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Best Business Commentary
December 19, 2007
ETFs for the rest of us
With exchange-traded index funds, “the hype is finally justified” for regular investors, says Jonathan Clements in The Wall Street Journal. Most of the 600 ETFs from Wall Street “merely mimic existing mutual funds” or are too narrow for “prudent investors.” But new, “intriguing” low-cost ETF offerings in four key areas—foreign real estate, international small caps, commodities, and foreign bonds—offer “ordinary investors some great new ways to diversify.” When U.S. markets dip, having investments in local markets abroad can help protect you. But still, ETFs are “volatile investments,” and you should cap each of these at 5-10 percent of your portfolio.
Beggars can’t be choosy
As liquid wealth shifts to former third-world countries, we “can’t afford to write off China, or India, or the Persian Gulf” because they lack brand cachet, says Daniel Gross in Slate. People are worried about Jaguar’s “upscale image” if it is purchased by Tata—an “enormously successful and sophisticated Indian company”? With U.S. firms like Citigroup, AMD, and Blackstone getting much-needed cash from places like China and Abu Dhabi, we should accept that we’ve “become imperial beggars.” And with our economy slowing and a looming housing bust, “being a snob about the source of capital” is just one of the “rising number of luxuries” we can no longer afford.
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