Surprise, surprise<\/strong><\/p>\n Here\u2019s another good case for looking under the hood<\/a> of your mutual funds and ETFs: Brett Arends\u2019s excellent piece<\/a> in Smart Money Magazine<\/em> about how many global funds are heavily invested in the U.S. stock market. For instance, he wrote of Vanguard\u2019s Total World Stock Index that 42% of the money is invested in the stock market of just one country\u2014you guessed it, the U.S.<\/p>\n This Seeking Alpha<\/em> blog<\/a> compared the costs of Vanguard ETFs and mutual funds, finding ETFs are less expensive. The blog doesn\u2019t take tracking error into account, as we suggested that investors should do in this post<\/a>.<\/p>\n When less is more in investing.<\/strong><\/p>\n In this interesting Kiplinger\u2019s<\/em> piece<\/a>, columnist Bob Frick reminds investors that an environment of too many choices may be detrimental. He writes about the famous supermarket experiment in which two tasting displays, one with six jams and one with 24, were set up in a store. More people stopped at the 24-jam table, but far more people who stopped at the six-jam table actually bought jam. The point is supported by research into investor behavior, as well, as we wrote about in this post, The Nine Stupid Things Investors Do, According to the Library of Congress<\/a>.<\/p>\n 1990, redux: There will be a compromise<\/strong><\/p>\n Washington, D.C., continues to stumble painfully toward a budget compromise this week, in a season of party infighting that\u2019s likely to make and break political careers. Old-timers are drawing comparisons to 1990<\/a>, when George Bush broke his \u201cno new taxes\u201d pledge, and the conservative The Wall Street Journal<\/em> editorial<\/a> page is telling the Tea Partiers to take their rescue fantasies back to Middle Earth.<\/p>\n Debt downgrade less likely than you think<\/strong><\/p>\n Meanwhile, a debt downgrade seems less and less likely. The ratings agencies said that they would downgrade the United States\u2019 sterling credit rating if the parties couldn\u2019t reach a budget compromise, or if the budget compromise wasn\u2019t fiscally responsible enough. Since the compromise will happen, the only real question was how thoroughly the agencies were going to examine it. S&P\u2019s president said midweek<\/a> that even plans that reduced the deficit less than the previously mentioned $4 trillion could still preserve the rating.<\/p>\n Earlier this week The Economist<\/em> made the point that the worst possible scenario for the ratings agencies would be for them to downgrade the debt \u2013 and find that nobody cared. The agencies will act cautiously.<\/p>\n Silver lining<\/strong><\/p>\n The debt negotiations may spur investors to diversify their assets, as the Aleph Blog suggests in this posting, Where to Hide<\/a>. Here\u2019s our take on what a diversified portfolio<\/a> should look like.<\/p>\n Soros leaves the party<\/strong><\/p>\n The news that iconic investor George Soros\u2019s advisory firm would no longer manage money that\u2019s not his own drew readers\u2019 interest this week, rising to the tops of most-read lists on web sites. Soros made billions as an investor and then became a philanthropist and advocate (lately supporting legalized marijuana in California). Soros Fund Management aims to avoid new disclosure regulations placed on hedge fund managers who invest outsiders\u2019 money, according to a statement from his company. So the firm is returning the outside money and transitioning to a family office.<\/p>\n A Bloomberg BusinessWeek<\/em> article<\/a> offered one other possible explanation \u2013 that Mr. Soros wanted to leave the party while he was still having a good time. Referring to Soros\u2019s flagship Quantum Endowment Fund, the story reported:<\/p>\n \u201cWhile Quantum has returned about 20 percent a year, on average, since 1969, when its predecessor was started, according to a person familiar with the firm, the fund\u2019s performance has suffered in the last 18 months. In the first half of this year, Quantum lost about 6 percent, the person said, following a gain of 2.5 percent in 2010. Other macro funds have returned 5.6 percent in the last year-and-a-half, according to Chicago-based Hedge Fund Research Inc.\u201d<\/p>\n A new window into Google<\/strong><\/p>\n Google, whose business practices are under anti-trust review by the U.S. Federal Trade Commission, this week said it would stop using rivals\u2019 reviews in its own Google Places service, which this Financial Times story<\/a> said marked the first time the Internet giant had reversed course under growing criticism about unfair business practices.<\/p>\n Not exactly directly investment-related, but related, because Google controls so much of the information flow you use to make decisions. People used to say that The New York Times<\/em> set the agenda in the United States. These days, Google search does.<\/p>\n What not to believe<\/strong><\/p>\n This week, the idea pervading the web is that a government default is possible. This is one of those cases where any journalist worth her salt knows the possibility of a default is extremely, extremely low \u2026 but in this age where the \u201cextreme story\u201d sells, people are writing as if default were a high probability.<\/p>\n Predictably, after weeks of reading media reports explaining the various ways in which a default might happen, investors started to get a little skittish that one will happen. Funny how that works: the media drives up ratings by being alarmist<\/a>, and individual investors are alarmed<\/a>, as a New York Times<\/em> story reports about how few havens there are for investors.<\/p>\n The opinions expressed by guest bloggers and\/or blog interviewees are strictly their own and do not necessarily represent those of Wealthfront Inc. Information in this or other blogs should be used at your own risk. Past performance does not guarantee future results. Securities investments involve risk; returns in such investments vary and may involve gain or loss.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Here\u2019s another good case for looking under the hood of your mutual funds and ETFs: Brett Arends\u2019s excellent piece in Smart Money Magazine about how many global funds are heavily invested in the U.S. stock market. For instance, he wrote of Vanguard\u2019s Total World Stock Index that 42% of the money is invested in the stock market of just one country\u2014you guessed it, the U.S.<\/p>\n","protected":false},"author":43,"featured_media":7233,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1282],"tags":[1298,1332,1292],"coauthors":[84],"class_list":["post-1182","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-etfs","tag-google","tag-mutual-funds"],"acf":[],"yoast_head":"\n