Why real-estate investors should still steer clear of Turkey even as the lira rebounds

The devaluation of the Turkish lira
USDTRY, +3.2826%
 may make real estate in cities like Istanbul and Ankara seem like a bargain for foreign investors, but scooping up property in Turkey could still be a fool’s errand even as the currency stabilizes.

Concerns about Turkish President Recep Tayyip Erdogan’s leadership and the country’s worsening relationship with the U.S. and the European Union sent the Turkish lira
EURTRY, +3.8916%
 reeling to historically low values at the start of the week.

Amid these dramatic fluctuations, some pointed to Turkish real estate as a major buying opportunity. Foreign investment in Turkish real estate has surged in recent years.

Developers sought to capitalize on renewed interest in Istanbul and the improved tourism industry in the country, particularly along the Black Sea. The number of tourists visiting Turkey increased 31% year-over-year during the first five months of 2018, according to data from the country’s Culture and Tourism Ministry.


The lira has recovered some on the news that the Qatari government plans to invest $15 billion in Turkey. But Turkey imposed tariffs on U.S. imports after President Trump placed sanctions on the country for not freeing a pastor facing prison time over terrorism charges. Either way, buyers may still be better off turning their attention elsewhere.

Here are some reasons why Turkish real estate may still be too risky a gamble:

Housing in Turkey could be a bubble

There is some disagreement as to whether the Turkish real-estate market shows signs of a bubble ready to burst or if it is just displaying isolated pockets of over-valuation.

Nevertheless, observers have been warning of a bubble since last fall. One of the main concerns is how Erdogan funneled money toward property developers in an effort to boost economic activity and housing construction in the country.

But with home prices falling due to the devalued lira, and construction costs soaring thanks to a stronger dollar, many Turkish homebuilders have been facing the threat of bankruptcy, English-language publication Ahval News reported.

Last May, Turkish lenders were lowering mortgage rate, the government cut certain taxes and real estate firms slashed prices in an attempt to spark more home sales. At that time, the country had around 2 million unsold homes.

Moreover, many properties, particularly in popular markets like Istanbul, are owned by foreign investors who may be inclined to cash out if the economic situation worsens. That could trigger a scramble to the bottom, which could erase the strides the country’s real-estate market had made.

Read more: The U.S. is about to add even more cities with a median home value of $1 million


“When I hear Erdogan accuse his central bank chief of ‘treason’ if he dared to raise interest rates or fulminate against bankers as ‘evil forces in the economy,’ I know the Turkish lira will continue to depreciate against the US dollar.”

Matein Khalid, a Dubai-based global equities strategist and fund manager


The currency could remain unstable for the foreseeable future

Turkey’s economy rests on a shaky foundation. Erdogan has pressured government officials to avoid taking measures that could combat the inflation risk that has plagued the country, raising alarm among observers. “When I hear Erdogan accuse his central bank chief of ‘treason’ if he dared to raise interest rates or fulminate against bankers as ‘evil forces in the economy,’ I know the Turkish lira will continue to depreciate against the U.S. dollar,” Matein Khalid, a Dubai-based global equities strategist and fund manager, wrote earlier this year in the Khaleej Times, an English-language publication in the United Arab Emirates.

Despite maintaining one of the largest trade deficits in Europe and the Middle East, Turkey’s Treasury and Finance Minister Berat Albayrak said he won’t impose capital controls during a call with investors earlier this week, Bloomberg reported. That prompted economists such as Mohamed El-Erian, chief economic adviser to Allianz SE, to call for a reduction in Turkish investment. An exodus on high-net worth investors though could only cement the country’s financial strife.

Consequently, those who were to invest could find themselves facing a long haul. “A stronger dollar does tend to put emerging-market economies under stress, so we could see more currency volatility,” said Danielle Hale, chief economist at Realtor.com. “You might have to end up keeping that investment for a longer term than you anticipated.”

Turkey’s political situation is very tumultuous

The Trump administration has continued to threaten to institute more sanctions on Turkey if the country does not release an American pastor who is currently being held in custody. “You don’t want to tie your money up in a country that could be facing very serious sanctions and potentially the continued devaluation of your money,” said Edward Mermelstein, a real-estate attorney who specializes in foreign and luxury real-estate investments.

The political risk in Turkey doesn’t just stem from the country’s foreign relations. Kurdish separatist groups and extremists aligned with ISIS have perpetrated multiple terrorist attacks across the country over the past few years. And these attacks, if they continue, could threaten the value of properties located in the areas that are targeted.

But perhaps the biggest political risk lies with Erdogan. Following a failed coup in 2016, Erdogan has consolidated his power and made gestures that suggest he could be setting himself up to rule the country for the remainder of his life, Mermelstein said. Already this has soured the country’s relationship with European governments.

“It’s not looking any different from what we’ve seen at the Kremlin or in Venezuela,” Mermelstein said. “It’s a political situation that leads to tremendous economic instability.”

Also see: Only one generation of Americans has fully recovered from the housing crash


The political risk in Turkey doesn’t just stem from the country’s foreign relations. Kurdish separatist groups and extremists aligned with ISIS have perpetrated multiple terrorist attacks across the country over the past few years. And these attacks, if they continue, could threaten the value of properties located in the areas that are targeted.


Cronyism may thrive at the local level if Turkey becomes more autocratic

As Turkey becomes more insulated from the international community, local officials will gain more sway and could become emboldened to profit off the misfortune of foreign investors. For instance, in Russia Mermelstein said his clients have been denied approval to redevelop real-estate holdings by local governments.

“The local government refused to allow construction, and then you had local competitors come in and make lowball offers saying that you’ll never be able to do anything with this property unless you accept this offer,” Mermelstein said.

Moreover, Turkey could institute laws that make it more difficult to pull money out of the country if the financial exodus escalates, which could tie up investors’ assets that might otherwise have been more liquid if they had invested in another country.


Want news about Europe delivered to your inbox? Subscribe to MarketWatch’s free Europe Daily newsletter. Sign up here.

http://feeds.marketwatch.com/~r/marketwatch/pf/~3/FNAWKNlzYFI/story.asp

Do we need BailCoin? FBI refuses to take cryptocurrency in videogame hacking case

After being arrested by federal agents for allegedly hacking videogame giant Electronic Arts Inc.’s systems, Martin Marsich tried to post a $750,000 bond with cryptocurrency.

That’s when Masich, federal authorities and the court ran into problems that show how difficult it can be to use digital currency in the real world, even as it becomes more prevalent online. In this case making its way through federal court in San Francisco, there were concerns that selling a large stash of small and lightly traded coins could have caused severe fluctuations in their prices.

Last known to reside in Italy, Marsich, 25, has been accused by the Justice Department and Federal Bureau of Investigation of infiltrating EA
EA, -1.31%
 systems related to its “FIFA” soccer franchise and stealing roughly $324,000 worth of digital goods, according to court documents. Arrested at San Francisco International Airport amid a sightseeing trip to Los Angeles, Marsich tried to use his stash of cryptocurrency as bail.

Don’t miss: The cryptocurrency market has shed more than $600 billion from its peak — what exactly happened?

While trying to set up the bond, government and defense lawyers spent several minutes hammering out the precise details of the exchange, and one lawyer suggested it wasn’t the first time the issue had come up.

“My sense is that it’s happened before, but it’s not the most common thing, so it might take a couple of days to get set up,” assistant U.S. attorney Ben Kingsley said in an Aug. 9 court hearing, according to an audio tape of the proceedings obtained by MarketWatch. “By then we should have the [cryptocurrency] wallet set up and we can do the transaction with the agents present.”

After trying to set up the bond — including taking steps to create a cryptocurrency wallet to facilitate the transfer — the government reversed course the next week and said it was not, in fact, able to take the digital money.

“Unfortunately, the FBI could not take possession of the cryptocurrency even though part of it would be used for restitution to Electronic Arts, due to liability issues,” assistant U.S. attorney Susan Knight said at an Aug. 13 hearing. “I had extended conversations with their district counsel and they refused to accept it, to have it as part of a bond and part of forfeiture.”

Instead, Knight suggested that Marsich sell $750,000 worth of his cryptocurrency to pay bail — but to sell such a large chunk of the currency Marsich holds could tank the value of the currency because it is thinly traded. And if that happened, Marsich would not be able to pay restitution that could be owed to EA.



Marsich holds several lesser known cryptocurrencies instead of a more well-known currency like bitcoin
BTCUSD, +1.70%
 , and Masich’s lawyer said in court that selling off a $750,000 stake would have the potential to crash the price. MarketWatch was unable to determine the exact currencies Marsich holds Friday.

Ultimately, the prosecutors and the defense agreed that Marsich would sell $200,000 worth of his cryptocurrency via a broker to secure his bail. From court documents, it’s not clear whether the transfer has occurred yet.

While in other parts of the country, court officials may deny such an approach because of a lack of knowledge about cryptocurrencies, that did not appear to be the case in the heart of Silicon Valley. At several points during the various proceedings, those in court showed knowledge of cryptocurrency, including the judge overseeing the case.

“I just went to a conference where I learned all about this,” magistrate judge Jacqueline Corley said in court. “It is very volatile, that I know,” she added later in that hearing.

Marsich is accused of using developer software designed to let two apps communicate, as well as a secret key that EA posses to gain access to EA’s systems and alter databases related to granting tens of thousands people online access to “FIFA 18” and digital content associated with it. The accounts Marsich effectively stole give players access to the game, which normally would cost players up to $60, plus the cost of the additional digital content.

See also: ICO swindlers have absconded with some $100 million in investor dough, research firm says

EA told the FBI that it suspects the hacker sold the stolen accounts over the dark web or online black markets, according to the FBI’s affidavit.

EA spokesman John Reseburg said Friday that EA works hard to protect its players and took steps to mitigate the problem as soon as it discovered the intrusion. No player data was exposed, he said.

During a court hearing earlier in August, Kingsley said that Marsich admitted to federal agents that he converted some of the proceeds from the scheme into cryptocurrency, which he then used for his trip to the U.S.

The hack began Sept. 24 of last year and EA figured out that its systems had been compromised March 25, 2018. Marsich faces up to five years in federal prison and a $250,000 fine.



EA stock fell 2.5% this week, as the S&P 500 index
SPX, +0.33%
 rose 0.3%.


http://feeds.marketwatch.com/~r/marketwatch/pf/~3/fV3emOOzBTs/story.asp

FA Center: Index fund investors will lose in a bear market if they fail this test

Maybe we shouldn’t be judging investment advisers according to whether or not they can beat the market.

That’s an incredible admission from someone such as myself who has devoted his career to judging advisers in precisely that way. Nonetheless, I have been exploring this possibility more and more in recent years. I was prompted to do so by a comment that Benjamin Graham—the father of fundamental analysis—made in his investment classic “The Intelligent Investor”: “The best way to measure your investing success is not by whether you’re beating the market,” he wrote, “but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

Graham’s comment puts index funds in an entirely different light. Their desirability becomes less a statistical one of whether buying and holding such funds will outperform those who engage in active management. That statistical question was long ago resolved, of course, with index funds winning hands down.

But buying and holding an index fund comes up short if few investors are willing to stick with the strategy through thick and thin. And, indeed, it appears that few actually are.

On the contrary, most who say they believe in a long-term buy-and-hold strategy end up discovering — at or near the bottom of the bear market — that they don’t have what it takes. That means they suffer most or all of the bear-market’s losses and benefit from only a portion of the market’s subsequent rebound.

In comparison, an adviser whose record looks inferior from a statistical point of view might be a better bet than the index fund. The key is whether an investor finds the adviser’s approach sufficiently compelling to stick with it through a bear market. Since the key to long-term success is actually following the strategy over the long term, such an investor could actually make more money over time than the buy-and-hold investor who throws in the towel at the latter stages of a bear market.



This alternate way of viewing investment success focuses our attention on what an investor should be looking for when choosing an adviser. The key question is whether you’re willing to follow an adviser through the dark days of a bear market. Though there of course is no way of knowing in advance for sure, there are several key questions investors should ask to gain insight:

•      Are you following the adviser because of his track record alone? This is a danger sign, because no adviser makes money all the time. There inevitably will be a time when the adviser is out of synch with the market. And if your only loyalty to that adviser is based on performance, then you’re very likely to ditch him at his first misstep.

•    Do the arguments and investment rationales the adviser provides meet a smell test of plausibility? This seems a low hurdle to ask an adviser to jump over, but you’d be surprised by how few investors demand their adviser to clear it. Especially revealing is when an adviser contradicts himself from one communication to the next. For example, if he says he’s bullish because of a particular indicator — say, the S&P 500
SPX, +0.33%
 is above its 200-day moving average — then see if he becomes bearish when the market drops below it. If he thinks so little of his own arguments to not follow them, then you’re unlikely to be loyal to him when the going gets tough.


You’re looking for someone who can persuade you to stay the course when that’s the last thing you want to do.


•      Do you respect the adviser? This is an amorphous and ill-defined question, to be sure. But it’s a crucial part of the puzzle. You’re looking for someone who can persuade you to stay the course when that’s the last thing you want to do.

The bottom line? When focusing on advisers in these ways, there’s no right or wrong answer but, rather, a question of better or worse fit. An adviser who one investor finds compelling might be considered inappropriate by another.

The key to satisfaction with an adviser is to keep asking the right questions. Whether or not your adviser beats an index fund is not the only question — or the most important.

For more information, including descriptions of the Hulbert Sentiment Indices, go to The Hulbert Financial Digest or email mark@hulbertratings.com .Create an email alert for Mark Hulbert’s MarketWatch columns here (requires sign-in).

Related: How to know if ‘bond-king’ Bill Gross has really lost his touch

Plus: Fidelity now offers zero-fee funds. What does that mean for you?


http://feeds.marketwatch.com/~r/marketwatch/pf/~3/lpWng-3ZG1o/story.asp

Earnings Outlook: Alibaba earnings: Spending for a future beyond e-commerce

Alibaba Group Holding Ltd. dominates online shopping in China, but the company has bigger plans in mind.

The Chinese e-commerce giant is investing aggressively as it tries to profit from more aspects of the retail experience, including food delivery and physical stores. These are part of Alibaba’s
BABA, +0.46%
 “new retail” initiatives, which are meant to merge online and offline commerce.

“We think Alibaba is years ahead of any competitor in driving digital commerce forward,” MKM Partners analyst Rob Sanderson, who rates the stock a buy with a $280 target price, wrote earlier this summer. “Of greater consequence is Alibaba’s foray into digitizing offline commerce (new retail), which we think is even further ahead and has potential to multiply Alibaba’s addressable market.”

Don’t miss: Alibaba battling Amazon, JD.com in Southeast Asia

Alibaba’s investments have weighed on recent results, and the question is whether investors will show patience going forward as the company plays the long game. The company is due to report results Thursday before the market opens, and management will likely provide some commentary on investment spending and progress.

If last quarter’s results and subsequent stock performance are any indication, Wall Street seems willing to settle for less on the profit front in the near term if it means bigger opportunities a few years out. Stifel’s Scott Devitt commented after Alibaba’s March-quarter earnings that the company’s margins disappointed due to investment spending, but Alibaba shares gained following the report.



“We remain comfortable with the lower long-term margin profile as it will allow the company to generate a higher level of absolute profit over the long term and should lead to increased efficiencies across Alibaba’s entire ecosystem,” Devitt wrote. He rates the stock a buy with a $256 price target.

When the earnings report hits, look for information about Alibaba’s recently announced partnership with Starbucks Inc.
SBUX, +0.98%
 that is meant to bolster its Hema supermarkets as well as the consolidation of Ele.me, a food-delivery startup that the company recently acquired. Consolidation ended up happening later than analysts were expecting.

Here’s what else to watch out for when Alibaba reports fiscal first-quarter results.

What to expect


Earnings: Analysts surveyed by FactSet expect that Alibaba earned $1.21 per share in the June-ended quarter, up from $1.17 in the year-earlier period. According to Estimize, which crowdsources projections from hedge funds, academics, and others, the average estimate calls for $1.39.


Revenue: The FactSet consensus calls for revenue of $11.8 billion for the June quarter, compared with $7.4 billion a year ago. Estimize projects $12.6 billion in revenue.


Stock movement: Alibaba shares have gained following six of the company’s last 10 earnings reports. They are down 13% over the past three months, compared with a 4% rise for the S&P 500 index
SPX, +0.33%
 .

Analysts are uniformly upbeat about Alibaba. Of the 39 analysts tracked by FactSet who cover the stock, all 39 rate it a buy. The average price target is $234.62, 36% above current levels.



What else to watch for

Tariff concerns have pressured Alibaba shares in recent months, and analysts will likely use Alibaba’s earnings call to ask executives about the impact of trade tensions’ impact on the company’s performance and overall e-commerce spending in China.

Stifel’s Devitt recently highlighted lower-than-expected retail sales data in China for July, which was released by the government on Aug. 14. July spending numbers won’t impact results for the to-be-reported quarter, which ended in June, but the trend will certainly be top of mind.

“Despite the Chinese government’s efforts to boost lending over the past month, it appears U.S. tariffs are having a larger impact on the retail landscape than we had previously anticipated,” Devitt wrote. He’s upbeat about Alibaba and peer JD.com in over the long term but warns of “near-term volatility as trade-related headwinds and negative sentiment persist.”

Don’t miss: Here are all the ways the new tariffs are going to hit your pocketbook

Alibaba’s cloud business is another important issue for investors and analysts, and the company has made some recent moves in this space. Autonomic Partners, a company owned by Ford Motor Co.
F, +0.42%
 , recently announced a partnership with Alibaba Cloud that centers on connected cars. Executives might be pressed to discuss this further during Alibaba’s earnings call.

Also of interest will be any discussion of the improvements Alibaba is making to its cloud infrastructure and expected benefits.

“While AliCloud will probably remain in investment mode near-term, we believe accelerating revenue per customer trends suggest a migration to value-added content delivery and database services that can drive segment adjusted margins improvement over time,” wrote Morningstar’s R.J. Hottovy, who calls Alibaba’s stock undervalued.

See also: Microsoft chipped away at Amazon cloud dominance in 2017, says Gartner

Another theme to watch out for is the World Cup, which Jefferies analyst Karen Chan warned could have had a meaningful impact on Alibaba’s content spending during the quarter and might have hit earnings. She rates the stock a buy with a $242 price target.

Susquehanna Financial Group’s Shyam Patil, however, sees the company’s World Cup partnership as a potential tailwind for the quarter. He listed the World Cup as one reason why Alibaba could deliver revenue upside, along with commission outperformance and traction in “new retail.”

Patil will also be looking for commentary on Alibaba’s Cainiao logistics efforts and international expansion. He has a positive rating and $305 price target on shares.


Want news about Asia delivered to your inbox? Subscribe to MarketWatch’s free Asia Daily newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7BF52D2264-9F27-11E8-ABEE-9079FD1B93A6%7D&siteid=rss&rss=1

Tesla short sellers are up $1.2 billion since Elon Musk’s ‘going-private’ tweet

Investors betting that Tesla Inc. stock will fall appear to be having the last laugh, at least for now.

Tesla
TSLA, -8.93%
 short sellers are up $1.2 billion in paper gains since the day Chief Executive Elon Musk tweeted he was “considering” taking the company private at $420 and funding was “secured,” S3 Partners LLC, which tracks real-time short interest data, said in a note Friday.

Musk shocked markets with that tweet on Aug. 7, the first of many that day and which was followed by an email to employees explaining his reasons for wanting to take Tesla private. That day the shorts got walloped.

The tweet has sparked a U.S. Securities and Exchange Commission probe and doubts have grown around the funding to cinch a going-private deal.

Tesla shares are off 20% since the $379.57 close on Aug. 7, including a 9% loss Friday on the heels of an interview on the New York Times in which Musk describes his “excruciating year” and blamed short sellers for much of his stress.

“Unfortunately for Elon Musk and the scores of Tesla retail and institutional long shareholders, the anticipated short squeeze resulting from Tesla’s march to $420/share never materialized,” S3 Partners LLC, which tracks real-time short interest data, said in a note Friday.

Tesla has about $11.2 billion in short-seller interest, behind only Alibaba Group Holding Ltd.
BABA, +0.46%
 

Short sellers bank on a stock falling in price. They then borrow the shares to sell them, hoping they can later pick them up at a lower price, return them to the original lender and pocket the difference.

There has been some short covering since the Aug. 7 tweet, but only about 4% of the Tesla short sellers have been driven away, S3 Partners said in the note.

Read more: Elon Musk left plenty of questions about Tesla going private, experts say

“Shorts have only covered 1.3 million shares since Tesla’s original stock price spike, hardly a short squeeze and more likely an exit by shorter term momentum short sellers and fat-trimming by the lesser capitalized long-term short sellers,” the note said. “In actuality, many of the longer-term short sellers have backed up their bets and slightly increased their short exposure over the last week.”

Short sellers “are under no impetus to cover their positions” unless Musk can get more traction and the stock heads back toward the $420 mentioned, the note said.

“With ample stock available to borrow and stock costs easing slightly to below 2.50% fee levels, there is more than enough stock to short at a reasonable cost basis. If Tesla’s stock price continues to slide we may see additional shares shorted and total shorts reach the 40 million share levels we saw in May.”

In the Times interview, Musk said he had no regrets about saying “funding secured” in the tweet. According to the newspaper, efforts are under way to find a second-in-command who could take off some of the strain on Musk.

Tesla’s $305.50 close Friday was the stock’s lowest since Aug. 1. It brought weekly losses to more than 14%, the company’s worst five-day period since early February 2016. The stock is now off 1.9% for the year, versus gains of 6.6% for the S&P 500 index
SPX, +0.33%
 and an advance of 3.8% for the Dow Jones Industrial Average.
DJIA, +0.43%
 


http://www.marketwatch.com/news/story.asp?guid=%7B1C67E3D4-A25F-11E8-9AD9-208A570A7F7F%7D&siteid=rss&rss=1

Personal Finance Daily: What you should know about recording your coworkers and an important tax change

Happy Friday, MarketWatchers! Don’t forget to read these top personal finance stories as you head into the weekend.

I pay all my mom’s expenses, but she wants her estate split equally between her children—should I reimburse myself?

This daughter feels like her time and money spent as caretaker have not be fully appreciated.

Why job seekers are relocating at historically low rates

The tight labor market, soaring real-estate prices and new technology make moving for a better job less desirable.

Omarosa secretly recorded her coworkers—think very carefully before doing the same

In many states, recording someone without their permission is illegal.

Want to make friends? Leave the Gucci bags and Dior shoes at home

Researchers looked at how status symbols affect your chances of making friends.

When my mother was dying, my sister wrote herself a check and stole $20,000

This woman never wants to see her sister or brother again, and she has no interest in receiving an inheritance.

The little-noticed tax change that could affect your return

The new tax law eliminates write-offs for miscellaneous itemized expenses.

Want to make over $100,000? Try gazing at the stars (seriously)

This woman has a six-figure income, thanks to a childhood love of ‘Star Wars.’

Reddit co-founder—and Serena Williams spouse—Alexis Ohanian on frugal living

The venture capitalist talks about managing wealth and parenting with his tennis-star wife.

My husband works part-time, has no credit and doesn’t pay any bills

This woman has seen her own creditworthiness fall since they’ve been together.

Is this peak branding? Gucci wants you to wear this $590 advertisement for Viacom

Experts say this T-shirt is just the latest example of luxury goods companies trying to be cool.

Elsewhere on MarketWatch
U.S. consumer sentiment drops to 11-month low in August

The University of Michigan said its consumer sentiment index in August fell to 95.3, down from 97.9 in July, the lowest level in 11 months.

Trump Today: President asks SEC to study new reporting rules, calls Manafort trial ‘sad’

President Donald Trump said Friday he’s asked the Securities and Exchange Commission to study six-month reporting for public companies, as he tweeted he’d canceled his planned military parade and called the trial of his ex-campaign chairman “sad.”

Trump and Warren agree: Corporations are holding back the economy

Trump supports a minor tweak, while Warren would redirect corporations to serve the public as well as shareholders, Rex Nutting writes.

11 marijuana stocks’ money flows show which are investor favorites

Constellation Brands bought a stake in Canopy Growth for a big premium, lighting a fire under other cannabis companies.


Get a daily roundup of the top reads in personal finance delivered to your inbox. Subscribe to MarketWatch’s free Personal Finance Daily newsletter. Sign up here.

http://feeds.marketwatch.com/~r/marketwatch/pf/~3/lzpdjbUYszA/story.asp

NewsWatch: Best stock investing strategy now is just to ‘stay home’

MARKETWATCH FRONT PAGE

U.S. stock market is the star on the world stage, writes Ed Yardeni. See full story.

Tesla stock sinks after Elon Musk describes his ‘excruciating year’ in NYT interview

Tesla sank 8% on Friday as investors digested the news of a widening SEC probe of Chief Executive Elon Musk’s go-private tweet, and after the New York Times published an interview in which Musk described an emotional year and said the “worst is yet to come.” See full story.

The questions every investor should ask about Trump’s proposal to radically change how companies report earnings

Most investors and analysts argue that shareholders need more disclosure from the companies they invest in and not less. See full story.

Index fund investors will fail in a bear market if they can’t pass this test

Buy-and-hold investment strategy must be kept through thick and thin See full story.

Blistering U.S. economy still surging at midsummer, leading index shows

The ebullient U.S. economy flexed its muscles at midsummer and is likely to expand steadily in the months ahead, according to an index that measures the nation’s economic health. The leading economic index rose 0.6 in July. See full story.

MARKETWATCH PERSONAL FINANCE

This daughter feels like her time and money spent as caretaker have not be fully appreciated. See full story.


Want a summary of the top news? Subscribe to MarketWatch’s free After the Bell newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7BA1156BC2-4F91-4632-9552-9FA4B8AA622A%7D&siteid=rss&rss=1

The Moneyist: I pay all my mom’s expenses, but she wants her estate split equally between her children—should I reimburse myself?

Dear Moneyist,

I moved my mom from another state in order to take care of her. She wanted her own space and wanted to be independent, but as close to us as possible. So she took the money from the sale of her house, and put it into a small house on our lot next to us.

We put her house in my name for two reasons: (i) I’m her power of attorney and (ii) We wanted to make sure it was not in her name so she qualified for Medicaid, if it comes to that. More than five years have passed.

She has had huge medical challenges for many years which have all fallen on me. I still work, but I have earned less due to the time spent taking care of my mother. Plus, I pay her a monthly amount to give her spending money, as well as paying for water, cable, phone, yard maintenance, transportation and meals.

She has two other children. And she is very adamant that she wants everything divided equally. We have no sibling rivalry. She has three savings accounts. Two are transfer on death accounts for the other siblings. (She doesn’t want them to know she has set funds aside for them and that money is to be touched only as a last resort). She is very adamant about that.

Don’t miss: My uncle with dementia needs long-term care — should I refinance his house?

The third account is held jointly with me. That’s her checking/savings account and we have agreed that it’s to be exhausted first. I could see that being exhausted once we end up with the cost of care to keep her in her home.

At her death, she wants the house sold and all proceeds split equally. There is no will and everything is titled to avoid probate. One sibling supplies help when needed, the other does nothing. Neither one lives close by. Both are extremely successful siblings, but not available to help.

Would it be wrong of me to repay myself for at least some of my expenses over the years before I split the sale of my mother’s house equally? My mother is adamant about splitting the shares equally. My siblings are aware of what expenses and upkeep I pay, but they may not want me to be reimbursed for the expenses.

Anonymous

Dear Anonymous,

It seems like you stand to gain in ways you’re not fully aware of. Firstly, if your mother’s house is in your name, you will inherit that when she dies. Secondly, you may also have “right of survivorship” on the jointly held bank account, whether you realize that or not. Assuming that your mother’s home constitutes a large part of her estate and your name is on the deed, you already stand to inherit a healthy sum of money. Likely, quite a bit more than your siblings.

But your letter also raises important questions about the division of labor in a family caring for an aging parent, and what arrangements should be in place for reimbursing that person for lost wages, time and expenses. I have received many letters from children in similar situations. One woman secretly charged her mother $20 for driving her to the grocery store, and I warned her that she could face legal issues later on.

The numbers are staggering. To say you’re not alone is an understatement. Nearly 10 million adults over the age of 50 take care of an aging parent, according to a recent Met Life report. The number of adult children caring for an elderly parent and/or providing financial assistance has more than tripled over the past 15 years. One-quarter of adult children, mainly comprised of baby boomers, provide some type of care for their parents.

The estimated lost wages, pension, and Social Security benefits are $3 trillion. For women, lost wages due to leaving the labor force early to take care of an elderly parent totals $142,693, while the impact on lost Social Security benefits is approximately $131,351. A “very conservative” estimated impact on pensions is $50,000, the report found. That comes to a grand total of $324,044 (versus $283,716 for men).

Also see: My sister took care of our mother for 10 years—shouldn’t she be entitled to her house?

Something many care givers overlook: It’s also important to take care of yourself, too. “There is also evidence that care givers experience considerable health issues as a result of their focus on caring for others,” the report said. “The need for flexibility in the workplace and in policies that would benefit working care givers are likely to increase in importance as more working care givers approach their own retirement while still caring for an aging parent.”

Another point of interest for you and your mom: The principal residence for someone who is receiving Medicaid is often exempt when it comes to mean testing, at least up to a certain amount of home equity. In many states, that can be as much as $500,000. Asset limits also vary from state-to-state: in some states, it’s single-digit thousands, while New York has much higher limits, as the cost of living is higher there.

Money and expenses and responsibility and, yes, sacrifice should not be dirty words. Absolutely, you should look at your mother’s finances and how much you will need to take care of her. It may be that the money your mother invested in her current home may cover that. There are other ways to be paid as a care giver for a parent too: A private contract between you and your mom and tax credits, and there are Medicaid-funded programs.

Asking to be reimbursed for money and time already spent is tricky, but you should have an honest, resentment-free conversation with your mother about finances today. Once you have monthly costs, you can share them with your siblings and (in an ideal world) approach these financial responsibilities united as a family. Whatever you decide, be transparent about the challenges that lie ahead and make it a joint decision. Your mother will surely benefit from that.

Recommended: My fiancé postponed our wedding, secretly bought a house—and told me I could pay rent



Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).

Would you like to sign up to an email alert when a new Moneyist column has been published? If so, click on this link.

Hello there, MarketWatchers. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.


Get a daily roundup of the top reads in personal finance delivered to your inbox. Subscribe to MarketWatch’s free Personal Finance Daily newsletter. Sign up here.

http://feeds.marketwatch.com/~r/marketwatch/pf/~3/jK0x4-hGgU0/story.asp

New Arm designs help Samsung and Qualcomm compete with Apple and Intel

New roadmaps released this week from Arm Ltd. detail the future of the company’s processor designs and show a shift in emphasis toward high performance.

The two main takeaways:

• These new cores (the building blocks of a CPU) will empower Android device makers and silicon providers like Samsung
005930, -0.34%
SSNLF, -3.07%
 and Qualcomm
QCOM, +0.46%
 to better compete with Apple
AAPL, +2.00%

• The new cores also enable competitive solutions for the notebook space targeting Intel
INTC, -0.15%
 Core-level performance. This should increase the opportunity to drive adoption of Arm-powered Windows devices.

Although not as well-known as Apple, Samsung or even Qualcomm, Arm is the company responsible for much of the intellectual property that powers mobile devices. Nearly all smartphones and tablets use Arm technology at some level, and this is the primary reason SoftBank
SFTBY, +0.50%
 acquired Arm in 2016.

Arm is now the leader in low-power, highly efficient chip design, which led to its success in mobile. But as markets have shifted, the need for additional performance and upgraded user experiences became apparent.

The latest core is called the Cortex-A76, available today to silicon partners with end-user product availability predicted in late 2018 or early 2019.

Apple may lose its advantage

Apple is a customer of Arm and uses an “architecture license” that permits it to build its own custom cores and chips based on Arm IP. Apple has invested a tremendous amount of money and engineering to build its processors, starting with the Apple A6 used inside the iPhone 5 in 2012. It continued to iterate and advance its designs, and today has a noticeable performance advantage compared with competing Arm-based chips.

Arm’s advancements with its most recent core will finally allow competing vendors to offer competitive performance and capability without needing to invest the resources individually. The flagship partners in the space, Qualcomm and Samsung, have been slowly falling behind Apple in performance and benchmarks, and it appears that the Arm A76 will meet or exceed what Apple has built.

Arm’s pivot could result in some fundamental changes to the mobile market and the relative positions of Apple, Samsung, and Qualcomm-based devices.

Intel will also be affected

This shift in direction for Arm will also affect Intel and its battle for the notebook space. New, faster cores and processor designs will enable partners like Qualcomm and its Snapdragon to battle Intel more directly, correcting the largest complaint about the platform: performance.

Arm is targeting Intel directly with this new roadmap, telling a group of analysts and partners that it will offer Core i5-level performance (Intel’s mid-range processor) while maintaining the power efficiency that has provided extended battery life in early waves of Windows-on-Arm devices.

Intel might struggle to counter this attack as it continues to have problems with its new 10nm (nanometer) production capability. The delays in the manufacturing division of Intel have caused problems throughout the company’s portfolio, but it is of particular importance when it comes to building chips with the characteristics necessary for low-power devices.

Ryan Shrout is the founder and lead analyst at Shrout Research, and the owner of PC Perspective. Follow him on Twitter @ryanshrout.

Get the top tech stories of the day delivered to your inbox. Subscribe to MarketWatch’s free Tech Daily newsletter. Sign up here.


Get the top tech stories of the day delivered to your inbox. Subscribe to MarketWatch’s free Tech Daily newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7B6E1B3E28-A256-11E8-9AD9-208A570A7F7F%7D&siteid=rss&rss=1

Tesla stock sinks after Elon Musk describes his ‘excruciating year’ in NYT interview

Tesla Inc. shares
TSLA, -8.93%
  sank more than 8% Friday as investors digested the news of a widening Securities and Exchange Commission probe of Chief Executive Elon Musk’s handling of a tweet disclosing his wish to take the company private.

Musk told The New York Times that he had no regrets about saying “funding secured” in a tweet that said he was considering a going-private deal at $420 a share. In an interview with the paper published late Thursday, Musk said he has had a very difficult year spent in a constant state of exhaustion leading up to the tweet, which is understood to have angered some members of the board.


Related: Wall Street has spoken: Tesla funding is not ‘secured’

The Times said Tesla’s board was concerned about Musk’s workload and health, especially his use of the sleep aid Ambien, and that efforts are under way to find a second-in-command who could take some of the strain off of him.

Tesla stock ended at its lowest since Aug. 1, down 8.9% at $305.50. Weekly losses topped 14%, its largest since the week of Feb. 5, 2016, when it slid 15%. Tesla shares also relinquished this year’s gains; they are down 1.9% in 2018, vs. a gain of 6.6% for the S&P
SPX, +0.33%

Musk told the Times he has no plans to stop tweeting. The SEC is investigating the matter, and Musk could face charges if he was found to have intentionally misled investors in his tweet.

He also addressed why he said the stock price for going private would be $420 a share — a reference that some at first thought was a joke, referring to marijuana.

Musk said he wanted to price the stock at a 20% premium from its price at the time — which would have been $419 a share. So he rounded up. “It seemed like better karma at $420 than at $419,” he told the Times. “But I was not on weed, to be clear.”

Musk said he has recently been working 120-hour weeks, and sometimes would not leave the factory for days on end — including his 47th birthday in June. But while “production hell” appears to have peaked, Musk said his struggles are not over.

“The worst is over from a Tesla operational standpoint,” he said. “But from a personal pain standpoint, the worst is yet to come.”

Claudia Assis in San Francisco contributed to this report

More on Elon Musk and Tesla:

Elon Musk left plenty of questions about Tesla going private, experts say

Tesla will lose money on a cheaper Model 3, analyst says

Elon Musk’s plan to take Tesla private is a pipe dream

Elon Musk is a ‘natural maniac’ — here’s what it means for Tesla investors, in one chart


http://www.marketwatch.com/news/story.asp?guid=%7BC68809E2-A238-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

Project Syndicate: Turkey has torn up the playbook on dealing with emerging-market crises

LAGUNA BEACH, Calif. (Project Syndicate) — Whether by accident or design, Turkey is trying to rewrite the chapter on crisis management in the emerging-market playbook. Rather than opting for interest-rate hikes and an external funding anchor to support domestic-policy adjustments, the government has adopted a mix of less direct and more partial measures — and this at a time when Turkey is in the midst of an escalating tariff tit-for-tat with the United States, as well as operating in a more fluid global economy.

How all this plays out is important not only for Turkey, but also for other emerging economies that already have had to cope with waves of financial contagion.

The initial phases of Turkey’s crisis were a replay of past emerging-market currency crises. A mix of domestic and external events — an over-stretched credit-led growth strategy; concerns about the central bank’s policy autonomy and effectiveness; and a less hospitable global liquidity environment, owing in part to rising U.S. interest rates — destabilized the foreign-exchange market.

A political spat with the U.S. accelerated the run on the Turkish lira
USDTRY, +3.5711%
 by fueling a self-reinforcing dynamic. And all of this occurred in the context of a more uncertain and — aside from the U.S. — weakening global economy.

In keeping with the traditional emerging-market-crisis script, Turkey’s currency crisis spilled over onto other emerging economies. As is typically the case, the first wave of contagion was technical in nature, driven mainly by generalized outflows from Turkey’s currency and bond markets. The longer this contagion continues, the greater the concern that it will lead to more disruptive financial and economic outcomes.

As such, central banks in several emerging economies — as diverse as Argentina, Hong Kong, and Indonesia — felt compelled to take counter-measures.

What has followed is what makes this episode of emerging-market crisis different, at least so far. Rather than sticking with the approach taken by numerous other countries — including Argentina earlier this year — by raising interest rates and seeking some form of support from the International Monetary Fund, Turkey has shunned both in a very public manner, including through strident remarks by President Recep Tayyip Erdoğan.


The Turkish lira lost almost half its value.

Facing an accelerated exchange-rate depreciation that, at one stage, almost halved the lira’s value, Turkey has taken a variety of measures that attempt to simulate — albeit partially — the traditional approach that emerging economies have tended to follow in the past.

Domestically, it tightened funding conditions and, at the same time, provided liquidity to domestic banks, along with regulatory forbearance. It made it harder for foreigners to access lira liquidity, thereby squeezing speculators that had shorted the currency. It promised to deal with credit and fiscal excesses while ruling out capital controls.

Externally, the government has mobilized at least $15 billion from Qatar to be used for direct investment in Turkey. And, in the midst of all this, the government also found time to retaliate against the doubling of tariffs on Turkish metal exports by President Donald Trump’s administration.

The question is whether this response will be enough to act as a circuit breaker, thus giving the Turkish economy and its financial system time to regain their footing. This is particularly important because continued currency turmoil would tip the economy into recession, raise inflation, stress the banking system, and increase corporate bankruptcies.

With this comes the toughest question of all for the government: Can it bring about recovery without reneging on its pledge not to raise interest rates or approach the IMF? It is possible, but not probable.

Absent additional measures, it is unlikely that a critical mass of corrective steps has been attained in Turkey. While the domestic policy adjustments provide short-term relief for the currency, they may be neither comprehensive nor sufficient as yet to return Turkey to a promising path for inclusive economic growth and durable financial stability.

On the external side, the funding from Qatar, assuming it materializes fully and in a timely fashion, appears small relative to Turkey’s gross external funding needs. It also doesn’t come with the IMF imprimatur that reassures many investors. And it is far from clear how this money will make its way into the economy to maximize the potential for currency stabilization.

And then there is the trade skirmish with the U.S.

Like other countries, it is only a matter of time until Turkey comes to the same realization as others about confronting the more protectionist stance adopted by the U.S. Because of its size and systemic influence, and assuming it remains willing to incur the risk of suffering some damage in the process, the U.S. is destined to win a tit-for-tat tariff escalation.

As such, the best approach is what the European Union decided to do last month: seek a way to pause the skirmish while working on the longer-term underlying issues.

Rather than rewriting the game plan for crisis management in emerging markets, Turkey may well end up confirming it. One hopes this will lead to the restoration of financial stability and growth as the government looks to reverse its stance on central-bank independence, interest-rate policy, and perhaps even the IMF.

The alternative — persisting with the current approach and, in the process, running the risk of turning technical dislocations into much more damaging longer-term economic and financial disruptions — would also prove problematic for other emerging economies.

This article was published with permission of Project Syndicate Can Turkey Rewrite the Crisis-Management Rules?



Want news about Europe delivered to your inbox? Subscribe to MarketWatch’s free Europe Daily newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7BB344736A-A21B-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

The questions every investor should ask about Trump’s proposal to radically change how companies report earnings

Should the U.S. move to a six-month financial reporting calendar from the current quarterly one as President Donald Trump mooted in an early Friday tweet?

Not really, according to many investors and analysts, who argue that shareholders need more disclosure from the companies they invest in and not less. And while many executives — Elon Musk, anyone? — argue that the burden of striving to meet quarterly estimates can lead to short-termism on the part of managers and shareholders, there’s no guarantee that a different reporting schedule would change that.

“If the charge is that companies are managing for short-term expectations, what will be the difference between a three-month cycle and a six-month cycle? Nothing,” said Leigh Drogen, founder and chief executive of Estimize, a platform that crowdsources earnings estimates and economic forecasts.

“A six-month cycle will also lead to increased volatility given less access to hard information regarding the performance of companies,” Drogen said.


“I understand CEOs’ frustration with short-term [reporting], but the solution is not to hide critical information from investors. [President Trump’s] proposal would raise the cost of capital for public companies and weaken our markets’ global competitiveness.”

Mercer Bullard, Butler Snow lecturer, professor of law, University of Mississippi


Trump said that the idea of changing reporting requirements came from outgoing PepsiCo Inc.
PEP, +0.62%
 Chief Executive Indra Nooyi, a longtime critic of the current system who has argued that the pressure to meet short-term goals clouds longer-term targets. The president has asked the Securities and Exchange Commission to review the issue.

“I have the results to show for long-term management and the scars to show for short-term management, “Nooyi told a panel at the World Economic Forum’s annual meeting in Davos this year, as Business Insider reported.

The executive was harshly criticized by analysts during the period in which she worked to move PepsiCo away from sugary drinks and salty snacks toward healthier products with her “Profits with Purpose” strategy. After her first five years as CEO, there were calls for her ousting as sales slowed, profits missed targets and the stock languished.

Read now : Trump and Warren agree: Corporations are holding back the economy

Nooyi suggested her 12-year tenure as CEO would offer a good case study for her insistence on taking a longer view. PepsiCo has beaten profit estimates for the past 20 quarters, according to FactSet, as her strategy paid off and got the company back on a growth track.

SEC Chairman Jay Clayton said his agency has already implemented measures that aim to “encourage long-term capital formation while preserving, and in many instances, enhancing key investor protections.”

The SEC’s Division of Corporation Finance “continues to study public company reporting requirements, including the frequency of reporting,” he said in a statement.

But if the idea is to get companies to focus on longer-term results over shorter-term performance, some feel that increasing the time between reports by three months won’t make much of a difference.

“I think it’s negligible,” said Wayne Thorp, vice president and senior financial analyst at the American Association of Individual Investors. “It’s a step in the right direction, but I don’t think it would impact the individual investor that much. It’s lip service.”

To be sure, companies would prefer not to have the burden and expense of quarterly reporting, which includes the need to rehearse for conference calls with analysts. And companies have become expert over the years at gaming the system so that they beat consensus forecasts and enjoy the subsequent stock gains.

In case you missed it: Here’s how investors are duped each earnings season

Also: Investors who paid attention to GE’s accounting saw trouble coming

That expertise has meant that earnings have beaten forecasts at a faster rate over time, as Jill Carey Hall, equity and quant strategist at Bank of America Merrill Lynch, told MarketWatch in June.

“There is a tendency by corporations to set conservative numbers so that EPS beats come through,” Hall said.

Booking Holdings Inc.
BKNG, +0.86%
the former Priceline, for example, regularly offers soft earnings guidance, only to then “beat” that guidance when it reports, as MarketWatch has previously reported. See The Sniff Test about Priceline’s tendency to set the bar low.

Billionaire investor Warren Buffett
BRK.B, +0.28%
 and JP Morgan Chase & Co.
JPM, +0.00%
 Chief Executive Jamie Dimon have argued that companies should stop offering quarterly guidance and switch their focus to longer-term issues. The two executives support the release of quarterly earnings reports, but believe the practice of guiding for the next quarter creates short-termism that is damaging to the economy.

“In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability,” they wrote in a Wall Street Journal commentary piece.

But John Kay, U.K.-based economist and author of “Other People’s Money: The Real Business of Finance,” says it’s the practice of reporting every quarter that causes short-term thinking.

“What is changing in three-month intervals does not tell us anything about how a company is positioned to deal with long-term growth,” Kay said in a recent interview with MarketWatch.

Read now: Critics say Buffett-Dimon plea to end quarterly guidance won’t end ‘short-termism’

Kay was tasked with reviewing activity in U.K. equity markets and the impact on long-term performance and governance of listed companies and recommended eliminating quarterly reporting in favor of six-month’s and phasing out guidance. His other recommendations included the adoption of a stewardship code, the establishment of a forum for collective engagement by investors, the clarification of fiduciary duties of trustees and their advisers, and the rebating to investors of all income from stock lending.


“Earnings reports cut through all the noise, and that’s what investors really need to see. It’s easy to get distracted. We need those earnings to keep [investors] on track, to keep them from going off the rails.”

Karen Cavanaugh, senior market strategist, Voya Investment Management


The U.K. in 2014 dropped its quarterly reporting requirement, although about 90% of U.K.- listed companies still report that way, many because they are also listed in the U.S., the deepest and biggest capital markets in the world.

The academic world has attempted to evaluate the merits of quarterly versus semi-annual reporting with mixed results. A paper by Chicago Booth Professor Haresh Sapra and colleagues from the University of Illinois at Urbana-Champaign and the University of Minnesota published in 2014 found there’s a happy medium between too little disclosure and too much delivered too often.

“Since markets are forward looking, any actions that favor the short term at the expense of greater long-term value creation would be effectively punished by lower capital market prices,” said the paper. Overreporting can be expensive and could make it more attractive for companies to do anything to produce quick profits. “Such pressures disappear when reporting frequency is decreased,” the paper found.

But some industry analysts said reduced reporting could actually increase costs for companies, as lenders could require higher interest rates to compensate for the increased uncertainty from less information.

“I understand CEOs’ frustration with short-term [reporting], but the solution is not to hide critical information from investors,” said Mercer Bullard, Butler Snow lecturer and professor of law at the University of Mississippi. “[President Trump’s] proposal would raise the cost of capital for public companies and weaken our markets’ global competitiveness.”

Karen Cavanaugh, senior market strategist at Voya Investment Management, said regular earnings reports are necessary and good for investors, because they provide a check point on how macro developments, such as tax cuts and tariffs, can affect companies and the economy.

“Earnings reports cut through all the noise, and that’s what investors really need to see,” Cavanaugh said. “It’s easy to get distracted. We need those earnings to keep [investors] on track, to keep them from going off the rails.”

Howard Berkenblit, partner and head of the capital markets group at the law firm Sullivan & Worcester, agreed that quarterly reporting serves a “useful function” for both companies and investors.



For companies, reporting twice a year instead of four times would save some money and resources, but they could find it challenging to “talk freely” to institutional investors and lenders about their business and outlook, unless that information has been fully disclosed to the public, as Regulation FD (Fair Disclosure) requires. And if companies are going to do the work to update investors, it wouldn’t be that much more of a burden to disclose the information officially, Berkenbilt said.

See also: This company is parsing earnings calls to identify the speech patterns that move stock prices

Related: There’s a link between CEOs who torture the English language and poor stock performance

For investors, it’s hard to argue that less information is ever better than more information. And for small investors, who are already unable to keep up with high-speed and algorithmic trading machines that can scrape information from multiple sources in the blink of an eye would likely be even more disadvantaged if those programs were to become more aggressive.

“I see it as maybe a hard sell, since investors and analysts still want that information, and may not want to wait that long to know what’s going on with a company,” Berkenblit said. “Is the saving really worth it, for the benefit to the investment community that you give up?”

Drogen from Estimize said fans of long-term planning often use Amazon.com Inc.
AMZN, -0.23%
 as an example of a company that was able to thrive despite the many years in which it failed to show a profit.

“Investors love to point to Amazon and Jeff Bezos when it comes to long term thinking and investments, but they are sorely mistaken if they believe the market is willing to given that kind of benefit of the doubt to every managerial team,” he said.

“In a time when technological disruption risk is increasing significantly, investors need more information at a more rapid clip in order to assess the health of businesses, not less,” he said.

Amazon shares have gained 60% in 2018, while the S&P 500
SPX, +0.33%
has gained 6.3% and the Dow Jones Industrial Average
DJIA, +0.43%
has added 3.6%.

Additional reporting by Anora M. Gaudiano


http://www.marketwatch.com/news/story.asp?guid=%7B91BC0CFC-A235-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

Capitol Report: Trump reportedly showing renewed interest in Erik Prince’s plan to privatize Afghanistan war

Getty Images

Erik Prince arrives to testify during a closed-door House Select Intelligence Committee hearing on Capitol Hill in November 2017.

President Donald Trump is showing renewed interest in a proposal to privatize the war in Afghanistan, according to an NBC News report citing current and former senior administration officials.

NBC said Trump is increasingly venting frustration to his national security team about the U.S. strategy in Afghanistan, and is reportedly eyeing a proposal by Blackwater founder Erik Prince that envisions replacing troops with private military contractors. The idea, which came up last year during Trump’s Afghanistan strategy review, would have those contractors work for a special U.S. envoy for the war, who would report to the president.

Prince’s proposal has raised ethical and security concerns among senior military officials as well as lawmakers and members of Trump’s national security team, NBC writes. The report says the president’s advisers are worried his impatience with the Afghanistan conflict will cause him to seriously consider plans like Prince’s, or order a complete U.S. withdrawal.

Prince, whose sister is Education Secretary Betsy DeVos, told NBC he plans to launch a media campaign to try to get Trump to embrace the proposal.

Also read: Blackwater founder Erik Prince uses Elon Musk to back his point about Afghanistan.

A spokesperson for the National Security Council told NBC “no such proposal from Erik Prince is under consideration” and that Trump is committed to the current U.S. strategy.

Blackwater, a security-contracting firm, is now known as Academi.


Want news about Asia delivered to your inbox? Subscribe to MarketWatch’s free Asia Daily newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7B7DACAF56-A243-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

Futures Movers: Oil ends higher, but suffers a third weekly loss in a row

Oil futures finished higher Friday, but suffered a third weekly loss in a row after data earlier this week marked a surprise jump in U.S. crude inventories and overall strength in the dollar underlined concerns about demand growth.

Crude found support Thursday and remained buoyant on Friday as the U.S. and China prepared to resume trade talks next week, though expectations for a breakthrough remained low.

West Texas Intermediate crude for September delivery
CLU8, +0.75%
 on the New York Mercantile Exchange climbed by 45 cents, or 0.7%, to settle at $65.91 a barrel. The U.S. benchmark still saw a 2.5% weekly decline.

The global benchmark, October Brent crude
LCOV8, +0.56%
rose 40 cents, or 0.6%, to $71.83 a barrel on the ICE Futures Europe exchange. Brent logged a 1.3% weekly loss.

Both benchmarks saw a third straight weekly fall, based on the most-active contracts.

The Energy Information Administration on Wednesday reported a 6.8 million-barrel rise in U.S. crude inventories, defying expectations for a decline of around 2.4 million barrels. Crude futures extended losses after the data in Wednesday’s session, joining a broader commodity rout tied in part to a strengthening U.S. dollar, pushing WTI to a 10-week low and Brent to its lowest close since early April, though prices recovered some lost ground in Thursday’s session.

There isn’t much of hope for a rise in oil prices, “especially when the data from the EIA shows that ample supply has built up again,” said Naeem Aslam, chief market analyst at Think Markets. “The negative effects from the EIA report…has pushed the bulls to a corner.”

Oil prices Friday showed little reaction to data on the number of active U.S. oil rigs from oil-field services firm Baker Hughes
BHGE, -1.38%
which offers a peek into the direction of U.S. crude output. The number was unchanged at 869 for the week.

Meanwhile, fears of broader damage to emerging markets as a result of Turkey’s currency crisis also served to send shock waves through commodity markets this week, led by a selloff for industrial metals. The ICE U.S. Dollar Index
DXY, -0.49%
which measures the U.S. unit against a basket of six major rivals, hit a 14-month high earlier in the week on haven-related demand.

“The oil market has not been spared from the macro-induced weakness, and while [Wednesday’s] counter-seasonal crude inventory build did not help, concerns of a firming U.S. dollar have also created anxiety on the prospects of oil demand growth,” wrote analysts at RBC Capital Markets.

That is because a weakening domestic currency “spells trouble for major emerging-market growth countries like India where consumers are already paying near record levels for retail petrol. The Indian rupee fell to all-time lows this week,” they noted.

Eugen Weinberg, head of commodity research at Commerzbank, said there remained worries that trade tensions between the U.S. and China, the world’s two largest oil consumers, could weigh on global demand. Meanwhile, on the supply front, crude production in Libya is set to bounce back to more than 1 million barrels a day again for the first time since June as production at the country’s largest oil field returns toward normal levels, he said in a note, citing S&P Global Platts.

In other energy dealings Friday, September gasoline
RBU8, -0.44%
 slipped 0.3% lower to $1.981 a gallon, for a weekly loss of around 2.9%, while September heating oil
HOU8, +0.17%
 rose about 0.1% to $2.098 a gallon, paring its weekly loss to roughly 1.9%. September natural gas
NGU18, +1.38%
 added 1.3% to $2.946 per million British thermal units, building a gain of less than 0.1% for the week.


Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7BB42C728E-A20A-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

Want to make friends? Leave the Gucci bags and Dior shoes at home

Who doesn’t love a new Louis Vuitton
LVMUY, +0.85%
  bag, a ride in a luxurious BMW
BMW, -0.48%
 and the latest pair of Chanel sunglasses? Potential new friends, that’s who.

Status symbols, like the trendiest pair of shoes and accessories, make people appear less socially attractive, according to new research published in the journal Social Psychological and Personality Science. Scientists conducted six studies where participants evaluated who they would want to befriend as well as how they would present themselves to potential new pals. The latter chose higher status items to present themselves, but those evaluating these new acquaintances preferred the people with lower or “neutral” status symbols.

“We may be wasting billions of dollars on expensive status symbols that ultimately keep others from wanting to associate with us,” Kimberlee Weaver Livnat, a researcher at the University of Haifa in Israel, said.

See also: 5 ways to tell if you belong among the new elites — the ‘aspirational class’

Respondents appeared to believe that a T-shirt from an expensive store would be more likely to impress. The researchers provided participants with the choice of two plain T-shirts, one that said “Walmart”
WMT, -0.77%
in plain script and one with “Saks Fifth Avenue.” More than three-quarters of participants presenting themselves as new friends chose to wear the Saks Fifth Avenue shirt, whereas only 64% of those looking for new friends preferred the person wearing the Walmart shirt.



Luxury items may not bode well for romantic relationships either. Men who opt for the flashier things in life, like fast cars and a penthouse apartment, are perceived as more interested in short-term hook-ups and affairs than marriage, according to a study published last May in the academic journal Evolutionary Psychological Science.

The study asked two groups of undergraduate students to rate two fictional men on their dating and parenting skills, interest in a relationship and attractiveness to others. The first fictional character spent $20,000 on a reliable car, whereas the second spent $15,000 on his car and used an additional $5,000 to add larger wheels, a paint job and a sound system. Both men and women equated the man with the flashier car with a higher interest in brief sexual relationships and gave him a low rating as a life partner.

See also: Gucci wants you to wear this $590 advertisement for Viacom

Whether it’s a wallet or a designer bag worth thousands of dollars, people crave luxury goods as a symbol of wealth and power. The world’s 100 largest luxury goods companies reported $217 billion in sales in 2016, up 1% on the previous year, according to Deloitte’s “Global Powers of Luxury Goods” report. The entire luxury goods market has “bounced back from economic uncertainty and geopolitical crises, edging closer to annual sales of $1 trillion at the end of 2017,” the report said.

One solution for status-conscious Americans: Choose a non-fashion brand to get your message across. As part of a recent promotion, people who signed up for a $12 New Yorker subscription received a free canvas tote bag with the magazine’s name on it. The plain cotton bag was dubbed 2017’s “it” bag by a London fashion editor. The tote is far from a fashion statement, but was considered by some to be a potent symbol of literacy, cultural awareness and interest in the world, experts said at the time.

The good news: The latest study suggested that status symbols may help for networking, the researchers said. At the very least, they said they wouldn’t hurt.


http://feeds.marketwatch.com/~r/marketwatch/pf/~3/egRUTB1g-wg/story.asp

Should companies move to a semi-annual reporting schedule as Trump proposed? Probably not, say analysts

Should the U.S. move to a six-month financial reporting calendar from the current quarterly one as President Donald Trump mooted in an early Friday tweet?

Not really, according to many investors and analysts, who argue that shareholders need more disclosure from the companies they invest in and not less. And while many executives — Elon Musk, anyone? — argue that the burden of striving to meet quarterly estimates can lead to short-termism on the part of managers and shareholders, there’s no guarantee that a different reporting schedule would change that.

“If the charge is that companies are managing for short-term expectations, what will be the difference between a three-month cycle and a six-month cycle? Nothing,” said Leigh Drogen, founder and chief executive of Estimize, a platform that crowdsources earnings estimates and economic forecasts.

“A six-month cycle will also lead to increased volatility given less access to hard information regarding the performance of companies,” Drogen said.


“I understand CEOs’ frustration with short-term [reporting], but the solution is not to hide critical information from investors. [President Trump’s] proposal would raise the cost of capital for public companies and weaken our markets’ global competitiveness.”

Mercer Bullard, Butler Snow lecturer, professor of law, University of Mississippi


Trump said that the idea of changing reporting requirements came from outgoing PepsiCo Inc.
PEP, +0.61%
 Chief Executive Indra Nooyi, a longtime critic of the current system who has argued that the pressure to meet short-term goals clouds longer-term targets. The president has asked the Securities and Exchange Commission to review the issue.

“I have the results to show for long-term management and the scars to show for short-term management, “Nooyi told a panel at the World Economic Forum’s annual meeting in Davos this year, as Business Insider reported.

The executive was harshly criticized by analysts during the period in which she worked to move PepsiCo away from sugary drinks and salty snacks toward healthier products with her “Profits with Purpose” strategy. After her first five years as CEO, there were calls for her ousting as sales slowed, profits missed targets and the stock languished.

Read now : Trump and Warren agree: Corporations are holding back the economy

Nooyi suggested her 12-year tenure as CEO would offer a good case study for her insistence on taking a longer view. PepsiCo has beaten profit estimates for the past 20 quarters, according to FactSet, as her strategy paid off and got the company back on a growth track.

SEC Chairman Jay Clayton said his agency has already implemented measures that aim to “encourage long-term capital formation while preserving, and in many instances, enhancing key investor protections.”

The SEC’s Division of Corporation Finance “continues to study public company reporting requirements, including the frequency of reporting,” he said in a statement.

But if the idea is to get companies to focus on longer-term results over shorter-term performance, some feel that increasing the time between reports by three months won’t make much of a difference.

“I think it’s negligible,” said Wayne Thorp, vice president and senior financial analyst at the American Association of Individual Investors. “It’s a step in the right direction, but I don’t think it would impact the individual investor that much. It’s lip service.”

To be sure, companies would prefer not to have the burden and expense of quarterly reporting, which includes the need to rehearse for conference calls with analysts. And companies have become expert over the years at gaming the system so that they beat consensus forecasts and enjoy the subsequent stock gains.

In case you missed it: Here’s how investors are duped each earnings season

Also: Investors who paid attention to GE’s accounting saw trouble coming

That expertise has meant that earnings have beaten forecasts at a faster rate over time, as Jill Carey Hall, equity and quant strategist at Bank of America Merrill Lynch, told MarketWatch in June.

“There is a tendency by corporations to set conservative numbers so that EPS beats come through,” Hall said.

Booking Holdings Inc.
BKNG, +0.54%
the former Priceline, for example, regularly offers soft earnings guidance, only to then “beat” that guidance when it reports, as MarketWatch has previously reported. See The Sniff Test about Priceline’s tendency to set the bar low.

Billionaire investor Warren Buffett
BRK.B, +0.30%
 and JP Morgan Chase & Co.
JPM, +0.12%
 Chief Executive Jamie Dimon have argued that companies should stop offering quarterly guidance and switch their focus to longer-term issues. The two executives support the release of quarterly earnings reports, but believe the practice of guiding for the next quarter creates short-termism that is damaging to the economy.

“In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability,” they wrote in a Wall Street Journal commentary piece.

But John Kay, U.K.-based economist and author of “Other People’s Money: The Real Business of Finance,” says it’s the practice of reporting every quarter that causes short-term thinking.

“What is changing in three-month intervals does not tell us anything about how a company is positioned to deal with long-term growth,” Kay said in a recent interview with MarketWatch.

Read now: Critics say Buffett-Dimon plea to end quarterly guidance won’t end ‘short-termism’

Kay was tasked with reviewing activity in U.K. equity markets and the impact on long-term performance and governance of listed companies and recommended eliminating quarterly reporting in favor of six-month’s and phasing out guidance. His other recommendations included the adoption of a stewardship code, the establishment of a forum for collective engagement by investors, the clarification of fiduciary duties of trustees and their advisers, and the rebating to investors of all income from stock lending.


“Earnings reports cut through all the noise, and that’s what investors really need to see. It’s easy to get distracted. We need those earnings to keep [investors] on track, to keep them from going off the rails.”

Karen Cavanaugh, senior market strategist, Voya Investment Management


The U.K. in 2014 dropped its quarterly reporting requirement, although about 90% of U.K.- listed companies still report that way, many because they are also listed in the U.S., the deepest and biggest capital markets in the world.

The academic world has attempted to evaluate the merits of quarterly versus semi-annual reporting with mixed results. A paper by Chicago Booth Professor Haresh Sapra and colleagues from the University of Illinois at Urbana-Champaign and the University of Minnesota published in 2014 found there’s a happy medium between too little disclosure and too much delivered too often.

“Since markets are forward looking, any actions that favor the short term at the expense of greater long-term value creation would be effectively punished by lower capital market prices,” said the paper. Overreporting can be expensive and could make it more attractive for companies to do anything to produce quick profits. “Such pressures disappear when reporting frequency is decreased,” the paper found.

But some industry analysts said reduced reporting could actually increase costs for companies, as lenders could require higher interest rates to compensate for the increased uncertainty from less information.

“I understand CEOs’ frustration with short-term [reporting], but the solution is not to hide critical information from investors,” said Mercer Bullard, Butler Snow lecturer and professor of law at the University of Mississippi. “[President Trump’s] proposal would raise the cost of capital for public companies and weaken our markets’ global competitiveness.”

Karen Cavanaugh, senior market strategist at Voya Investment Management, said regular earnings reports are necessary and good for investors, because they provide a check point on how macro developments, such as tax cuts and tariffs, can affect companies and the economy.

“Earnings reports cut through all the noise, and that’s what investors really need to see,” Cavanaugh said. “It’s easy to get distracted. We need those earnings to keep [investors] on track, to keep them from going off the rails.”

Howard Berkenblit, partner and head of the capital markets group at the law firm Sullivan & Worcester, agreed that quarterly reporting serves a “useful function” for both companies and investors.



For companies, reporting twice a year instead of four times would save some money and resources, but they could find it challenging to “talk freely” to institutional investors and lenders about their business and outlook, unless that information has been fully disclosed to the public, as Regulation FD (Fair Disclosure) requires. And if companies are going to do the work to update investors, it wouldn’t be that much more of a burden to disclose the information officially, Berkenbilt said.

See also: This company is parsing earnings calls to identify the speech patterns that move stock prices

Related: There’s a link between CEOs who torture the English language and poor stock performance

For investors, it’s hard to argue that less information is ever better than more information. And for small investors, who are already unable to keep up with high-speed and algorithmic trading machines that can scrape information from multiple sources in the blink of an eye would likely be even more disadvantaged if those programs were to become more aggressive.

“I see it as maybe a hard sell, since investors and analysts still want that information, and may not want to wait that long to know what’s going on with a company,” Berkenblit said. “Is the saving really worth it, for the benefit to the investment community that you give up?”

Drogen from Estimize said fans of long-term planning often use Amazon.com Inc.
AMZN, -0.33%
 as an example of a company that was able to thrive despite the many years in which it failed to show a profit.

“Investors love to point to Amazon and Jeff Bezos when it comes to long term thinking and investments, but they are sorely mistaken if they believe the market is willing to given that kind of benefit of the doubt to every managerial team,” he said.

“In a time when technological disruption risk is increasing significantly, investors need more information at a more rapid clip in order to assess the health of businesses, not less,” he said.

Amazon shares have gained 60% in 2018, while the S&P 500
SPX, +0.38%
has gained 6.3% and the Dow Jones Industrial Average
DJIA, +0.49%
has added 3.6%.

Additional reporting by Anora M. Gaudiano


http://www.marketwatch.com/news/story.asp?guid=%7B91BC0CFC-A235-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

Retirement Weekly: It’s time to take another look at gold

What role should gold play in a retirement portfolio?

That would be an important question at any time but especially now, given gold’s awful performance in recent weeks. Bullion is now down some $200 an ounce since its January high, and more than $700 from its all-time high eight years ago.

So now is a good time to reassess.


To continue reading, please subscribe. Already a Subscriber? Log in

http://feeds.marketwatch.com/~r/marketwatch/pf/~3/TWJ4IU0mxI8/story.asp

Retirement Weekly: Beware conventional wisdom when planning for retirement

If you read a lot about retirement you have no doubt come across established thinking that asks you to follow the so-called 4% rule and to choose a Social Security start date after conducting a break-even analysis.

These well-recognized strategies may have problems. Let’s take a closer look.

Deciding to draw down retirement assets using the 4% rule


To continue reading, please subscribe. Already a Subscriber? Log in

http://feeds.marketwatch.com/~r/marketwatch/pf/~3/GTjUcnz31KQ/story.asp

Should companies move to a semi-annual reporting schedule? Probably not, say analysts

Should the U.S. move to a six-month financial reporting calendar from the current quarterly one as President Donald Trump mooted in an early Friday tweet?

Not really, according to many investors and analysts, who argue that shareholders need more disclosure from the companies they invest in and not less. And while many executives — Elon Musk, anyone? — argue that the burden of striving to meet quarterly estimates can lead to short-termism on the part of managers and shareholders, there’s no guarantee that a different reporting schedule would change that.

“If the charge is that companies are managing for short-term expectations, what will be the difference between a three-month cycle and a six-month cycle? Nothing,” said Leigh Drogen, founder and chief executive of Estimize, a platform that crowdsources earnings estimates and economic forecasts.

“A six-month cycle will also lead to increased volatility given less access to hard information regarding the performance of companies,” Drogen said.


“I understand CEOs’ frustration with short-term [reporting], but the solution is not to hide critical information from investors. [President Trump’s] proposal would raise the cost of capital for public companies and weaken our markets’ global competitiveness.”

Mercer Bullard, Butler Snow lecturer, professor of law, University of Mississippi


Trump said that the idea of changing reporting requirements came from outgoing PepsiCo Inc.
PEP, +0.55%
 Chief Executive Indra Nooyi, a longtime critic of the current system who has argued that the pressure to meet short-term goals clouds longer-term targets.

“I have the results to show for long-term management and the scars to show for short-term management, “Nooyi told a panel at the World Economic Forum’s annual meeting in Davos this year, as Business Insider reported.

The executive was harshly criticized by analysts during the period in which she worked to move PepsiCo away from sugary drinks and salty snacks toward healthier products with her “Profits with Purpose” strategy. After her first five years as CEO, there were calls for her ousting as sales slowed, profits missed targets and the stock languished.

Read now : Trump and Warren agree: Corporations are holding back the economy

Nooyi suggested her 12-year tenure as CEO would offer a good case study for her insistence on taking a longer view. PepsiCo has beaten profit estimates for the past 20 quarters, according to FactSet, as her strategy paid off and got the company back on a growth track.

But if the idea is to get companies to focus on longer-term results over shorter-term performance, some feel that increasing the time between reports by three months won’t make much of a difference.

“I think it’s negligible,” said Wayne Thorp, vice president and senior financial analyst at the American Association of Individual Investors. “It’s a step in the right direction, but I don’t think it would impact the individual investor that much. It’s lip service.”

To be sure, companies would prefer not to have the burden and expense of quarterly reporting, which includes the need to rehearse for conference calls with analysts. And companies have become expert over the years at gaming the system so that they beat consensus forecasts and enjoy the subsequent stock gains.

In case you missed it: Here’s how investors are duped each earnings season

Also: Investors who paid attention to GE’s accounting saw trouble coming

That expertise has meant that earnings have beaten forecasts at a faster rate over time, as Jill Carey Hall, equity and quant strategist at Bank of America Merrill Lynch, told MarketWatch in June.

“There is a tendency by corporations to set conservative numbers so that EPS beats come through,” Hall said.

Booking Holdings Inc.
BKNG, +0.34%
the former Priceline, for example, regularly offers soft earnings guidance, only to then “beat” that guidance when it reports, as MarketWatch has previously reported. See The Sniff Test about Priceline’s tendency to set the bar low.

Billionaire investor Warren Buffett
BRK.B, +0.05%
 and JP Morgan Chase & Co.
JPM, +0.04%
 Chief Executive Jamie Dimon have argued that companies should stop offering quarterly guidance and switch their focus to longer-term issues. The two executives support the release of quarterly earnings reports, but believe the practice of guiding for the next quarter creates short-termism that is damaging to the economy.

“In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability,” they wrote in a Wall Street Journal commentary piece.

But John Kay, U.K.-based economist and author of “Other People’s Money: The Real Business of Finance,” says it’s the practice of reporting every quarter that causes short-term thinking.

“What is changing in three-month intervals does not tell us anything about how a company is positioned to deal with long-term growth,” Kay said in a recent interview with MarketWatch.

Read now: Critics say Buffett-Dimon plea to end quarterly guidance won’t end ‘short-termism’

Kay was tasked with reviewing activity in U.K. equity markets and the impact on long-term performance and governance of listed companies and recommended eliminating quarterly reporting in favor of six-month’s and phasing out guidance. His other recommendations included the adoption of a stewardship code, the establishment of a forum for collective engagement by investors, the clarification of fiduciary duties of trustees and their advisers, and the rebating to investors of all income from stock lending.


“Earnings reports cut through all the noise, and that’s what investors really need to see. It’s easy to get distracted. We need those earnings to keep [investors] on track, to keep them from going off the rails.”

Karen Cavanaugh, senior market strategist, Voya Investment Management


The U.K. in 2014 dropped its quarterly reporting requirement, although about 90% of U.K.- listed companies still report that way, many because they are also listed in the U.S., the deepest and biggest capital markets in the world.

The academic world has attempted to evaluate the merits of quarterly versus semi-annual reporting with mixed results. A paper by Chicago Booth Professor Haresh Sapra and colleagues from the University of Illinois at Urbana-Champaign and the University of Minnesota published in 2014 found there’s a happy medium between too little disclosure and too much delivered too often.

“Since markets are forward looking, any actions that favor the short term at the expense of greater long-term value creation would be effectively punished by lower capital market prices,” said the paper. Overreporting can be expensive and could make it more attractive for companies to do anything to produce quick profits. “Such pressures disappear when reporting frequency is decreased,” the paper found.

But some industry analysts said reduced reporting could actually increase costs for companies, as lenders could require higher interest rates to compensate for the increased uncertainty from less information.

“I understand CEOs’ frustration with short-term [reporting], but the solution is not to hide critical information from investors,” said Mercer Bullard, Butler Snow lecturer and professor of law at the University of Mississippi. “[President Trump’s] proposal would raise the cost of capital for public companies and weaken our markets’ global competitiveness.”

Karen Cavanaugh, senior market strategist at Voya Investment Management, said regular earnings reports are necessary and good for investors, because they provide a check point on how macro developments, such as tax cuts and tariffs, can affect companies and the economy.

“Earnings reports cut through all the noise, and that’s what investors really need to see,” Cavanaugh said. “It’s easy to get distracted. We need those earnings to keep [investors] on track, to keep them from going off the rails.”

Howard Berkenblit, partner and head of the capital markets group at the law firm Sullivan & Worcester, agreed that quarterly reporting serves a “useful function” for both companies and investors.



For companies, reporting twice a year instead of four times would save some money and resources, but they could find it challenging to “talk freely” to institutional investors and lenders about their business and outlook, unless that information has been fully disclosed to the public, as Regulation FD (Fair Disclosure) requires. And if companies are going to do the work to update investors, it wouldn’t be that much more of a burden to disclose the information officially, Berkenbilt said.

See also: This company is parsing earnings calls to identify the speech patterns that move stock prices

Related: There’s a link between CEOs who torture the English language and poor stock performance

For investors, it’s hard to argue that less information is ever better than more information. And for small investors, who are already unable to keep up with high-speed and algorithmic trading machines that can scrape information from multiple sources in the blink of an eye would likely be even more disadvantaged if those programs were to become more aggressive.

“I see it as maybe a hard sell, since investors and analysts still want that information, and may not want to wait that long to know what’s going on with a company,” Berkenblit said. “Is the saving really worth it, for the benefit to the investment community that you give up?”

Drogen from Estimize said fans of long-term planning often use Amazon.com Inc.
AMZN, -0.34%
 as an example of a company that was able to thrive despite the many years in which it failed to show a profit.

“Investors love to point to Amazon and Jeff Bezos when it comes to long term thinking and investments, but they are sorely mistaken if they believe the market is willing to given that kind of benefit of the doubt to every managerial team,” he said.

“In a time when technological disruption risk is increasing significantly, investors need more information at a more rapid clip in order to assess the health of businesses, not less,” he said.

Amazon shares have gained 60% in 2018, while the S&P 500
SPX, +0.35%
has gained 6.3% and the Dow Jones Industrial Average
DJIA, +0.53%
has added 3.6%.

Additional reporting by Anora M. Gaudiano


http://www.marketwatch.com/news/story.asp?guid=%7B91BC0CFC-A235-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1

Metals Stocks: Gold marks largest weekly drop in more than a year

Gold prices settled slightly higher Friday, but posted a nearly 2.9% weekly retreat, the largest such drop since early May of last year.

The precious metal edged up in the wake of losses over the past two sessions as the leading dollar index also churned in the red. The buck, which was currently down slightly for the week but up 4.5% year to date, has been the key driver for the precious metals. A firmer greenback, which makes buying bullion more expensive to investors using another currency, remains near a roughly 14-month peak.

December gold
GCZ8, +0.07%
 rose 20 cents to settle at $1,184.20 an ounce. Based on the most-active contracts, gold futures were down almost 2.9% for the week, which was the largest such percentage loss for a most-active contract since the week ended May 5, 2017, according to FactSet data. Prices settled Thursday at $1,184, the lowest since early January of 2017.

The metal also trades nearly 10% lower year to date, failing to draw the support that might be expected amid geopolitical turmoil around trade-war worries and Turkey’s financial crisis, as focus remains almost exclusively pinned on the stronger dollar. The precious metal has mostly languished just below the psychologically important $1,200 level after dropping beneath this line for the first time in more than a year on Monday.

Don’t miss: Turkey’s woes won’t trigger a full-blown crisis across emerging markets, economist says

A popular metals exchange-traded fund, the SPDR Gold Trust
GLD, +0.47%
was up 0.3%, but poised for a weekly loss of 2.8%, while an ETF that tracks gold miners, the VanEck Vectors Gold Miners ETF
GDX, +2.26%
added 1.2% — trading down 10.5% on the week.

“It is becoming increasingly clear that the yellow metal has struggled to maintain its safe-haven allure, with investors rushing to the dollar instead in these times of uncertainty,” said Lukman Otunuga, research analyst at FXTM, in a note Friday. “ With the greenback heavily supported by U.S. rate-hike expectations and safe-haven demand, gold is likely to witness further losses moving forward.”

The U.S. dollar index
DXY, -0.38%
which measures dollars against a half-dozen rivals, was down 0.4% at 96.28, looking at a weekly a loss of less than 0.1%. However, it continues to trade near its highest level since June 27, 2017, with the index was up 4.5% year to date, according to FactSet.

The weakness in the greenback Friday came on the heels of data from the University of Michigan showing that its consumer sentiment index fell to 95.3 in August, from 97.9 in July — the lowest level in 11 months.

Meanwhile, after posting broad declines Thursday, industrial metals on Comex ended on a mixed note. Copper saw its September contract
HGU8, +1.30%
 inch up by 0.5% to $2.629 a pound. It still finished about 4.1% lower for the week.

September silver
SIU8, -0.29%
lost 0.6% to $14.631 an ounce, for a weekly decline of 4.3%.

October platinum
PLV8, -0.36%
fell 0.9% to $777.30, still trading near its lowest in a decade and down about 6.3% on the week. September palladium
PAU8, +0.87%
 rose 0.3% to $877.80 an ounce, for a weekly fall of 2.6%.



Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

http://www.marketwatch.com/news/story.asp?guid=%7BDF1E5E8C-A203-11E8-894E-F549B3224C71%7D&siteid=rss&rss=1