Posts by Michael Santoli

  • Powerball lottery sales plunge as 'jackpot fatigue' sets in

    Michael Santoli at Yahoo Finance 3 days ago

    It’s getting harder to find Americans who are willing to pay $2 for the (remote) chance to win a couple hundred million bucks.

    Powerball lottery ticket sales collapsed by some 40% in the second half of 2014 from the same period a year earlier in the 44 states, plus the District of Columbia, which participate in the sweepstakes.

    Lottery industry experts are blaming “jackpot fatigue,” a phenomenon in which bettors seem to require ever-larger stakes in order to continue buying tickets at the same pace.

    La Fleur’s magazine, which covers the lottery industry, notes that there hasn’t been a Powerball jackpot above $257 million in nearly a year. In the 15 months prior to February 2014, there were five jackpots of at least $400 million, including one of $600 million in the spring of 2013.

    Powerball jackpots build over time until a winning ticket or tickets hit. The lack of ever-larger jackpots, then, is a statistical fluke. But it’s the buildup of stakes toward record levels that generates buzz and seems to excite casual players into wagering.

    This certainly seems to describe what’s been happening to Powerball sales.

    More from Yahoo Finance

  • 'Robo-advisor' promises to beat ETFs at their own game

    Michael Santoli at Yahoo Finance 4 days ago

    Did the evolution of investing culminate in the creation of the index ETF, a simple product packed with decades of finance research and technological smarts?

    Or can the new generation of software-centric investment firms deliver on promises to improve the low-cost investing game beyond ETFs?

    Beginning 75 years ago, mutual funds pooled investor money to improve upon haphazard stock portfolios. Index funds, dating to the 1970s, were even more efficient than mutual funds and outperformed most of them. Exchange-traded funds that track market indexes then added greater liquidity and tax benefits, growing from zero to $2 trillion in two decades.

    Now a leading automated investment service for individuals is claiming to outdo even index ETFs – by, rather ironically, unbundling them into individual stock holdings.

    Here's how it works: A Wealthfront tax-optimization program books losses from declining stocks and reinvests the cash in similar stocks in order to mimic the index while generating better after-tax returns. These tax losses can offset taxable gains elsewhere in an investor’s portfolio, and up to $3,000 of these losses can be used to reduce taxable income in a given year.

  • Why should the Swiss central bank action matter to you?

    Michael Santoli at Yahoo Finance 10 days ago

    Switzerland has fewer people than Virginia and a smaller economy than Turkey. Yet an arcane policy move by the Swiss National Bank early Thursday rocked global financial markets.

    When Switzerland’s central bank ended an effort to limit the rise of the Swiss franc, the franc soared by 30% against the euro, the Swiss stock market shed a quick 10% and U.S. shares dropped in the initial shock.

    How will the Swiss surprise matter to the typical American, if at all?

    --The limited, but coveted, array of goods that the U.S. buys from Switzerland, including watches and chocolate, will likely get more expensive. The largest Swiss companies include pharmaceutical giants and banks, but their products are not, strictly speaking, sourced in Switzerland. A strengthened franc also means Switzerland, one of the world's most expensive countries, gets pricier for tourists. Already, there have been reportsof higher ski pass rates at popular resorts.

  • As gas prices collapse, high-octane fuel fetches unusually fat premium

    Michael Santoli at Yahoo Finance 11 days ago

    The oil-price crash has provided dramatic relief for pain at the pump. But drivers who like to fill up with premium-grade gasoline are feeling a twinge of discomfort as they’re asked to pay an unusually hefty added charge for the good stuff.

    With U.S. crude-oil prices collapsing from near $100 per barrel last summer to below $45, the average national retail price for regular unleaded gasoline has tanked by 43% since June 30 to $2.07 per gallon this week, according to the U.S. Energy Information Agency. High-octane premium gas dropped, on average, by only 37% to $2.49 a gallon.

    As a result, the price spread between premium and regular unleaded has spiked to a record high above 40 cents a gallon, as the chart below makes clear.

    The fat premium that’s now being demanded for premium is one more reason for most drivers to stick to plain old 87-octane regular – which is perfectly fine for the vast majority of recent-model cars.

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    The reasons for the widening price between regular and what used to be known as “high test” involve demand, supply and chemistry.

  • Wall Street ties and Elizabeth Warren sink Treasury nominee's chances

    Michael Santoli at Yahoo Finance 12 days ago

    Such are the victories available to the hardcore wing of the minority party in Congress.

    When Lazard investment banker and hefty Democratic donor Antonio Weiss withdrew his name from consideration for the number-three job in the Treasury Department, it represented a clear win for Sen. Elizabeth Warren (D-Mass.) and her anti-Wall Street contingent.

    From the moment President Obama nominated Weiss to serve as Undersecretary of the Treasury for Domestic Finance, Sen. Warren railed against what he representedmore than the man himself.

    In a speech last month, she declared: “This is about building some counter pressure on the Wall Street bankers. The titans of Wall Street have succeeded in pushing government policies that made the megabanks rich beyond imagination, while leaving working families to struggle from payday to payday.”

    Progressive advocacy groups celebrated the defeat of Weiss’ candidacy for a job whose occupant has almost never been familiar to the public.

  • Stocks have had a 'normal' decade. Is that a relief or a worry?

    Michael Santoli at Yahoo Finance 16 days ago

    The past 10 years brought a credit boom and bust, the most damaging financial crisis in decades and $12 trillion in money creation by desperate central banks – all of which made for a pretty average decade.

    Rather average, that is, in terms of the returns produced by big U.S. stocks.

    Through Dec. 31, the average annual total return for the Standard & Poor’s 500 stock index was 7.6%, according to FactSet. That’s up sharply from negative 1% five years earlier, when the market was winding up a “lost decade.” This measure of the past decade’s gains is now approaching long-term average yearly return.

    Since 1926, big American stocks have delivered just over 10% a year, and Jeremy Siegel’s study on stock performance dating back to 1871 pegged the average at 6.8% after inflation, which is slightly above the pace of the past 10 years.

    A glance at this long-term chart of rolling 10-year stock returns would lead many to the conclusion that this uptrend is really just getting in gear. Throughout history, this gauge has spent far more time at levels well above the current one.

     

  • On Wall Street, 2014 is ending just as 2013 did. A January warning?

    Michael Santoli at Yahoo Finance 26 days ago

    As a fresh year approaches, a strong fourth-quarter rally carries stocks to a new high as December ends, economists are projecting the economy will lift off and investors grow enthusiastic about further upside in the coming year - even as they anticipate higher interest rates.

    That’s how 2013 finished up – and also the way the current year is closing.

    What makes this more than a simple seasonal curiosity is the fact that the upbeat close to 2013 was followed by a rude and jarring New Year’s market decline that sank the Standard & Poor’s 500 index by nearly 6% in a month.

    As I discuss with Yahoo Finance’s Rick Newman in the accompanying video, the synchronicities in market conditions this year compared with a year ago are striking:

    -From its low following an early October pullback, the S&P 500 this year is up 11.9%. From the October 2013 low, the index climbed 11.7% through year-end. In both cases, there was a powerful surge forming a “V” bottom in October, followed by a slight pullback in early December and a somnolent upward drift in each year’s final weeks.

    Déjà vu, or never mind?

    In need of a ‘new story’

    Rate risk?

     

  • The gift of a TV binge? Netflix gift cards a surprise hot holiday item

    Michael Santoli at Yahoo Finance 1 mth ago

    Giving someone a plastic gift card for a digital streaming-video service might seem as odd as sending a virtual fruitcake.

    Yet Netflix gift cards, available for the first time in recent months, have emerged as a hot holiday item, with spot shortages striking the handful of retail stores Netflix Inc. (NFLX) is using to distribute them.

    In Manhattan, the cards seem to have been sold out for the past several days at Staples Inc. (SPLS) and GameStop Corp. (GME) locations, the only chains in the borough that carried them.

    When asked about the Netflix cards Monday, a saleswoman at a GameStop in downtown Manhattan asked, “What is it with this epidemic?”

    The woman, who declined to give her name because she wasn’t authorized to speak on behalf of the company, said a customer had bought “about 30” in the previous week, leaving the shop with just a few remaining. Since then, she said, “we’ve had like eight million calls” from people seeking the cards.

    (For what it’s worth, you can still find plenty of Hulu gift cards on the shelves.)

     

  • Regulators worry some ETFs fail to track market prices

    Michael Santoli at Hot Stock Minute 1 mth ago

    Even a truly innovative “killer app” can be dangerous if used in the wrong way. Exchange-traded funds have been the most successful new mainstream investment product of the past couple of decades, going from a quirky novelty in the late ‘90s to more than $2 trillion in assets today covering nearly every corner of the markets. Yet the rush to create ETF vehicles to access illiquid or hard-to-value asset classes has prompted concerns that the pricing of ETF shares in some cases can diverge sharply from the value of the underlying investments. The Financial Times reports today that the Federal Reserve Bank of New York is looking into how ETF portfolios of less-liquid instruments such as high-yield bonds, commodities and emerging-market stocks perform in turbulent market conditions. The paper cited recent swings both above and below “net asset value” in the Market Vectors Russia ETF (RSX) and the iShares iBoxx High Yield Corporate Bond ETF (HYG) as possible evidence of stripped gears in the fund-pricing machinery. As I discuss in the attached video with Yahoo Finance Editor-in-Chief Aaron Task, ETFs have become a pervasive way for investors to access markets based on three core promises: lower cost, easy liquidity and full transparency. That final selling point essentially means that the fund’s price will tend to directly reflect the value of the underlying securities in real time. All of these promises are fully kept in the largest ETFs, which command an enormous share of the assets under management and trading volume. The SPDR S&P 500 ETF (SPY), PowerShares QQQ Nasdaq 100 ETF (QQQ) and similar broad-market equity funds are phenomenally liquid and remain tightly linked to the relevant indexes through real-time arbitrage by authorized dealers.

  • Yahoo Finance 2014 Company of the Year: Under Armour

    Michael Santoli at Yahoo Finance 1 mth ago

    It started 18 years ago with one man hawking one shirt, a guy trying to persuade elite football players that it was simply better – that it would make them better.

    Today, Under Armour (UA) is a $15.2 billion company run by that same guy, stalking the legacy giants of athletic gear, a made-in-America global brand that boasts one of the fastest growth records in consumer products and among the best stock performance in the market.

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    For these distinctions and how they were achieved -- and for the way the company has turned potential setbacks into wins in 2014 -- Under Armour is the Yahoo Finance Company of the Year.

    CEO Kevin Plank, that guy who came up with that shirt in 1996 that stayed dry under football pads, says, “These things don’t happen out of nowhere. There were a lot of years preparing for this.”

    Related: Yahoo Finance Restaurant Stock of the Year - Jack in the Box

    Winning with women

    The Company of the Year judging