Free Stock Market Investing Tips

The US stock market has a long history dotted with a lot of ups and downs. The stock market is made up of two exchanges - the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations system (NASDAQ).
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These funds invest in real estate investment trusts (REITs) which are firms investing in real estate (equity) or mortgages on real estate (debt) or a combination of the two. A fund focused largely on equity would be valued on the property invested in and the rents received from the property. The valuation of property is not tied to interest rates. Funds focused on the debt side of real estate are valued based upon the ability of the financed to pay their mortgages. Interest rates can have a big impact on these REITs. As indexes, both types of funds seek to mimic the performance of the real estate market.

Much has been in the news lately about the American housing market slump and mortgage crunch. It would be easy to think that in today’s market, it would not be wise to invest in a real estate index fund. But the opposite is probably true. One of the most popular real estate index funds, Dow Jones U.S. Real Estate Index Fund (IYR) is down from its 52 week high of 94.99 at 72.65 on August 31, 2007. This shows a rebound from the 52 week low at 66 after the news about mortgage companies going bankrupt broke. IYR is still a bargain at the current price. It looks like the real estate bubble won’t burst any further for this well-established REIT.

The best known mortgage REIT, Annaly Mortgage Management (NLY), is similarly off its 52 week high of a little over 16 at the current price of 14.10 and is similarly making a rebound. This is another investment that is probably bargain priced. After all, mortgages don’t go away once the mortgage house goes under, but are bought and sold by different firms. When the fed meets in September to lower interest rates as speculation leads us to believe it will, that will only drive the stock price of funds like NLY up.

In the TSE (Tokyo Stock Exchange), the “Nikkei 225″ is a market index which is the most important in the Asian stocks. Since 1971, this stock index has been calculated every day by the “Nihon Keizai Shimbun (Nikkei)” newspaper. Moreover, and besides being reviewed once every year, the Nikkei’s unit is the Yen.

After its introduction to the OSE (Osaka Securities Exchange), CME (Chicago Mercantile Exchange, and the SGX (Singapore Exchange, the Nikkei 225 has become an international ingredient in the stock exchange. One of its other major indexes is the “Topix”.

The highest average ever recorded of the Nikkei 225 in the 20^th century was in 1989 (reaching 38,957.44 before closing at 38,915.87). In the 21^st century, it reached right above 18.300 points.

To weight stock by the Nikkei 225, they are given equal weighting based on 50 yen per share. Such weighting is also influenced by removals, splits and addition of constituents. Since it reflects the overall market, there is no final weighting for the Nikkei 225.Review results of the Nikkei 225 are published every September with changes applied early October. Such changes are usually announced in the Japanese Nikkei newspaper plus appearing on the NNI. Whenever a stock is being replaced, the divisor is, afterwards, changed to make sure that there is a smooth transition of the stock index.

The top performing mutual funds over the last five years are dominated by Latin American funds. Of the 13 funds reporting a greater than 40% return after five years, five are mutual funds emphasizing Latin America. More impressively, the top four returns after five years are all Latin American funds with BlackRock Latin America (MDLTX) leading the pack with a whopping return of 49.4%. That means a $1,000 investment in MDLTX 5 years ago would be worth $7443.08 today. Some of the performance of these funds over the last five years can be attributed to the rise of commodity and oil prices. Much oil, minerals, and agricultural products are exported from the region. Another reason behind the Latin American fund surge is many governments have adopted sound macroeconomic policies, especially in Brazil, Mexico, and Chile where greater control over interest rates, inflation, and government spending has come about during the time period. Also, national debts have been reduced. The future does look bright for Latin American funds, but caution must be taken. I’ll elaborate on why in the last paragraph.

There is a different picture if we look at the best performing funds over a ten year period. No single focus area dominates as Latin America does over a five year period but there are several focusing on small cap and ultra-small cap or micro-cap companies. The best return rate is 21.5% for Wasatch Micro Cap (WMICX) which would make that $1000 investment worth $7018.83. The fund is very volatile, at one time gaining 30.5% over a month (July 1998) and another time losing 24.7% in a month (August 1998). However, the 5 year rate of return is 20%, and the one year rate is 20.5%, showing that for this fund, 20% or better can be expected. Averaging rates over 20% for a period of ten years paints an excellent track record for the fund’s management.

The ten year rate of return paints a different picture of the Latin American funds that dominate the five year period. MDLTX, mentioned above, has a return rate of 15.5% over ten years so something drastic happened between 5 and 10 years ago and the fund has rebounded in the last five years. If considering a Latin American fund, do the research on what companies are focused on. There are still some unstable countries in the southern hemisphere with oil-rich OPEC member Venezuela providing a glaring example. Venezuela’s government has been seizing assets of private companies recently.