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SOX, bonds, etfs and covered calls
Old 08-22-2006, 10:49 AM   #1
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SOX, bonds, etfs and covered calls

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Originally Posted by FinanceDude
The theory was that as the funds grew bigger, they could be elminated because economies of scale would allow it.
Hunh, that seems very similar to the theory that as funds grew bigger that they'd be able to reduce their expense ratios...

... oh, wait, I forgot that Sarbanes-Oxley made it impossible for any fund families to do that. Unless they're trying to compete with Vanguard.
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 11:59 AM   #2
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Re: So much for ER in 2010... (longish)

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Originally Posted by FinanceDude
Keep in mind companies like Vanguard and Fidelity PAY their 12b-1's to marketplace firms like Schwab and others to get distribution.
Vanguard doesn't have 12b-1 fees, at least on their index funds. This is why Schwab charges a commission to invest in Vanguard funds.
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 12:01 PM   #3
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Re: So much for ER in 2010... (longish)

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Originally Posted by eridanus
Vanguard doesn't have 12b-1 fees, at least on their index funds. This is why Schwab charges a commission to invest in Vanguard funds.
I don't think Vanguard has any in ANY fund... it is not something they need.
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 12:17 PM   #4
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Re: So much for ER in 2010... (longish)

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Originally Posted by Nords
... oh, wait, I forgot that Sarbanes-Oxley made it impossible for any fund families to do that.* Unless they're trying to compete with Vanguard.
Not exactly true..........American Fund reduced fees on their funds in 2005................. https://www.americanfunds.com/resour...t-fees.htm?r=s

Other than mandated by settlements with Elliot Spitzer, I don't know of anyone else who did that...............

My wife works a lot with Sarbanes-Oxley.........the cost of implementing it at her company is $500,000....................

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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 12:28 PM   #5
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Re: So much for ER in 2010... (longish)

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Originally Posted by FinanceDude

My wife works a lot with Sarbanes-Oxley.........the cost of implementing it at her company is $500,000....................

My impression as an analyst and shareholder of several small companies that have spent a LOT of money on SOx compliance is that I have received very little value for the money. Does that jibe with your wife's experience?
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 12:39 PM   #6
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Re: So much for ER in 2010... (longish)

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My impression as an analyst and shareholder of several small companies that have spent a LOT of money on SOx compliance is that I have received very little value for the money.* Does that jibe with your wife's experience?
Definitely...........it's a big hassle...........there's few "experts" out there that you can send your people to so they can learn.........it's a big mess..........

Thanks, Enron and Arthur Andersen!!
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 12:40 PM   #7
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Re: So much for ER in 2010... (longish)

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Originally Posted by FinanceDude
Definitely...........it's a big hassle...........there's few "experts" out there that you can send your people to so they can learn.........it's a big mess..........

Thanks, Enron and Arthur Andersen!!*
Yeah. I am somewhat surprised that more of the stuff I own hasn't gone private to avoid the requirements. For small companies, SOx is a really big burden.
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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 12:45 PM   #8
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Re: So much for ER in 2010... (longish)

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Originally Posted by FinanceDude
My wife works a lot with Sarbanes-Oxley.........the cost of implementing it at her company is $500,000....................
That is money well spend as far as I am concerned. Before S-A the accountants and CEO's at some companies were in bed together to rip-off the shareholders.

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Re: So much for ER in 2010... (longish)
Old 08-22-2006, 03:25 PM   #9
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Re: So much for ER in 2010... (longish)

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That is money well spend as far as I am concerned. Before S-A the accountants and CEO's at some LARGE companies were in bed together to rip-off the shareholders.
Sorry.............a little edit..............

I haven't heard about the small publicly held biotech firm fleecing shareholders........
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 10:12 AM   #10
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Re: So much for ER in 2010... (longish)

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Originally Posted by brewer12345
Yeah. I am somewhat surprised that more of the stuff I own hasn't gone private to avoid the requirements.* For small companies, SOx is a really big burden.
Yep. Just recently the (smallish) company that I worked for went private and its bottom line changed colors (red to black) pretty much overnight.
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 11:24 AM   #11
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Re: So much for ER in 2010... (longish)

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That is money well spend as far as I am concerned. Before S-A the accountants and CEO's at some companies were in bed together to rip-off the shareholders
.

I work in a accounting dept of a middle size co that went public 2 yrs ago. All SOX has done, is it created tremendous amount of extra paperwork. There are so many processes and procedures for every little process and a procedure that I have no idea how real "accounting" work gets done. Also, everything has to be reviewed and signed many many times.

I think SOX and similar acts do nothing but create more unnessary bureacracy. People who want to cheat and steal will do so anyway.

Lena
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 11:28 AM   #12
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Re: So much for ER in 2010... (longish)

Actually.............WHEN was the last time that Congress made legislation that STREAMLINED things for businesses?

Ok..............NEVER wasn't the word I was looking for.................
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 11:45 AM   #13
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Re: So much for ER in 2010... (longish)

Not to get off topic, but Finance Dude - can you please elaborate on mutual funds fees you were talking about

thanks

Lena
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 01:32 PM   #14
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Re: So much for ER in 2010... (longish)

Lena:

here is a couple of links to read about fees in mutual funds. Some of them are readily disclosed and some are not.

http://www.fool.com/News/mft/2006/mf...?ref=foolwatch

http://www.sec.gov/answers/mffees.htm

Also, mutual funds often pay way more than you would think to trade stocks. The higher fees then are often offset by kickback arrangements with the mutual fund company.
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 01:58 PM   #15
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Re: So much for ER in 2010... (longish)

Thanks MB.

Speaking of trading stocks, does anyone have any good reading suggestions on writing covered calls?

Lena
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 02:01 PM   #16
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Re: So much for ER in 2010... (longish)

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Originally Posted by Lena
Thanks MB.

Speaking of trading stocks, does anyone have any good reading suggestions on writing covered calls?

Lena
Depends. I'm sure that there are lots of popular books that keep it pretty shallow. Then there are the hard quant books that teach you how to actually value derivatives. Why not keep it simple and either skip covered calls, or only start writing them when the stock has drifted close to your sell target?
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 02:11 PM   #17
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Re: So much for ER in 2010... (longish)

Brewer,

I am very ignorant about the world of investing. A friend of mine was trading options and it sounded way too complicated for me. Then she mentioned covered calls and the idea seemed to fit: less risk and less involment. It also seemed less involved then trading stocks Or, I could be wrong and misunderstoond the whole thing.

So, I figured I'll do some reading on it. Doesn't hurts to have some knowledge (Well, unless you are a spy or something and can be killed for it)

Lena


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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 02:39 PM   #18
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Re: So much for ER in 2010... (longish)

In that case, lots of good material here: http://www.cboe.com/LearnCenter/OptionsInstitute1.aspx

A rule of thumb: stick to writing covered calls and maybe buying some calls and puts. That way you can only do limited damage to yourself if you get it wrong.
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 02:40 PM   #19
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Re: So much for ER in 2010... (longish)

Quote:
Originally Posted by Lena
I am very ignorant about the world of investing.* *A friend of mine was trading options and it sounded way too complicated for me.* Then she mentioned covered calls and the idea seemed to fit:* less risk and less involment.* *
I mean no insult to you when I say this, but IMO writing covered calls is NOT a good way to start for someone who is "very ignorant" about investing.

If I were you, I'd start with basic stuff -- stocks, bonds, and mutual funds. *When I say basic, I mean that you can explain the concept in simple terms. *

The posters here have some good recommendations, and of course you'll supplement that with your own reading. *For something basic, you might try PERSONAL FINANCE FOR DUMMIES (in whatever edition is the most recent) by Eric Tyson. *It's a good, comprehensive introduction to the topic. *(I think there's also INVESTING FOR DUMMIES, but I haven't read that and so can't recommend it.)
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Re: So much for ER in 2010... (longish)
Old 08-23-2006, 02:42 PM   #20
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Re: So much for ER in 2010... (longish)

Quote:
Originally Posted by Lena
I am very ignorant about the world of investing. A friend of mine was trading options and it sounded way too complicated for me. Then she mentioned covered calls and the idea seemed to fit: less risk and less involment. It also seemed less involved then trading stocks Or, I could be wrong and misunderstoond the whole thing.
Covered calls are like Vegas. Everyone's a winner!

A CC strategy only works in certain market conditions when compared to a Buy & Hold strategy. Similar to how daytrading was profitable and easy...until about March 2001 and 99% of daytraders blew out.
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