We're seeing more of the 2010 year-end data points coming in, and in the category of highest-yielding municipal bond fund, there's a bit of a surprise: Pioneer High Income Municipal Fund led all its peers by returning 7.14 percent last year. Why is that a surprise? Because the Pioneer fund doesn't own any general-obligation bonds issued by state and local governments, a mainstay of municipal-bond funds. Instead, the fund turned its focus toward revenue bonds from non-governmental agencies, such as hospitals and airports.
State and local governments have been facing revenue shortfalls lately, with their tax bases eroding. Those deficits have pushed a lot of investors out of the muni market, and resulted in an overall loss of 4.5 percent for municipal bonds in the fourth quarter of 2010. Hence, you get results like a municipal bond fund that outperforms because it doesn't act like a municipal bond fund.
For the record, the top five muni-bond funds for 2010, according to Zacks Investment Research:
Pioneer High Income Municipal A
Invesco Van Kampen High Yield Municipal A
Aim High Income Municipal A
Waddell & Reed Municipal High Income A
Black Rock High Yield Municipal A
Tuesday, January 11, 2011
Monday, January 10, 2011
The Jobs News
The headline story on Friday was very positive: The unemployment rate dropped from 9.8 percent to 9.4 percent, putting it at its lowest point since May 2009. The private sector added 110,000 jobs in December, meaning that there were private-sector jobs added every single month in 2010- the first time we can say that since 2006. If you leave aside the hiring of temporary census workers last spring, December added the most jobs of any month since January, and the third-most since 2007.
So that's the good news. The bad news is that the biggest reason the unemployment rate fell, a larger factor than the job growth itself, was the departure of 260,000 Americans from the labor force. That's the biggest such group to do so since July.
What may happen, as the economy gains strength, is that some of these discouraged workers will try to re-enter the workforce - and paradoxically, a stronger economy may be accompanied by a rise in the unemployment rate. It probably makes more sense to look more closely at the raw number of jobs created than the overall unemployment rate.
So that's the good news. The bad news is that the biggest reason the unemployment rate fell, a larger factor than the job growth itself, was the departure of 260,000 Americans from the labor force. That's the biggest such group to do so since July.
What may happen, as the economy gains strength, is that some of these discouraged workers will try to re-enter the workforce - and paradoxically, a stronger economy may be accompanied by a rise in the unemployment rate. It probably makes more sense to look more closely at the raw number of jobs created than the overall unemployment rate.
Friday, January 7, 2011
Bills, Bills, Bills
Did the Christmas season leave you with a whole bunch of credit-card bills? At least you're better off than poor Patrice Perry, of Philadelphia, who got a bill for $286,651,237 from her credit-card issuer, Capital One. Not only did Capital One ask her to pay that ridiculous amount of money, but they called her house repeatedly asking for it, and harassed her family and co-workers in the process.
The situation started in May 2009, when Capital One sent Perry a bill for $4,807 in charges she hadn't incurred. After that, the amount of money she supposedly owed fluctuated, peaking at $286 million. "It went down and up and down and up," said Perry's lawyer. "The only thing I can associate that with is that they were trying to confuse my client."
Capital One has finally admitted that the charges were a mistake. But Perry is not satisfied with that. She has sued Capital One for - appropriately enough - $286,651,237.
The situation started in May 2009, when Capital One sent Perry a bill for $4,807 in charges she hadn't incurred. After that, the amount of money she supposedly owed fluctuated, peaking at $286 million. "It went down and up and down and up," said Perry's lawyer. "The only thing I can associate that with is that they were trying to confuse my client."
Capital One has finally admitted that the charges were a mistake. But Perry is not satisfied with that. She has sued Capital One for - appropriately enough - $286,651,237.
Thursday, January 6, 2011
A Strong December
Two more positive signals for the economy today: In December, American service industries posted their strongest showing since May 2006, according to the Institute for Supply Management's non-factory index. The index reached 57.1, beating the analysts' estimate of 55; anything over 50 is supposed to indicate growth ahead. The service industries index covers approximately 90 percent of the American private-sector economy.
It's probably no coincidence, then, that the ADP estimate of jobs produced by the private sector was very strong as well. ADP has the private sector adding a whopping 297,000 jobs in December, which is the most for any month since they began doing these estimates in 2001. If the official government unemployment report, which is due out on Friday, is anything like that, it will be the best news this economy has seen in a long time.
It's probably no coincidence, then, that the ADP estimate of jobs produced by the private sector was very strong as well. ADP has the private sector adding a whopping 297,000 jobs in December, which is the most for any month since they began doing these estimates in 2001. If the official government unemployment report, which is due out on Friday, is anything like that, it will be the best news this economy has seen in a long time.
Wednesday, January 5, 2011
Investing by the Block
There was a fascinating graphic in the New York Times over the weekend, looking at returns from the S&P 500 over various periods of years since 1920. In this case, the researchers looked at every possible combination of when you could have put your money into the market and when you could have taken it out. So they have calculated the returns for people who invested in 1935 and withdrew in 1952, for example, as well as nearly 4,000 other combinations of years.
The best 20-year period since 1920? That would be money invested in 1948 and withdrawn from the markets in 1968. Accounting for dividends, inflation, taxes and fees, an investor in that time frame would have made 8.4 percent a year. The second-strongest 20-year period was from 1979 to 1999, when an investor could have made 8.2 percent a year. This was the time in which many of us came to learn about investing, and for a lot of people, 8 percent a year came to be seen as a reasonable, expected return. We know now that that isn't the case.
The worst 20-year period in the study stretched from 1961 to 1981, when investors could have expected to lose an average of 2 percent a year. More recently, of course, we've had more bad news: Anyone who invested in 1995 or later, then took their money out of the market in 2007, was likely to end up losing on their investment.
To see the entire graphic, click here.
The best 20-year period since 1920? That would be money invested in 1948 and withdrawn from the markets in 1968. Accounting for dividends, inflation, taxes and fees, an investor in that time frame would have made 8.4 percent a year. The second-strongest 20-year period was from 1979 to 1999, when an investor could have made 8.2 percent a year. This was the time in which many of us came to learn about investing, and for a lot of people, 8 percent a year came to be seen as a reasonable, expected return. We know now that that isn't the case.
The worst 20-year period in the study stretched from 1961 to 1981, when investors could have expected to lose an average of 2 percent a year. More recently, of course, we've had more bad news: Anyone who invested in 1995 or later, then took their money out of the market in 2007, was likely to end up losing on their investment.
To see the entire graphic, click here.
Tuesday, January 4, 2011
New Jersey's Housing Outlook
For the record, in 2010, there were an estimated 13,500 housing units built in New Jersey over the course of the year. That doesn't sound like so many, does it? That was still up from 12,235 units in 2009, which was the lowest year on record, stretching back to when these records were first kept during World War II.
Like a lot of things in this economy, our state's housing starts are headed in the right direction, but they're a long way from healthy. One economist predicts that housing units in New Jersey will be up to 15,000 in 2011, which is a step up, but would still be the third-lowest figure in history.
These figures come from this very thorough - and somewhat pessimistic - look at the state's real estate landscape. If you're interested in where New Jersey's housing market is headed, I recommend you give it a click.
Like a lot of things in this economy, our state's housing starts are headed in the right direction, but they're a long way from healthy. One economist predicts that housing units in New Jersey will be up to 15,000 in 2011, which is a step up, but would still be the third-lowest figure in history.
These figures come from this very thorough - and somewhat pessimistic - look at the state's real estate landscape. If you're interested in where New Jersey's housing market is headed, I recommend you give it a click.
Monday, January 3, 2011
Happy New Jobs!
The last employment news of the year turned out to be some of the best: New jobless claims for the last week of December fell to a seasonally adjusted 388,000. That's the lowest that figure has been since July of 2008.
But seasonal adjustments, of course, are at their most drastic during the Christmas season. If you disregard the seasonal adjustment, the number of new jobless claims was actually up 25,000 over the previous week; with the seasonal adjustment, jobless claims fell by 34,000.
Even discounting any uncertainty over the adjustment, though, in the longer term, things are still positive. The four-week moving average dropped by 12,500, to 415,000, up through that last week of December. Just as with the weekly average, the four-week average is now at its lowest point since July 2008.
But seasonal adjustments, of course, are at their most drastic during the Christmas season. If you disregard the seasonal adjustment, the number of new jobless claims was actually up 25,000 over the previous week; with the seasonal adjustment, jobless claims fell by 34,000.
Even discounting any uncertainty over the adjustment, though, in the longer term, things are still positive. The four-week moving average dropped by 12,500, to 415,000, up through that last week of December. Just as with the weekly average, the four-week average is now at its lowest point since July 2008.
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