THREAD IS CLOSED!!! Ask Rande 6000+ USE NEW THREAD

Top 32. May 13, 2000 6:59 AM

» BillR_5 - ETF's

Can we regroup and analyze the differences?

ETF's require a commission to buy (but could be as low as $8.00 my man!)

ETF's also have an expense ratio deducted. (?)

Vanguard Index Funds require written notice to buy or sell. (Arghhh!)

What tax advantages to ETF's, other than in the case of liquidating and creating gains?

-- posted by BillR_5

Top 33. May 13, 2000 8:37 AM

» SKT - Stock Quote information

During the day I do not have time to check my portfolio page or stock quote page I have setup withan ISP. I am looking for a service provider who can send stock quotes right to my alpha pager or cell phone that has SMS? Know of any good providers?

-- posted by SKT

Top 34. May 13, 2000 8:47 AM

» JenL_2 - Vanguard Index Funds vs "Vipers"

Bill - You said:

Vanguard Index Funds require written notice to buy or sell. (Arghhh!)

I have Vanguard index funds in a 401(k) plan and can buy and sell with a phone call or online. The trade is closed same day. But in our particular 401(k) plan we can only make 2 trades a month. But I've heard of other Vanguard 401(k) plans that offer unlimited trading of Vanguard funds.

Maybe when Vanguard offers these "Vipers" they will go back to restricting trading in the index funds? Makes sense to offer different investment vehicles to satisfy both the DCA - Buy & Holders, and the short term traders.

Hmmm - So the "Vipers" will be trading like a stock right? So we should be able to buy them through Schwab like any other stock. Whereas now Vanguard index funds purchased through Schwab require an additional fee. Or am I missing something?.....Jen

-- posted by JenL_2

Top 35. May 13, 2000 9:04 AM

» Slick - 50 Basis Pts. Raise

Everywhere you turn , all pundits are now saying 50 basis pts are a foregone conclusion for the FOMC Tuesday. Why is it , that all of the sudden, the gradualists ( Greenspan ) is going to modify his basic gameplan? The last time he raised a 1/2 pt(I believe) was in 95 which caused a recession. Same thing in 91, with the same result.

So, Rande, what's your take here?

Thanks---Slick

-- posted by Slick

Top 36. May 13, 2000 9:09 AM

» Rande - Vanguard requires written notice only for transfers into or out

Vanguard requires written notice only for transfers into or out of index funds within the fund family. Phone redemption is always available if you want to sell and just say, "send me the check." Of course, you'll get that day's closing price. With ETFs, you get the price at the time of sale/purchase. Not a big deal, since it doesn't get much more short-term than intraday, but still provides more control. Yes, you pay a commission when buying/selling ETFs, but the ongoing expenses are lower than index mutual funds, even with Vanguard. Since mutual funds are required to pass through all realized gains to shareholders in the form of annual distributions, mass redemptions in an open-end index fund could trigger a bad tax result if the fund is forced to sell appreciated securities to meet redemptions (taxable distributons in a decling share price environment -- not a problem for those who bought on day-one, but not good for those who came later and bought into a potential tax liability they never got the benefit of). No such problem with ETFs, since they are bought and sold as a stock. The only taxable distributions associated with ETFs should be in the form of regular dividends and taxable gains resulting from sale of stocks that are no longer on the index. Would expect such distributions to be a little higher for the W5000 Vipers than the S&P equivalent, but still negligible. Negligible distributions are the reason another argument in favor of the index mutual funds -- automatic reinvestment of distributions -- isn't that big of a deal. Yes, with an index fund you get the advantage of automatic reinvestment and compound growth (one of Brinker's "seven steps"), but since one of the reasons you would buy index funds in the first place is their low distributions, the issue is somewhat moot. With index funds, the compound growth is largely the result of the fact that turnover is small and the appreciation is tax-deferred -- classic buy-and-hold. Again, for most investors the differences are minor. But, if you have a significant amount to invest and don't like the notion of buying into a potential tax liability, then the ETFs make a lot of sense -- especially given their lower expenses and greater ongoing tax efficiency (as minor as it might be), despite the initial commission. If you're into a DCA program of regular small investments, I'd stick with the index fund. And I wouldn't jump to sell existing fund shares to get into the ETFs if taxes would be incurred. It's just another option to consider in the broad scheme and that's a good thing for investors.

-- posted by Rande

Top 37. May 13, 2000 9:16 AM

» Rande - Slick,

Slick,

My take is that 50bp is likely. Yes, the actual inflation news is far from worrisome (to say the least), but the job market remains tight and wage and benefits are definitely on the rise. This is something that gives great concern to Greenspan (but, go ahead and cash your paycheck anyway). My HOPE (and it is only that) is that the Fed does raise rates by 50bp AND does a shift to neutral bias. Probably won't happen, even though it should. Actually, what "should" happen is NOTHING, in my opinion. They've gone far enough already. But, dealing with reality, the Fed will do what the Fed will do, and they are going to raise rates one way or the other. If I was going to bet, I'd put the money on 50bp and no shift in bias. Hope does spring eternal, however, and if they do the double-deed and shift to neutral it would be a good thing.

-- posted by Rande

Top 38. May 13, 2000 9:20 AM

» Kirk - Variable Loans

Rande, do you have any idea on how many people have variable rate loans? I figure my loan payment increase at present rates next fall will be the equivalent of 4 HiFi VCRs from CostCo each month or a new set of tires for a standard car again - EVERY MONTH! That is a ton of lost money that could otherwise go to buying goods and services rather than servicing loans. I've budgeted for this and have saved more than this for many years by being variable, but you have to figure people will be have a ton less money to spend once their variable rate loans adjust. Credit cards are already pretty steep.... so not sure how much it matters there.

Another impact. My Tax write off will go up by about $6000 a year so the Federal Government will have $2000 or so less to spend. Could be the end to budget surpluses if others are in a similar situation. I wonder how this will effect rates? First look it would seem to increase demand for loans as the Fed would not be paying off debt as fast, if at all.

-- posted by Kirk

Top 39. May 13, 2000 9:28 AM

» Rande - SKT,

SKT,

You know what's coming first -- WHY do you need stock quotes delivered to your pager or cell phone? Okay, maybe you're a daytrader. If so, I'll spare you the sermon, you've heard it before. I'm not familiar with any particular providers (getting this stuff via the PC is more than enough for me and I'm just glad I don't have CNBC during the day), but here's what I'd do -- start with your local cell provider or phone company to see what services they provide. The long-distance folks (Sprint and "beVocal" for example, etc.) also have such services available. Most of the popular financial mags have ads for wireless "real-time quote" providers too. Good luck, but I still think you'ld be better off without it. Somewhere between the extremes of doing the "Rip Van Winkle" routine vs. having a quotron hard-wired to your medulla oblongata lies reason. Real-time stock quotes, anywhere or anytime, is not my version of it.

-- posted by Rande

Top 40. May 13, 2000 9:31 AM

» KLR - VIPERS

I have a considerable amount of VIGRX, one of the funds for which there will be a corresponding VIPER. Since the NAV of fund shares is determined only once a day at closing it seems to me that there will always be some slight discrepancy between the NAV of the fund shares and the closing price of the corresponding VIPER shares since they are not interchangeable. Also, I have seen nothing re: interchangeability of fund shares for VIPERs. Will I be able to covert VIGRX shares for VIPERs and do I want to? If not, I assume that any sale of VIGRX and simultaneous purchase of corresponding VIPERs would be a non-taxable event.

-- posted by KLR