WSJ: What the ‘January Effect’ Means. It’s Not the Same as the ‘January Barometer.’

By SIMON CONSTABLE

During the first month of the year you may hear stock traders talk about the “January effect” and the “January barometer.” They sound similar, but they’re actually different.

The barometer tells you that if stocks are up in January, then the rest of the year should be good for stocks, says Sam Stovall, U.S. equity strategist at S&P Capital IQ. It’s a rule of thumb that has proved remarkably accurate. Since 1945, in years when the market was up in January, 84% of the time it continued rallying through the end of the year, with an average additional gain of 11.5%, says Mr. Stovall. See original story here.

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Barron's: Time to Buy the Commodities Bear

By SIMON CONSTABLE

The collapse in commodities prices since summer has some investors wondering whether the complex has any place in their portfolios. The answer depends on the time horizon.

The Thomson Reuters/Jefferies–CRB Index, which tracks a basket of commodities, has fallen about 22% since June 20, according to data from SIX Financial Information. U.S. oil prices are off 46% over the same period, while gold has slid about 7%, on top of a substantial retreat over the prior 18 months. See original story here.

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WSJ: What Is Window Dressing?

By SIMON CONSTABLE

To most people the holiday season means decorations at home and at work, but it also
can mean “window dressing” in your mutual fund.

This somewhat disparaging term is used to describe the practice of a mutual fund
making cosmetic changes to its portfolio just before the end of each calendar quarter.
It’s done because funds publish their exact holdings of securities four times a year
based on what they own at the end of each quarter. See original story here.

WSJ: Will the "Presidential Cycle" Boost Stocks in 2015?

By SIMON CONSTABLE

As President Obama gears up for his penultimate year in office, it could be time to cast
a ballot for stocks.

That suggestion has nothing to do with the administration’s policies or whether
investors agree with them. Rather, it’s about history.

Specifically, we’re talking about the so-called presidential stock cycle, which suggests
that stocks do better on average in the president’s third year in office (regardless of
whether it is a first or second term) than in any other year. The pattern has held with
remarkable consistency. See original story here.

Barron's: How USAA Finds Stable Growth

By SIMON CONSTABLE

When you look at the $1.2 billion USAA World Growth fund. you Might think you’re seeing double. First, there are two portfolio managers, David R. Mannheim and Roger Morley. They work for USAA’s subadvisor, MFS Investment Management, which is where the second part of the double vision kicks in. The pair also run the MFS Global Equity fund (ticker: MWEFX), which is “modeled after,” or is substantially the same as, the USAA fund (USAWX). USAA’s World Growth has expenses of 1.19%, versus 1.29% for the MFS version. See original story here. 

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WSJ: Five Gifts for the Financially Savvy

By SIMON CONSTABLE

This is the time of year when many of us buy loved ones a special gift. This is the fourth year I’ve compiled a list of suggestions, all with a financial theme. Think of them as reminders that we all need to be savvy about money. As usual, there is something for budgets small or large. Read more here.

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WSJ: How Important is "Active Share" for Fund Managers?

By SIMON CONSTABLE

Just how active is the manager of your actively managed mutual fund? And how much
does it matter?

A debate is on over the concept of “active share”—a measure of how much a portfolio’s
stocks differ from those in its benchmark. The issue is whether it is a valid way to
evaluate managers.

It all started in a 2006 working paper and 2009 article by Martijn Cremers and Antti
Petajisto, then professors at the Yale School of Management. They suggested ranking
funds from zero to 100% based on how much their holdings diverge from a benchmark
index. An active share of 60%, for example, means that 40% of the fund’s stocks merely
match what is in an index—a mix that would make the fund’s manager a “closet indexer,” the professors wrote. Read more here.