Financial Market Reporting, Part 9: Exchange Traded Funds

ETFs, or Exchange Traded Funds, might be the most popular of all exchange-traded securities. (Image by Angelo_Giordano via Pixabay, CCO Creative Commons)

In my recent post on mutual funds, I noted that John Bogle disrupted that industry with Vanguard, a mutual fund company that specialized in low cost index funds designed to mimic rather than outperform major market indexes. The other mutual fund companies responded with their own index funds, and there is intense competition between them

Mutual fund shares vs. ETFs

Exchange Traded Funds, ETFs, are another refinement of the fund category. They will certainly figure into your reporting on the fund asset class because they are by some measures the most popular of all exchange traded securities.

For my primer on ETFs, see businessjournalism.org.

Financial Market Reporting, Part 8: Mutual Funds and Index Funds

In a previous post about indexes, I identified the Dow Jones Industrial Average and the Standard and Poor’s 500 as the two most frequently referenced. They originated as short-cuts that summarized market trends, and are often used as a benchmark against which investment performance can be judged.

There has been an explosion in the number of indexes in recent years. There are hundreds if not thousands available, enough to slice and dice the markets in as many ways as can be imaged. Some are broad-based, like the NASDAQ Composite with more than 3,000 stocks. Others might track a region, like the EURO STOXX 50, based on 50 large companies in the Eurozone. Some follow companies of a certain size, like the Wilshire US Small Cap. And still others focus on an industry, such as the NYSE Arca (originally AMEX) Semiconductor Index.

Continue at businessjournalism.org….

Financial Market Reporting, Part 7: Indexes

Business reporters can get up to speed on market indexes with a backgrounder on the Dow and S&PIn my first Financial Market Reporting piece, I complained that many reporters make casual reference to “the market” without specifying what they mean. Usually, I wrote, they mean the Dow Jones Industrial Average, which I called the “best known” stock market measure. The DJIA is just one of a multitude of stock market indexes that pop up in virtually every discussion of the markets, including reports evaluating individual stocks and other investment vehicles. So they warrant a closer look.

The first index

The DJIA was not the first stock market index. It was not even the first index created by Charles Dow. In 1880 Dow, who was 29 years old, moved to New York and got a job at the Kieman Wall Street Financial News Bureau, which furnished financial news to banks and brokerages. In those days there was a lot of “fake” news, designed to tout companies and their stocks. But the Kieman service had a reputation for sticking to the facts.

Dow figured if one responsible news service could succeed there was room for more, and with a fellow reporter, Edward Jones, founded Dow, Jones & Company. The pair produced newsletters and summaries of financial news, which they delivered to financial institutions and investors. Their “Customer’s Afternoon Letter” quickly grew to have more than 1,000 subscribers.

Continues at businessjournalism.org….

 

Going Public: Reporting on IPOs

A few months ago I moderated a training teleconference for reporters as part of the continuing education program of SABEW, the Society of American Business Editors and Writers. The teleconference focused on Initial public offerings—the first sales of stock issued by a company to the public.

The teleconference is now available as a podcast you can play at any time to hear a panel of experts decipher the language of IPOs and discuss how reporters should cover companies as they prepare to go public. We talked about how reporters can use the U.S. Securities and Exchange Commission’s EDGAR database to access IPO prospectuses and which nuggets of information and red flags they should look for in SEC documents when researching companies that are about to go public.

On the panel was John Divine, an investing reporter at U.S. News & World Report, Lauren Hirsch the deals team leaders and correspondent at Thomson Reuters in New York, Tom Taulli who has been involved in the IPO market since the mid-1990s when he co-founded Web IPO, and Jack Willoughby, a senior editor at Barron’s who wrote the financial publication’s “Offerings in the Offings” column.

You can hear the podcast here.

Trump and the Employment Report, fact and fiction, Pt. 2

Numbers are funny things. Even though they appear to be absolute, a clever manipulator can twist them to make pretty much any point he wants to make. Take President Trump’s statement from February: “Ninety-four million Americans are out of the labor force.” It might seem preposterous but it is correct, as the great sage Obi-Wan-Kenobi once said, “from a certain point of view.”

It is the number you get if you take the total U.S. population 16-years of age and older and subtract the people the BLS says are in the labor force. That number includes everyone who is retired, and most high-school, college, graduate or vocational school student. It also includes the disabled, homemakers, some self-employed and those living off their investments.

My guide to reporting the employment report continues at businessjournalism.org….

Trump and the Employment Report, fact and fiction, Pt. 1

The Bureau of Labor Statistics released its Employment Situation Report for February on March 10, showing a healthy 235,000 gain in payroll employment. Asked what President Trump thought about the numbers, White House press secretary Sean Spicer said, “I talked to the president prior to this, and he said to quote him very clearly,” Spicer said. “They may have been phony in the past, but it’s very real now.”

Many of the reporters present laughed. I cringed.

Over the years on public television’s Nightly Business Report, I filed countless “numbers” pieces. The monthly employment reports were most closely watched. For better or worse these reports often had an immediate financial market moving impact, making them lead stories for a market driven broadcast.

I cringed because I believe attempts to undermine the credibility of these reports do a great disservice.

Continues at businessjournalism.org….

Financial Market Reporting, Part 6: Derivatives

Chicago Board Options Exchange
Chicago Board Options Exchange

My series at the Reynold’s Center continues with thoughts on reporting the derivative markets. These are investment vehicles that are derived from others, appropriately called derivatives. Investors do not own the underlying asset, but bet on how that asset will perform.

 

 

Options are a common type of derivative. In 1973 the Chicago Board of Trade created the Chicago Board Options Exchange, which at first operated out of an old cloak room off the CBOT trading floor. The CBOE traded listed stock options. Unlike futures, options were not a commitment but gave the buyer an option to buy a stock for a certain period of time.* The option is based on the stock, called “the underlying.”

Continue at businessjournalism.org….

Lunch with Paul Kangas, Nightly Business Report

Paul Kangas

I remember one specific lunch with Paul Kangas. Silly, isn’t it? I spent a fair amount of time with Paul during the many years I was associated with public television’s Nightly Business Report. That included several meals with a man who, among many other things, appreciated good food and drink. Why would one particular lunch stand out?

It was 1990. A year before I had moved from Chicago, my hometown, where I worked for CBS, NBC, and as a freelance contributor for NBR, to New York. Here I was NBR’s New York Bureau Chief and Senior Correspondent. Paul had been with NBR since it first went on the air in 1979. A former stockbroker, Paul was at first the broadcast’s stock commentator. Later he added co-anchor to his role.

But Paul was so much more than his title implies. On a broadcast that itself defined a new role for business news on television, Paul set the standard for both the program and the industry.

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Financial Market Reporting, Part 5: “Real Stuff,” Commodities and Futures Contracts

The latest in my series on financial market reporting is live at the Reynold’s Center:

Previous posts introduced the markets and the best-known investment vehicles, stocks and bonds. But even if you don’t own one of those investments, you probably have placed a considerable amount of money in a different asset class, although you may not consider these to be investments.

I’m referring to real assets, physical items, the “stuff” we accumulate throughout our life. If you’ve ever sold an item on eBay, you know what I mean. You might have sold a used item you’ve upgraded or outgrown. Or you could have sold a “collectable,” an item you bought in the belief that its value would grow over time (Beanie Babies, anyone?) These are “real” assets.

Continued at businessjournalism.org….