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Friday, September 12, 2008
Cavuto: A Weekend for the Books
Neil Cavuto, Managing Editor and Anchor
FOXBusiness
Missed tonight's Cavuto? Catch "The Deal" right here on FOXBusiness.com
48 hours.
Two days.
One weekend.
One incredible test.
Because here's the deal, my friends:
They don't come as much "make-or-break" as these next couple of days.
Here's why.
Our economy and for some of us, our very lives are being put to the test.
In what could be a perfect storm, we're dealing with the season's worst hurricane and this season's most problematic banking rescue.
Both have markedly different stakes.
Ike is just a monster. A possible Category 3 storm that could easily get worse...But a storm so massive, so wide, so slow-moving, and so worrisome, that the governor of Texas has all but called for the evacuation of a quarter of his huge state.
Leaving aside the oil rigs and refineries there, and the bustling city of Houston in its potential wake, this is a potential giant of a storm, complete with 26 foot tides that will pass everything in its path, including, i might add, New Orleans, whose battered levies stand little more than 17 feet. You do the math. FEMA already has, and it's worried.
It's a Saturday event.
We hope it doesn't turn into a Sunday disaster.
Because on that day, a different storm...a financial one...that regulators hope to calm reportedly marshalling support, cobbling it together actually, for Lehman Brothers.
We're told no tax payer dollars will be involved...but we're also told federal backing for this huge facilitation will be involved, which leads this simple mind to ask, "doesn't that mean "taxpayer dollars" are involved?
No matter, it's a huge test. And for a government that has its own 4:30 movie of the week, turned rescue of the week, another test, another shot in the arm, another hail mary pass that "this" time is the charm. We'll see.
So...two big storms….two big tests.
Ike involves lives.
Lehman involves luck.
Both involve us...and could affect us...for some time to come.
48 hours.
They could very well redraw an election map.
And a financial one.
They could scare us, or unite us.
In 48 hours, we'll know.
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FOX Translator
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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
