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MONEY WATCH.Navigation: Main page Author: Lim, Paul J. Section: Money & Business
Housing's a Buy? So Why Do Execs Sell? Last month, the president of the National Association of Home Builders said that "builders still remain upbeat and confident in the housing market" and added that "builder attitudes suggest that new-home sales and starts will continue to be brisk." If that's the case, why are so many executives in the home-building sector dumping their company stock at a record rate? Over the past 10 months, insider selling has reached peak levels at eight of 12 large publicly traded home-building companies, according to Richard Bernstein, chief U.S. strategist for Merrill Lynch. And that's despite the fact that most Wall Street analysts have "buy" recommendations on those shares. Of course, insiders could be selling for benign reasons--such as diversifying their personal holdings. But why do so now, simultaneously, and at a record pace? "We think this insider selling somewhat mimics that of the technology sector during the year surrounding the peak of the bubble," says Bernstein. Within a year of the Internet bubble's bursting in 2000, there was record net insider selling at 14 of 20 large tech firms, Bernstein said. Could this be deja vu all over again? Investors Don't Put Much Stock in HurricanesIt sounds counterintuitive, but hurricanes tend to lift the economy in their wake because of all the money spent to rebuild communities. But storms like Katrina aren't necessarily a plus for the equity markets. A study shows that U.S. stock market performance tends to be flat one year after major hurricanes, according to Sam Stovall, chief investment strategist for Standard & Poor's. Stovall looked at the 13 costliest hurricanes to hit the United States since 1938. Two of those storms swamped the energy fields of southeast Louisiana like Katrina--Hurricanes Betsy, in 1965, and Camille, in 1969. How did stocks fare? Twelve months after Betsy, stocks were down 14 percent, and a year after Camille, the S&P 500 had lost 20 percent of its value. Coming to a Retirement Plan Near You: the Roth 401(k)The Bush tax cuts of 2001 did more than reduce income tax rates across the board and eradicate the marriage penalty. They also gave birth to a new type of retirement savings plan: the Roth 401(k). Like a regular 401(k), a Roth 401(k) will allow workers to invest in mutual funds on a tax-advantaged basis. But as with a Roth IRA, contributions to these new accounts--which will launch on Jan. 1, 2006--will be made with after-tax dollars, and withdrawals at retirement will be completely tax free. Already, 31 percent of employers who offer 401(k)'s say they are likely to add the Roth 401(k) option next year, according to a recent survey by the employee benefits consulting firm Hewitt Associates. But your employer isn't required to adopt this plan. So if you want access to a Roth 401(k), now is the time to lobby your human resources department. PHOTO (COLOR) PHOTO (COLOR) ~~~~~~~~ By Paul J. Lim in the Fair Use guidelines of the 1976 U.S. Copyright Act. info [at] singlearticles.com Powered by CommonSense |
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