water to grow crops, obviously. If you could have a seed that was less thirsty and required less water, it would be a killer app in places like that. Maybe I'm looking out a little too far for most readers. Even without that product being developed, Monsanto is worth talking about. But it would really be exciting if they could come up with that seed and generate some pretty good demand in the next three to five years, in places like India and China. What about Monsanto's near-term issues and valuation? They sell a product called Roundup, which is an herbicide. The short version is that Roundup is competing against a generic product. So it is the opposite of Medco's situation. Monsanto has the brand, and the generic version is eating into its profitability. That's why this year and next year, earnings are going to be flat. But after that they can grow once again as Roundup's impact on earnings lessens and Monsanto's seed business grows. Their fiscal year ends in August. So for the year ending later this month, they are going to earn something like $4.40 a share, with the stock in the low-80s. It trades at nearly 19 times, with tremendous upside-growth potential. What about a pick from another sector? Electronic Arts, which I view as a consumer name but which other people view as a technology name, is an interesting story, and I continue to like the stock. Electronic Arts is pretty much hated by everyone. It's a $21 stock. They've got about $8 a share in cash, and it is a turnaround. They lost money last year. They've got new management. They've cut a ton of operating expenses this year, and they have a pretty good slate of games coming this year and next year. So I'm looking at a company that can earn north of $1 a share this year and can ramp it to north of $1.25 a share next year. If you pull the cash out of the stock price, you are paying 12, 13 times for this company on $1 of earnings. You are paying about 10 times next year's earnings, excluding the cash. It's a great consumer-franchise company. It owns consumer properties like Madden football, the FIFA soccer games and the Sims games. So it's a name that maybe isn't as popular as an Apple, but it's attractive. I'm always on the hunt for names that other growth managers shun. Thanks, Joe. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


5 Smart Books: Our Staff's End-of-Summer Picks (Consumer Action)
The summer vacation season is coming to a close. Soon enough the kids will be back at school and you'll be back to the daily grind. Our writers have chosen several books to help you smooth that transition back to the "real world." All of the picks involve employment and careers -- both in real life and fiction. We have a look at finding a job, an exploration of the roots of the Mafia, the workings of the illicit international traffic in antiquities and two thrillers, one about how government-trained operatives are working for private money and another about how a selfless doctor finds his medical training enables him to hold his own against the intelligence community. Fired to Hired Author: Tory Johnson Reviewed by: Aleksandra Todorova, Senior Writer, SmartMoney.com So you’re out of work, up to your ears in job applications, all networked out… and have no job offers whatsoever. Will a career-help book help you land one? Sorry. In this brutal economy, bouncing back from a job loss is, well, a job that only you can do. But if you need a kick in the behind to get you out of the pessimistic, self-pitying mindset that so many job seekers succumb to after months of rejection, Tory Johnson’s "Fired to Hired" can certainly help you go, as Johnson puts it, from “Blah” to “Ah!” As a recruiter (her company Women for Hire helps women find work), Johnson knows job seekers appreciate concrete advice. Happily, her book is light on generalities and heavy on practical tips. Her conversational style makes it an easy read, but what makes this book a page-turner (really!) are the experiences shared by high-profile executives and by the TV personalities with whom Johnson works on ABC’s "Good Morning America." Our favorite: Years ago, when Diane Sawyer walked into a TV station in her hometown of Louisville, Ky., to ask for a job, she was turned away. The reason? She wasn’t "polished enough to be on television news." The Lost Chalice The Epic Hunt for a Priceless Masterpiece Author: Vernon Silver Reviewed by: Sarah Morgan "The Lost Chalice" is the fascinating story of how a band of grave robbers turned up two priceless ancient works of art — and how these ill-gotten masterpieces made their way to Sotheby’s, to private collections and to the Metropolitan Museum of Art. Silver shows how the illicit trade of stolen antiquities implicates the art world's most prestigious institutions. He takes us alongside detectives and reporters who doggedly pursue elusive treasures across decades and continents, chasing leads to Switzerland, Beirut…and Malibu. Millions are made while laws — and irreplaceable artworks — are broken. Silver creates a compelling narrative, but the power these objects exert over collectors from every walk of life leaves an even deeper impression than the lively, twisting plot he unfolds. Consider the Met's Sarpedon krater, created by famed Greek artist Euphronios and featuring a scene of the Trojan War. Even after the Met acquired this rare bowl, which was used to mix wine and water, curator Dietrich von Bothmer couldn't stop speaking in public about details of a “lost chalice," an earlier work he should never have admitted he’d seen. By the time you finish this book, you’ll share a little of his obsession for such astonishing antiquities. Vanished Author: Joseph Finder Reviewed by: Robert J. Hughes Outsourcing has hit the spy racket. Now that the U.S. spends close to 70% of its intelligence budget on private contractors, loyalties lie less with country than with cash. In his new novel "Vanished," Joseph Finder combines this and other real-world scenarios, including those involving jailed financial tycoons and the misdirection of Iraq-bound money, into an original and gripping thriller. The author, an intelligence expert, has crafted several bestselling thrillers set in the corporate arena, including "Power Play." His latest novel kicks off a series featuring Nick Heller, an iconoclastic (aren't they all?) investigator for a Washington, D.C., security company with way too many inside-the-Beltway connections for its own impartial good. The basic arc of the story concerns the kidnapping of Heller's estranged button-down brother, who has been attacked after an outing at a local restaurant with his wife. The Heller brothers have a fraught history, but family ties are stronger than resentments, and Nick tries to find his brother Roger (and the reason for his abduction), uncovering along the way a trail of corporate and government deception. Finder is that rare thriller author who actually writes well. He manages deft characterization, offhand one-liners and a fine sense of place. He also gives us a look at a new, increasingly dangerous world of intelligence-gathering and illuminates cutthroat ambitions in the business world that are at play even among executive assistants. In the best thrillers everything is connected. Pay attention to the details here, because they all fit into the surprising and timely plot of this first-rate effort. The First Family Terror, Extortion, Revenge, Murder, and the Birth of the American Mafia Author: Mike Dash Reviewed by Matthew Heimer, Deputy Editor, SmartMoney Lovers of mobster lore will spot one name that grabs them on the very first page of "The First Family": Corleone. But that’s about as close to "The Godfather" as Mike Dash gets in his engaging account of the Mafia’s unglamorous roots. Corleone — yes, it’s a real place — was the Sicilian hometown of Giuseppe Morello, a.k.a. "The Clutch Hand," who by 1900 had risen to lead New York City’s first tightly organized Mafia "family." The Morello family's octopus reach extended over rackets involving everything from vegetable wholesaling to Harlem real estate, but counterfeiting was its specialty and, ultimately, its downfall. Dash, a British historian and journalist, traces the arc of these exploits with the help of troves of colorful (if not always reliable) testimony from informants, jailbirds and G-men. The story comes across as a sepia-toned, almost quaint version of the classic Mafia feud narrative — one where stilettos and horse carts take the place of machine guns and black sedans. And though the brutality depicted in "The First Family" will hardly come as a surprise to readers familiar with the genre, the period details keep the story fresh. Rules of Vengeance By Christopher Reich Reviewed by: Robert J. Hughes In his previous book, "Rules of Deception," author Christopher Reich introduced readers to the kind of thriller hero that movie audiences responded to in the wildly successful "Bourne" franchise: a man who lives by his wits and outfoxes his more highly-funded adversaries. But Reich's twist is original: His hero, Jonathan Ransom, isn't a trained spy suffering from amnesia and calling up skill sets that had become second nature. No, he is a physician (for Doctors Without Borders, no less) who has a knowledge of anatomy, a strong will to survive, and the ability to think on his feet (and on the run). These skills all came in handy in "Rules of Deception" as Ransom more than held his own against the trained operatives who tried to come between him and his wife who happens to be a spy. In "Rules of Vengeance," Ransom is back with a, well, what the title says. Called to London from Africa where he is tending to the suffering (for a medical symposium and a quick rendezvous with that superspy wife), Ransom finds himself at the middle of a suicide bombing in broad daylight. He is accused of being the mastermind and apprehended by the police. Naturally, they don't believe him. Yet somehow Ransom, in Reich's inventive and fast-moving tale, is able to take matters into his own hands. For Ransom, the stakes are high. He risks the truth about his wife, the truth about the bombing, and the prospect of his own future. Reich has crafted an up-to-the-minute thriller that looks at the desperation for control among supposedly friendly espionage agencies in the U.S. and abroad (particularly Britain, with Russia thrown in for good measure) at a time when intelligence gathering has become so reliant on electronics that the personal touch (foul or fair) is overlooked. The writing is occasionally clumsy (his descriptions of people are run-of-the-mill) but Reich's plotting is superb, filled with surprises up to the last page. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


August 21, 2008 (Thursday): Is Lehman Going Down? Housing Certainly Is
Federal Reserve Checks Lehman’s Credit Once burned, twice shy. A Wall Street Journal story reports today that the Federal Reserve is trying to get down to the bottom of a rumor that Credit Suisse had pulled a line of credit from Lehman Brothers last month. The Fed’s motive: to prevent the type of speculation that ultimately caused the run on Bear Stearns that helped sink the investment firm. Credit Suisse told Fed officials the rumors were false and that it had no intention of pulling Lehman Brothers' line of credit. (For more on this news, click here and here.) Microsoft Teams Up With Seinfeld Not that there’s anything wrong with Microsoft paying Jerry Seinfeld an estimated $10 million to appear in its new ad campaign with company CEO Bill Gates. But the leak of the news to the Wall Street Journal today seems a tacit admission that Apple’s "Mac vs. PC" ads have battered Microsoft’s image. The Seinfeld ads, set to debut September 4, are expected to use a variation of the "Windows, Not Walls" slogan. (For more on this news, click here.) Lehman's Stock in Downward Spiral Lehman Brother's stock has taken a beating in the past quarter, losing 10% or more of its value during 11 days. Over the past 12 months, the stock has plunged 76% —worse than Citigroup, whose shares are down 64 % and even Merrill Lynch, whose stock has lost 68 % of its value. Lehman’s main problems are its significant mortgage exposure — about $61 billion in mortgages and asset-backed securities—and the bank's reluctance to lessen its exposure to the troubled mortgage industry, reports The New York Times. Other banks have taken drastic action to turn things around. Citigroup sold off its German consumer banking division, while Merrill shed a $31 billion portfolio of mortgage-related collateralized debt obligations for 22 cents on the dollar and its stake in Bloomberg L.P. Instead of a small third-quarter profit, analysts now expect Lehman to write-down up to $4 billion and lose $3.30 a share. (For more on this news, click here.) Housing Starts Weaken Not even falling mortgage rates can revive housing starts. In Freddie Mac’s weekly survey, 30-year fixed rate mortgages averaged 6.47% across the country for the week ending today, down from 6.52% a year ago. The 15-year fixed rate averages 6% this week, down from 6.18% in the year-ago period. Still, housing continues to weaken, with starts falling to 965,000 units in July, the lowest pace since March 1991. (For more on this news, click here.) SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Hotel Rewards Programs Are Heating Up (Deal of the Day)
Whether you’re rolling high or budgeting low, getting VIP treatment is a simple feat at most hotels these days. Hospitality chains, travel booking sites and individual properties are desperate to fill rooms amid consumer and business travel cutbacks. They’re appealing to travelers’ dual desires to save and splurge while on vacation with perks like free nights, extra reward points and discounted (or free) access to property amenities, such as spas and restaurants. “It’s been a very traumatic year for hotels,” says Robert Mandelbaum, director of research information services at PKF Consulting, a hospitality research firm that tracks pricing trends. “There’s a drive to enhance the perception of value.” Ideally, without dropping prices outright. Room rates are projected to drop 10.4% this year, a sharp contrast from the average annual increase of 3.4% over the last 20 years, according to PKF. Operators are also hoping that promotional rewards tied to future stays will be enough to lure travelers away from other hotels and into an ongoing relationship, says Bjorn Hanson, a clinical associate professor at New York University’s Tisch Center for Hospitality, Tourism and Sports Management. Not sure you’re getting the best deal available? Just ask if there’s any chance for a better rate or other extras, Hanson says. “Most of the time, that’s all it takes,” he says. On the flip side, guests who encounter fees can get them waived more easily as properties focus on keeping travelers coming back. Here’s a selection of deals available: American Express Travelers who book a hotel stay of two nights with an American Express card at a participating San Francisco hotels get a third night free. Offer good for travel through Sept. 30. Best Western Travelers who buy a Best Western travel card before Aug. 31 receive half a reward credit on partner Southwest Airlines (LUV) for every $100 spent (16 credits amount to a free round-trip ticket). The travel cards can be used to pay for room rates and hotel charges at Best Western. Hotels.com Welcome Rewards regularly offers one free night at any property after travelers have booked (and stayed) 10 nights through the site at properties with a per-night rate of $40 or more. Loews Philadelphia Hotel Guests receive a food and beverage credit based on the length of their stay: $20 for one night, up to $500 for a stay of seven nights or more. “Taste the Season” offer good through Jan. 4, 2010. Marriott Guests who redeem Marriott Rewards points for a two-night stay before Labor Day will receive a third night free. Short on points? They can be purchased points to make up the difference. At the brand’s Courtyard chain, get a $20 Visa (V) gift card when you book a stay of two nights or longer at participating properties before Sept. 13. The Venetian Las Vegas Guests who stay before Dec. 31 will receive $150 in extras, including a $50 slot credit, $25 and $30 at restaurants Dos Caminos and ZINE, and free passes to LAVO nightclub. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Will You Finally Be Able to Sue Your Broker? (On the Street)
In this great litigious nation, you can sue just about anyone – your doctor, your mechanic, even your dog walker. Just not your stockbroker. Angry brokerage customers – and these days, there are plenty of them – have long been forced to take their complaints before a panel of arbitrators, a process, critics say, that is far from consumer-friendly. But that may be changing, and faster than anyone anticipated. Since the financial crisis began, the practice of forcing consumers into mandatory arbitration has come under increasing public and legal scrutiny. Most recently, Bank of America (BAC) announced it would no longer force credit-card customers into arbitration if they had a dispute. The move by banks and others to back away from arbitrations on credit-card conflicts has inspired calls for similar action regarding securities arbitration. Investor advocates have long complained about the process; now the issue has champions on Capitol Hill as well. “Forced arbitration is becoming less and less acceptable to the American public,” said Sen. Russ Feingold (D., Wisc.), a sponsor of the Arbitration Fairness Act, which would ban mandatory arbitration. “The customers of securities brokers deserve to have the option of taking disputes to court if they want to.” Even some in the brokerage industry are starting to waver. Chase, which last month stopped sending new credit-card disputes to arbitrators, is reevaluating its use of arbitration in all areas, including its brokerage businesses, a spokesman for the bank says. The problems with broker mandatory arbitration are nothing new, of course, but the financial crisis has drawn them back into the spotlight. Almost 4,500 complaints against brokers were filed through the end of July – an increase of 140 percent since 2007. For years, consumer advocates have argued that the process unfairly favors companies in part because one person on every three-member panel comes from the securities industry. The panel isn’t required to explain its rationale, either. When the process is over, all a customer gets is a “thumbs up” or a “thumbs down.” Less than half of the cases are decided in favor of the customer. To be fair, compared to other kinds of consumer arbitration, securities arbitration is reasonably well-regarded. It’s run by the Financial Industry Regulatory Authority (FINRA), which is a regulatory body, not a for-profit company with conflicts of interest, as the Minnesota attorney general’s office alleged last month in a suit filed against National Arbitrator Forum, the nation’s largest credit-card arbitrator (the company has since stopped taking new arbitration cases). Securities arbitrators are trained and compensated for their time, and FINRA says arbitration has saved consumers time and money, compared to a long, expensive court case. Even so, advocates say, customers should get to choose. “We’d like to go back to the days when an investor could compel a broker to arbitration, but he also had the choice to go to court,” said Brian Smiley, the president of the Public Investors Arbitration Bar Association. At the very least, he adds, the securities arbitration process should be more transparent and panelists should be impartial. In Washington, the Obama administration has already called for an investigation into the fairness of mandatory securities arbitration as part of an overhaul of the nation’s financial regulation system. Feingold’s bill is in the Senate; its complement, sponsored by Hank Johnson (D., Ga.) is in the House. “If we are really changing the mandatory arbitration process, the securities side must change too,” said Johnson. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


5 Ways Cash for Clunkers Has Changed Car Buying (Consumer Action)
One of the most surprisingly successful government efforts to stimulate the modern auto industry is coming to an end -- and much sooner than expected.  The Car Allowance Rebate System, better known as Cash for Clunkers, is scheduled to end on Monday, Aug. 24 at 8 p.m. After doing “an extensive amount of analysis on the amount of deals already locked and pending in the system,” the government chose to not fund a second extension to the program, the Department of Transportation said. Even as dealers throughout the country voiced concern over the delays in processing – as of Aug. 20, DOT had processed 170,000 applications, or just under 40% of those submitted, and paid $145 million to dealers – they would be hard pressed to deny that the Clunkers program has provided the energy shot the auto industry so desperately needed. What happens next? If you’re planning to buy a new (or used) car soon, you’ll find your experience may be quite different from that before the Cash for Clunkers program began. Here are five changes to expect: 1. Thinner inventories leave shoppers with fewer choices “Inventory is really the key issue for car shoppers, at least in the near term,” says Jessica Caldwell, a senior analyst at automotive data aggregator Edmunds.com who has been tracking auto sales under the Clunkers program. The program’s success depleted dealer inventories faster than anyone anticipated, even as manufacturers ramped up production to meet new demand. Tammy Darvish, vice president of Washington, D.C.-based Darcars Automotive Group, says her dealerships now average a 25-day supply, compared with a typical 50-day supply before the start of the Clunkers program. If you’re in the market for one of the popular models – Ford’s (F) Escape, Focus and F-150 models, Honda’s (HMC) Civic and Toyota’s (TM) Corolla and Camry, according to Edmunds.com – you’ll be better off waiting several months for inventories to build back up. 2. It’s still a seller’s market in the near term… Cash for Clunkers stripped buyers of some of their negotiating power, and they may not get it back in the near future as dealerships remain emptier than usual. “In the short term, at least, higher prices will be holding up because of the inventory issue,” Caldwell says. “But at one point, the market will correct itself and, incentives or not, with a fully-stocked showroom the dealer will have more room for negotiation.” 3. … but expect a return of manufacturer incentives soon When it comes to incentives, consumers are easily spoiled: Once they’re offered a good deal, they start to expect more going forward, says Thilo Koslowski, a vice president and lead automotive analyst at market research firm Gartner, which tracks retail trends. “To get consumers to go to the showroom without that additional incentive will be tough, and it puts the burden on the manufacturer to phase out of the Clunker program,” he says. And that’s where new incentives come in, he adds. 4. Good news for the value of your trade-in... By the time the $3 billion in government rebates is exhausted, the Cash for Clunkers program will have taken nearly 750,000 old cars off the used-car market (clunkers are scrapped, not resold). Add to that a significant decrease in leased vehicles – last summer General Motors and Chrysler pulled away from leasing, though GM recently re-entered the market – and in the near future you’re likely to see fewer used cars to meet consumer demand, says Jeff Bennett, a professor of automotive marketing at Northwood University in Midland, Mich. Already, used-car values have increased markedly over the past three months and will likely continue to do so, Bennett says. That’s particularly good news for car owners who are upside-down on their auto loans, or owe more to the bank than their cars are worth. “The average individual who owed $20,000 on a car that was worth $15,000 may now have a car that’s worth $16,000 or $17,000,” Bennett says. “They’ll be in a much better position to trade in.” 5. ...but a short-term hit on late-model used cars If you have a later-model car, don’t rush to the dealership to trade it in just yet: Chances are it is worth less now than it was before the Clunkers program. With its $3,500 or $4,500 rebates, the Cash for Clunkers program convinced many consumers to buy new cars rather than recent-year models, which depressed prices, says Jack Nerad, executive market analyst at Kelley Blue Book, which compiles new- and used-car pricing data. Values may begin to rebound once the program is over. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Europe Cheers More Hints of a Recovery (Market Update)
Surprising Data from Germany, France Help Lift Euro European stocks advanced as traders welcomed new data supporting the idea that the Old World is slowly pulling out of the recession. Well, Western Europe anyway. In France, traders cheered an unexpected rise in a national manufacturing index. The gauge climbed to a reading of 50.2 in August, up from a July reading of 48.1. The shift was significant because it marked a surprising transition from a sector undergoing contraction to one in the midst of an incremental expansion. In a country marked by labor disputes, this was news everyone could get behind. In Germany, a measure of the services sector climbed to a reading of 54.1 in August, up from 48.1 in July. That jump was also unexpected, and it marked a similar swing: the sector went from shrinking to growing. "Survey data, like PMIs, are really starting to strengthen, particularly in Europe, so people are quite optimistic about where things are headed and that’s a euro positive," said Geoff Kendrick, the director of currency strategy at UBS in London, according to Bloomberg. The upshot was a bump in the value of the euro against the dollar. The currency climbed 0.4% against the greenback and touched $1.4335. IN OTHER NEWS: Caterpillar (CAT) and Navistar International (NAV) are in negotiations to establish a joint venture to sell trucks with China's Jianghuai Automobile, Reuters reported, citing an anonymous source. The new entity would sell heavy trucks in China -- where there is still a market for them. LINK U.S. stock futures leaned positive ahead of new housing data and a speech from Federal Reserve chairman Ben Bernanke. Shortly after 7 a.m., Dow, Nasdaq and S&P 500 futures were trading above fair value. LINK Will the Outlook Improve for the Housing Sector? Over the last few months, the state of the housing sector has looked murky at best. Traders should get a little more clarity when the National Association of Realtors releases its July report on existing home sales at 10 a.m. today. The annual rate of existing home sales has risen in each of the last three months, suggesting that home buyers are beginning to absorb some of the market’s excess inventory. And economists predict that trend will have continued in July. Consensus estimates put the annual rate of existing home sales at 5.00 million last month, up from 4.89 million in June. Still, the glut of homes on the market is huge, and it remains a significant weight on the sector and the broader recovery. Traders will need to see some movement of existing homes to restore their faith in the broader sector. Earlier this week, the Commerce Department released new data suggesting the recent resurgence of new home sales had hit a snag. The annual rates of new home sales and building permits slipped in July. And homebuilders haven’t exactly been setting the roof on fire either. Pulte Homes (PHM) reported disappointing second-quarter results before completing its merger with Centex, and Lennar (LEN) notched a downgrade from Citi at the end of last month. Traders know it’s unrealistic to imagine a housing market that can support the construction of new homes without a market for existing ones, so they’ll be looking to today’s report for a sign that the sector’s speed bump wasn’t a harbinger of another trough to come. As Clunkers Winds Down, Automakers Face New Reality The world's automakers did not sleep well last night. The White House's after-market announcement that it intends to shutter the cash for clunkers program on Monday at 8 p.m. let some of the new air out of the industry’s balding tires. The program, which had offered credits up to $4,500 to customers trading in their old cars for more efficient ones, was a success by most metrics. By Thursday, dealers had submitted more than 457,000 vouchers worth $1.9 billion. Roughly one million new cars were sold last month – the most since August 2008. Ford (F) and General Motors, whose lots had turned stagnant with rusting inventory, were forced to increase production at their factories to meet renewed demand. But the party may be over. The Department of Transportation’s announcement was a poignant reminder to auto executives that, for all of the government’s help, their industry remains deeply troubled. GM still faces some of the steepest hurdles, as it tries to rebuild a streamlined company without the benefit of government subsidies (not including a $50 billion bailout before the clunkers program got underway). Ford is better off, and its turnaround plan, which included a shift toward smaller vehicles, appears to be paying off; the Escape and Focus are now among the most popular cars on the market. Japan continues to dominate the space. Toyota (TM) remains the world’s largest automaker (though its shares are smarting today in Asia): the Corolla is America’s favorite car; the Prius is Japan’s. Still, with the end of the summer driving season approaching and the clunkers program winding down, automakers may be in for a cold fall. IN OTHER NEWS: Starbucks (SBUX), the coffee chain that isn’t quite as ubiquitous as it once was, is lowering prices for the first time on some of its most popular beverages. Over the next few months, Starbucks will charge on average of a nickel to 15 cents less for its 12-ounce lattes and coffees, The New York Times reported. LINK Asian finished mixed. Japan's Nikkei dropped 1.4% as Honda (HMC) sold off and the yen rebounded. Hong Kong's blue-chip index slipped 0.6%. China's Shanghai Composite picked up steam. LINK SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Housing, Fed Drive Stocks to 2009 Highs (Market Update)
News at a Glance Housing Hopes: NAR figures show sales increase. Bernanke Speaks: Recovery to be slow-paced. Apple Core: Thomas Weisel raises estimates. Tired Teenwear: Pacific Sunwear, Wet Seal, Zumiez report losses. The Lowdown Major stock indexes hit their highest levels for the year Friday as investors reacted positively to a stronger housing sales numbers and a key Fed speech that pointed to global stabilization, but a slow recovery. The Dow Jones Industrial Average closed up 156 to 9506, a 1.6% gain for the day. The Nasdaq rose 32 to 2021 and the S&P 500 rose 19 to 1026, both high water marks for 2009. Federal Reserve Chairman Ben Bernanke said the global economy is approaching stability, but that economic recovery "is likely to be relatively slow at first, with unemployment declining only gradually from high levels." He delivered the keynote speech at a Fed retreat in Jackson Hole. Other leading central bankers from across the world also attended, and heard a speech that said the world showed signs of a classic panic last September and October following the collapse of Lehman Brothers. "Since we last met here, the world has been through the most severe financial crisis since the great Depression," he said. "Critical challenges remain" in reaching a return to growth, he said, indicating the Fed will not be raising interest rates soon. Investors were cheered by positive data on July existing-home sales, which rose 7.2%, the fourth monthly consecutive increase, according to the National Association of Realtors. In the latest crop of earnings, teen apparel retailers Pacific Sunwear (PSUN), Wet Seal (WTSLA) and Zumiez (ZUMZ) all reported losses and declining same-store sales. Overseas, European stocks rose and the euro moved higher after a euro-zone measure of purchasing managers' indexes in the manufacturing and services sector hit the 50 mark, indicating output was neither expanding nor contracting in August. In Asia, the Shanghai Composite rose for the second day in a row, gaining 1.7%, though other leading Asian benchmarks fell. Front-month Nymex crude-oil futures hit a fresh high for the year, spurred by stronger global equities markets. The October contract hit $74.25 a barrel -- a 2009 high -- earlier in the session, and as of 4:03 p.m. was trading up 3 cents at $73.89 a barrel. Corporate News J.P. Smuckers (SJM) reported profits of 92 cents a share, up from 77 cents a share last year. Growth was invigorated by profit from Folgers, which it acquired in 2008. A venti caramel macchiato will cost sugar and caffeine fans another 25 cents in some Starbucks (SBUX) locations, as the coffee drinks chain puts in place price hikes it announced in April.  After meeting with Apple (AAPL) executives, Thomas Weisel Partners analysts raised their fiscal 2009 and 2010 earnings estimates, citing "a positive view of Apple's current competitive position and long-term growth outlook." The Economy Federal Reserve Chairman Ben Bernanke addressed the last year of the banking crisis at an annual Fed retreat. Traders reacted positively to hints that the Fed will not adopt a monetary tightening policy in the near-term, and will allow interst rates to stay in place as the emergency stimulus spending program progresses. STORY Existing homes sales rose for the fourth consecutive month, climbing 7.2% in July, a total of 5.24 million units, the National Association of Realtors reported. REPORT Dow Jones Newswires contributed to this report. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Whole Foods-Style Health Care (Ahead of the Curve)
I've written several columns over the last couple months about the attempts by Obama administration and the Democratic-controlled Congress to impose nationalized health-care insurance -- so-called "Obamacare." I've said it's bad for corporate profits, bad for the stock market, bad for the economy -- and even bad for people seeking quality health care. I've never had such a huge volume of reader response to anything I've written here, and never so polarized. To half of you, I'm a messiah. To the other half, I'm a pariah. So I was glad to find support in this perilous position from one of my favorite CEOs, John Mackey, who runs one of my favorite companies: Whole Foods Market (WFMI). Before I get into how Mackey and Whole Foods play into the Obamacare debate, let me just say a few words about this wonderful company. Back in 1980, when Whole Foods started, if anyone had asked the question, "Does the world really need another chain of supermarkets?" the answer would certainly have been "no." But from a single store in Austin, Texas, Whole Foods now has more than 280 stores in the United States, Canada and the United Kingdom. They've done it by catching the new wave of the way people want to eat and shop now. They want all the amenities of a supermarket -- variety, low prices, large inventories. But they want higher-quality food -- healthier, lighter, organic, in an environment that doesn't blare commercialism and dehumanization. Whole Foods' stock has pretty much risen and fallen with the market over the last several years. In the recession, the company has had to pare back growth plans, and the widespread belief that consumers are going to have to scrimp and save for a while has led investors to question whether a "high-end" grocery store can thrive. I think the stock is cheap. The recession is over, and Whole Foods will surely start expanding again. And it's a mistake to think of it as a "high-end" retailer. One of the things I love about it is that its prices are so competitive -- especially adjusted for the higher-quality level, on average. As confidence in the economy and the U.S. consumer comes back, I think Whole Foods could have a nice run. But back to the matter of Obamacare. Another reason Whole Foods became a success is the way CEO Mackey runs the business. Here, too, Whole Foods caught a new wave. Whole Foods has always had a philosophy of treating its employees as intelligent human beings, empowering them to made decisions not normally delegated to people who might otherwise be seen as unskilled labor, and giving them significant incentives to improve their performance and productivity. Part of his formula for treating employees well has been the company's approach to health-care benefits. He talked about it in a commentary in the Wall Street Journal last week. Here's the essence of it: Whole Foods Market pays 100% of the premiums for all our team members …for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness. And then later on: Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Do you see the essence of what he has done? First, by offering high-deductible insurance, he has returned the whole concept of health insurance back to what it should have been all along -- a safety net against the really bad health catastrophes. Second, by giving employees the funding to pay for their own care when they just get the sniffles, he returns health care to the discipline that all other markets for any other kind of service have to face -- consumers making careful decisions about how to spend their own money. Mackey went on in his commentary to criticize Obamacare as the very opposite of his own plan's aspirations. It emphasizes low-deductible insurance, and positions health care as a "right," like the right to free speech, rather than as something that people have to earn and make careful decisions about. Government would end up making the decisions -- and that's just a polite way to say "rationing." If Whole Foods had to switch over to an Obamacare-style approach, its costs of doing business would rise. And his employees would not be pleased, either, because under his enlightened approach to management he's already crafted his company's health benefits to reflect his employees' stated wishes. As he puts it, "Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction." Labor is the largest cost for most companies. Benefits are the fastest-growing component of labor costs. And health-care insurance is the fastest-growing component of benefits. If Obamacare is enacted, labor costs are only going to go higher -- which means that corporate profits will have to go lower, unless companies pass the costs on to consumers. Any company CEO -- and all the more so, people who run small businesses where labor costs are high and profit margins are already slim -- needs to be concerned about this. But Mackey is coming from another place, as well. He's pointing out the very good news that corporate profits and providing generous health benefits don't need to be at odds. He's already found the way -- he just needs to keep government from messing it up for him and his workers. And yet Mackey has been demonized for expressing these views in print. Left-leaning bloggers have tried to organize a boycott of Whole Foods to punish Mackey. One prominent blogger even made the absurd statement that "very few businesses go as far as Whole Foods in marketing their products specifically as part of a quasi-politicized left-wing lifestyle and few CEOs go as far as Mackey in public advocacy of political views that are only tangentially related to his business." Oh, come on. There's nothing left-wing about eating healthy. And health-care costs and employee satisfaction are certainly not tangential concerns for a corporate CEO. But do you see now why I keep saying that today's political environment is such a threat to business? If a CEO can't reasonably disagree with President Obama and propose his own worthy alternatives, his political opponents retaliate by trying to destroy his company. How come they think that health insurance is a right, but free speech is not? And I think this has a lot to do with why stocks have rallied 50% from the March lows -- because that threat hasn't materialized as strongly as was initially feared. Think about it. We have a popular president. A Congress strongly dominated by Democrats. And in health care, a popular issue. And yet it seems they can't get it done. If guys like John Mackey can keep taking the heat, and keep fighting the good fight, maybe this economy and this stock market have a chance after all. SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


13 Small-Cap Funds on a Tear (Screens)
The upcoming Labor Day weekend may mark the end of summer to some, but for investors it will mark the end of a nine-month period filled with incredible volatility, two lackluster earnings season and despite it all, incredible gains. The S&P 500, for example, is up 13.5% year to date. But one of the biggest winners thus far this year are small-cap stocks. According to Morningstar, the average small-cap fund is up 19.3% this year through Thursday. In the fund world, the only groups outpacing small caps are their slightly larger midcap brethren and technology and energy sector funds. We've spent a lot of time this year writing about the risks and rewards of investing in small company stock funds. This week the SmartMoney.com fund screen focuses on the 1,667 small-cap funds and share classes in our screener tool. We trimmed that group by searching for funds that had above average returns during the trailing three- and five-year time periods. The funds also had to be up by more than the S&P 500 this year. In addition, we favored funds with reasonable fees. That left us with 13 offerings. Many advisors are adding to their small-cap positions for several reasons. Historically, small caps have performed well coming out of economic downturns. Investors are also regaining an appetite for risk after sitting on the sidelines for much of 2008. And there is also some opportunistic buying going on: The average small-cap fund dropped 37.2% during 2008, making plenty of good shares look cheap. Larry Rosenthal, president of Financial Planning Services in Manassas, Va., doesn't think we will see the Dow skyrocket back up to 1440. But, he says, two to four years down the road, investors will look back and say what a great buying opportunity stocks were at today's prices. While you may want to start adding to your small-cap positions, don't get carried away. The third-quarter earnings season, which is a critical one for measuring consumer spending, is on the horizon and poor results could mean that run-up will cool off. Small caps usually account for between 5% and 20% of a diversified portfolio (depending on age and risk tolerance). Rosenthal has advised his clients to dollar-cost average into the sector in order to build a position over time instead of jumping in with both feet. "I definitely feel right now everything is rising and falling together," he says. If improved consumer spending isn't evident in the third quarter earnings reports, he believes stocks could pull back. So which funds are among the biggest gainers this year? Funds from Royce, FBR, Gabelli and TCW are making return appearances on this screen since the last time we did it in April. The Criteria: The small-cap funds on the table below are open to new money, require a minimum investment under $5,000 and charge less than a 1.5% annual expense ratio. In addition, they are beating the year-to-date return of the S&P 500 and feature performance track records that put them in the top 10% of their category during the trailing three- and five-year time periods. As usual, we did not allow load funds. Small-Cap Funds on a Run Name TICKERTickerAssets(In Millions)YTDReturn(%)3-YearAverageAnnualReturn(%)5-YearAverageAnnualReturn(%)ExpenseRatio(%) Source: Lipper Note: Data as of Aug. 20, 2009 American Century Small Cap Value ASVIXASVIX612.322.77-1.574.741.25 CG Capital Markets Small Cap Value TSVUXTSVUX311.322.54-2.514.970.99 Dreyfus Small Company Value DSCVXDSCVX169.046.677.038.131.23 FBR Focus FBRVXFBRVX945.024.22-0.525.831.42 FMI Common Stock FMIMXFMIMX720.226.703.267.611.22 Gabelli Small Cap Growth GABSXGABSX1014.420.120.346.051.43 Janus Perkins Small Cap Value JSCVXJSCVX487.822.432.635.931.03 Royce Heritage RGFAXRGFAX134.533.33-1.666.141.50 Royce Low-Priced Stock RYLPXRYLPX2203.430.79-1.944.871.49 Royce Premier RYPRXRYPRX3238.020.100.997.201.13 Royce 100 RYOHXRYOHX110.825.131.368.231.50 Royce Value RYVFXRYVFX991.928.14-0.617.391.45 TCW Small cap Growth TGSCXTGSCX133.843.735.009.171.20 Recipe Fund Type = Small Cap Annualized 3-Year Return (%) = Display Only Rank in Classification (%) (3 year performance) <= 10 Annualized 5-Year Return (%) = Display Only Rank in Classification (%) (5 year performance) <= 10 Expense Ratio <= 1.5% Load Fund (type) = No Load Minimum Initial Investment <= $5,000 Open to New Investors = Yes Total Net Assets ($ millions) >= 50 Year-to-Date Return (%) = Display Only SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Bernanke and Housing Give ETFs a Boost (Daily ETF Wrap-Up)
Market Wrap-Up Major indexes hit year-to-date highs Friday afternoon as investors reacted positively to stronger housing sales data and a key Fed speech that pointed to global stabilization. Dedicated short-bias exchange traded funds using varying degrees of leveraged led the losers for the week, moving in the opposite direction to the market. The Dow Jones Industrial Average climbed 156 points to close at 9506, a 1.7% gain, after earlier peaking at 9511. The Nasdaq was up 32 at 2021 and the S&P 500 rose 19 to 1026. Investors were cheered by positive data on July existing-home sales, which rose 7.2%, the fourth monthly consecutive increase, according to the National Association of Realtors. During a keynote speech in Jackson Hole, Wyo., earlier in the day, Federal Reserve Chairman Ben Bernanke said the global economy is approaching stability, but that economic recovery "is likely to be relatively slow at first, with unemployment declining only gradually from high levels." "Since we last met here, the world has been through the most severe financial crisis since the great Depression," he said. "Critical challenges remain" in reaching a return to growth, he said, indicating the Fed will not be raising interest rates soon. Oil hit $74.25 a barrel -- a 2009 high -- in the Friday session. For a detailed rundown on Friday’s trading session see our market story. Winners The energy-weighted Market Vectors Russia fund (RSX) climbed 9.1% for the week on surging energy prices, while the United States Oil fund (USO) rose 8.2%. The SPDR S&P Homebuilders fund (XHB) climbed 6.2% on positive housing data. Losers The United States Natural Gas fund (UNG) fell 9.1% for the week after it stopped issuing new shares and started trading more like a closed-end fund. The Short S&P 500 ProShares fund (SH) shed 4.1% for the week. This Week’s Industry News Earnings Note Launching Pad Global X Funds launches its FTSE Nordic 30 fund (GXF) Wednesday, offering a direct play on an index of major Scandinavian companies. It is the first ETF for Nordic names in the United States. The fund will charge an expense ratio of 0.5%. ProFunds Group on Thursday launched a short-exposure ETF designed to replicate the inverse performance of long-term U.S. Treasury bonds. The ProShares Short 20+ Year Treasury (TBF) seeks to provide the opposite results of the Barclays Capital 20+ Year U.S. Treasury Index. The fund has an expense ratio of 0.95%. Next Week’s Notebook Earnings and Conference Calls MondayAccuray, Noah Education Holding, Winn-Dixie Stores TuesdayAmerican Woodmark, Bank Of Montreal, Big Lots, Blue Coat Systems, Borders Group, Burger King, Burlington Coat Factory, Casual Male Retail Group, Chico's FAS, Dycom Industries, Hain Celestial Group, International Rectifier, Medtronic, Myriad Genetics, Sanderson Farms, Sbarro, Staples, TTI Telecom, Versant Wednesday Angeion, Canadian Imperial Bank of Commerce, Charming Shoppes, China National Offshore Oil Corporation, Coldwater Creek, Crossroads, DSW, eLong, Guangshen Railway, Guess, Jo-Ann Stores, Michaels Stores, Sigma Designs, Swiss Life, Tivo, Williams-Sonoma Thursday Bebe Stores, China Telecom, Conn's, Cost Plus, Dollar Financial, Energy Conversion Devices, Fred's, Genesco, Gerber Scientific, LaBarge, Magma Design Automation, Marvell Technology Group, Medicult, National Bank of Canada, Novell, Shoe Carnival, Solera Holdings, Titan Cement, Toll Brothers, Toronto Dominion Bank, Wind River Systems FridayBank of Nova Scotia, China Unicom, Tiffany, Workstream Economic Data MondayNo major economic indicators. Tuesday7:45 a.m. ICSC-Goldman Store Sales8:55 a.m. Redbook9:00 a.m. S&P Case-Shiller Housing Price Index10:00 a.m. Consumer Confidence10:00 a.m. State Street Investor Confidence Index Wednesday7:00 a.m. MBA Purchase Applications8:30 a.m. Durable Goods Orders10:00 a.m. New Home Sales10:30 a.m. EIA Petroleum Status Report Thursday8:30 a.m. GDP8:30 a.m. Jobless Claims8:30 a.m. Corporate Profits10:30 a.m. EIA Natural Gas Report Friday8:30 a.m. Personal Income and Outlays9:55 a.m. Consumer Sentiment SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Financial Stocks, ETFs Gain in Light Trading Day (Daily ETF Wrap-Up)
Market Wrap-Up Positive economic data from the Philadelphia Fed outweighed mixed retail earnings results and helped the major indexes gain ground Thursday. Yet, trading was light and the low trading volumes left many exchange-traded funds nearly flat. The Dow Jones Industrial Average rose 70 points higher to close at 9349. The Nasdaq picked up 20 to 1989 and the S&P 500 was up 11 at 1007. The Philadelphia Fed survey of manufacturing in the Mid-Atlantic region showed an unexpected turn to the positive for the month, swinging to 4.2 from -7.5 in July. Any reading over zero indicates a pickup in manufacturing activity. Financial stocks also added to market gains, as American International Group (AIG), MBIA (MBA) and E*Trade Financial Group (ETFC) all charged higher. For a detailed rundown on Thursday’s trading session see our market story. Winners The rally in the financial sector helped push the SPDR KBW Bank fund (KBE) 2.7% higher. Losers The United States Natural Gas fund (UNG) shed 4.3% as gas inventories rose, according to the Department of Energy. The iShares S&P U.S. Preferred Stock Index fund (PFF) shed 1.9% as corporate debt was shunned in favor of stocks. Thursday’s Industry Headlines Launching Pad ProFunds Group on Thursday launched a short-exposure exchange traded fund designed to replicate the inverse performance of long-term U.S. treasury bonds. The ProShares Short 20+ Year Treasury (TBF) seeks to provide the opposite results of the Barclays Capital 20+ Year U.S. Treasury Index. The fund has an expense ratio of 0.95%. Friday’s Notebook Earnings and Conference Calls AnnTaylor Stores, J. M. Smucker, Solar Holding Economic Data 10:00 a.m. Existing Home Sales SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.


Tishman Faces Office Downturn
A Tishman Speyer-led partnership is in default on debt tied to a large office portfolio in the Washington area. Tishman itself isn't at risk.


Stockbridge Weighs Deutsche Fund
Stockbridge is weighing a bid to take control of a Deutsche Bank real-estate fund.


How Far Up Will Dubai Tower Finally Top Out?
Emaar Properties isn't saying when the nearly completed Burj Dubai, already the world's tallest skyscraper, will open.


Empty Bank Branches Add To Supply In Retail Real Estate
In Chicago roughly 75% of Washington Mutual's bank branches have gone dark. It's a stark harbinger of what looms ahead for recession-battered retail real estate.


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