Tag Archives: onload

Resolve To Focus On Goals Rather Than Results In 2015

Results, results, results. We frequently hear that we should focus on results. More often than not, focusing on results is a waste of time. Because it is looking in the rear-view mirror, rather than the windshield. Someone asked me today what I thought of Janet Yellen as head of the Federal Reserve. I found this hard to answer. Even though Chairperson Yellen has been in the job since February, her job as lead policy-setter has almost no short-term ramifications. It takes quarters – not months – to see the results of those policy decisions. Even after a year in office, it is very difficult to render an opinion on her performance as Fed leader. The fantastic 5% growth in the U.S. economy last quarter has much more to do with what happened before she took office – in fact, years of policy setting before she took office – than what has happened since she became the top Fed governor. We often forget what the word “results” means. It is the outcome of previous decisions. Results tell us something about decisions that happened in the past. Sometimes, far into the past. We all can remember companies where looking backward all looked well, right up until the company fell off a cliff. Circuit City. Brach’s Candy. Sun Microsystems. Further, “results” are impacted dramatically by things outside the control of management, such as: Changes in interest rates (or no changes when they remain low) Changes in oil prices (which have been dramatically lower over the last 6 months) Changes in investor expectations and the overall stock market (which has been on a record-setting bull run) Inflation expectations (which remain at historical lows) Expectations about labor rates (which remain low, despite trends toward higher minimum wages) Technology advances (including rapid mobile growth in apps, beacons, payments, etc.) We too often forget that last quarter’s (or even last year’s) results are due to decisions made months before. Gloating, or apologizing, about those results has little meaning. Results, no matter how recent, are meaningless when looking forward. Decisions made long ago caused those results. “Results” are actually unimportant when investing for the future. What really matters are the decisions being made today, which can cause future results to be wildly different – better or worse. What we need to focus upon are these current decisions and their ability to create future results: What are the goals being set for next year – or better yet, for 2020? What are the trends upon which goals are being set? How are future goals aligned to major trends? What are the future expected scenarios, and how are goals being set to align with those scenarios? Who will be the likely future competitors, and how are goals being set make sure the organization is prepared to compete with the right companies? Far too often, management will say, “We just had great results. We plan to continue executing on our plans, and investors should expect similar future results.” But that makes no sense. The world is a fast-changing place. Past results are absolutely no indicator of future performance. For 2015 and beyond, investors (and employees, suppliers and communities sponsoring companies) should resolve to hold management far more accountable for future goals and the process used to set those goals. That Amazon.com maintains a valuation far higher than its historical indicates it should, primarily because it is excellent at communicating key trends it watches, future scenarios it expects and how the company plans to compete as it creates those future scenarios. In the 1981 Burt Reynolds’ movie ” The Cannonball Run ,” a character begins a trans-country auto race by ripping the rear-view mirror from his car and throwing it out the window. “What’s behind me is not important,” he proudly states. This should be the 2015 resolution of investors and all leaders. Past results are not important. What matters are plans for the future and future goals. Only by focusing on those can we succeed in creating growth and better results in the time to come.

2 iShares ETFs To Participate In The NYSE Incentive Program

Summary As of Jan. 2, 2015, two iShares ETFs will start participating in the NYSE Arca ETP incentive program. What is the incentives program? How the incentives program will help provide liquidity and help investors execute more efficient trades. BlackRock (NYSE: BLK ), the world’s largest asset manager and parent company of iShares, the world’s largest issuer of exchange traded funds, said today that as of Jan. 2, 2015, two of its ETFs will start participating in the NYSE Arca ETP incentive program. The iShares Interest Rate Hedged High Yield Bond ETF (NYSEArca: HYGH ) and the iShares Asia/Pacific Dividend ETF (NYSEArca: DVYA ) are the two iShares ETFs that will participate in the program, which is “designed to incentivize Market Makers to undertake Lead Market Maker (“LMM”) assignment in exchange-traded products (“ETPs”) listed on NYSE Arca,” according to a statement issued by BlackRock: While the impact of participation in the NYSE Arca ETP Incentive Program, which is optional, cannot be fully understood until objective observations can be made in the context of the NYSE Arca ETP Incentive Program, potential impacts on the market quality of HYGH and DVYA may result, including with respect to the average spread and average quoted size for HYGH and DVYA. HYGH, which debuted in May and now has almost $47 million in assets under management, tries to reflect the performance of the Citi High Yield (Treasury Rate-Hedged) Index, which tracks a basket of high-yield bonds with a built-in hedge against rising interest rates. The fund tracks bond securities issued from the U.S. or Canada with at least one year remaining to maturity. The ETF has an effective duration of 0.36 years and a 30-day SEC yield of 5.67%. DVYA, which will celebrate its third anniversary in February, has almost $55 million in assets. The ETF has a trailing 12-month dividend yield of 6.29%. Australia accounts for 48% of DVYA’s weight while Hong Kong and Singapore combine for another 31%. According to the statement: As a participant in the NYSE Arca ETP Incentive Program, BlackRock will continue to pay the applicable NYSE Arca Listing and Annual fees in addition to an Option Incentive Fee, which would range from $10,000 to $40,000 per year and will in turn be paid by NYSE Arca to the LMM assigned to HYGH and DVYA. iShares Asia/Pacific Dividend ETF (click to enlarge) ETF Trends editorial team contributed to this post.

Residential REITs ETF Could Slow As Renters Turn Into Buyers

Summary The residential REIT ETF was this year’s best performing financial services fund. However, residential REITs could slow down next year. Rental costs are rising, which in turn could force more renters to buy homes. The residential real estate investment trust exchange traded fund may be this year’s best financial services fund, but things may slow down next year as younger Americans find cheaper financing for a new home. The iShares Residential Real Estate Capped ETF (NYSEArca: REZ ) has increased 37.7% year-to-date as Americans opted to rent instead of purchase a new home this year. REZ offers investors a liquid alternative to physically owning commercial real estate. To qualify as a REIT, a real estate firm has to pay out the majority of its taxable income to shareholders as dividends, and REZ generates its income through renters. Since REITs pay out income to investors, REZ also shows a decent 3.21% 12-month yield. In 2014, U.S. renters paid a collective $441 billion in rent, up $20.6 billion, or 4.9%, from 2013 as renters in San Francisco paid over 14% more in rent, renters in Denver paid 11% more and New Yorkers paid over 10% of all the rent paid in the country, reports Diana Olick for CNBC . Zillow Chief Economist Stan Humphries said in the CNBC article: Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing. Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn’t out of the question. In fact, it’s probable. Consequently, the sudden rise in rents could force renters to become new homeowners, especially with cheaper loans available. Specifically, Fannie Mae and Freddie Mac have announced low-down payment loans and mortgage rates are also still attractive. Currently, Fannie Mae and Freddie Mac implement a minimum 5% down payment on home loans. However, the lenders could change it to a 3% minimum, which would allow creditworthy but cash-strapped consumers to acquire a new home. Additionally, mortgage rates remain depressed after Treasury bond yields made a surprising turnaround this year, with benchmark 10-year yields down to 2.2% compared to about 3.0% at the start of 2014. Zillow’s Humphries added: As we prepare for New Year’s and the next home shopping season, we expect soaring rents to entice more people to the relative stability of home ownership, particularly younger potential buyers. iShares Residential Real Estate Capped ETF (click to enlarge) Max Chen contributed to this article .