What the experts say
Funds for futures; Beware ‘saver’s remorse’; Panning for cheap property
Funds for futuresJudging from the “pitches” in my e-mail inbox, managed futures are supposed to be the latest and greatest investment niche, said Jason Zweig in The Wall Street Journal. These funds, which specialize in trading futures contracts for everything from crude oil to currencies, do have a pretty impressive track record: The Barclay CTA Index went up 14 percent last year and has gained an average of 12 percent since 1980. “But look before you leap.” The index only includes funds with at least four years of returns. “Since many of the stinkiest funds never got into the indexes, overall past returns likely look better than they actually were.” Also, the strong market trends that have boosted returns as of late seem to be petering out, which will make it harder for managers to turn enough profit to justify the funds’ high fees.
Beware ‘saver’s remorse’The tough economy has inspired a lot of “ambitious do-it-yourselfers,” but such frugality can backfire, said Susan Saulny in The New York Times. “Being thrifty sometimes comes at a high price and can bring along with it a new scourge of the times: saver’s remorse.” Carol Taddei knows the feeling. The Chicago homeowner recently tried installing a new toilet herself and ended up spending $3,000 on repairs after the ceiling in the room below the toilet collapsed. Auto mechanics and hairstylists have also had to perform rescue operations for failed do-it-yourself projects. “One of my clients decided to bleach her hair,” says Sunny Brewer, a stylist in St. Clair, Mich. The client ended up paying her $1,000 to fix the mistake, Brewer says, and “she’s sporting a chin-length bob because her hair broke off.” Some jobs really are best left to the pros. Panning for cheap propertyPaul Belt has never been to Detroit, but that didn’t stop him from plunking down $30,000 for a bungalow in the Motor City, said Anne Kadet in SmartMoney. Belt, a former military-systems analyst based in Nevada, is part of a “new breed of eager real estate prospectors” buying houses for pennies on the dollar, often sight unseen. “In many cities a cottage industry has emerged to serve these out-of-towners.” Consultants will tell potential investors what neighborhoods look promising, and even offer “all-in-one packages” to those who hope to “flip” the cheap homes for a tidy profit when the market recovers. For now, Belt hopes to rent out the house for $850 a month. “The return can be astronomical if it’s done right,” says Scott Galloway, a Huntington Woods, Mich., property attorney who represents venture firms based in Austin and San Jose. “That’s a huge ‘if’ in a recession as deep as today’s.”