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Thursday, June 14, 2007

Ultimate fund portfolio

Ultimate fund portfolio
The best choices for stable, long-term growth in five essential categories.
By Yuval Rosenberg, Fortune Magazine contributing writer
June 14 2007: 10:51 AM EDT


NEW YORK (Money Magazine) -- Chuck Royce oozes expertise. From his bespoke suits and bow ties, to his passion for handcrafted wooden boats, to his patrician bearing, the president and chief investment officer of Royce & Associates comes across as the kind of old Wall Street hand who set your grandparents up in their comfortable retirement.

Heck, he might well have. Royce, 67, has 43 years of experience, and he's steered his Pennsylvania Mutual fund to average annual gains of 16 percent since 1973.

A pioneer in small-company investing, he's such a legend that we've made him a model for our own stock portfolio (see "The Fortune 40").

And when you ask him about his duty to shareholders, he doesn't joke around. "I have a responsibility to run this money in the best possible way for the very long term," says Royce. "That is definitely on my mind."

In short, Royce is the kind of guy you want picking stocks for your retirement portfolio - if you're not going to do it yourself, that is.

And for those of us who aren't natural DIY-ers, turning the task over to professionals makes a lot of sense. (Quick quiz: Do you check stock quotes obsessively on your BlackBerry? Read 10-K filings in bed at night? Impress your friends by reciting P/E ratios from memory? No, no, and no? This strategy may be for you.)

With a diversified group of funds you can get the upside of equities without quite so much volatility, and leave the stress over quarterly earnings to unflappable types like Chuck.

To simplify things even further, for the past two years we've selected standouts in several basic categories - what we call the Ultimate Mutual Fund Portfolio.

The group is designed to produce robust long-term gains, but our choices (including Royce's fund) have delivered in the near term too.

The funds we assembled in 2005 averaged a one-year return of 16 percent, vs. 10 percent for the S&P 500 index.

Last year we updated our picks, and the portfolio returned 21.2 percent from June 7, 2006, through June 5 of this year, vs. 23.4 percent for the S&P (our four equity funds averaged a 24.2 percent return, and our capital preservation fund returned 9.2 percent).

Given that success, we kept the basic building blocks in place this year.

The anchor of our lineup remains a total-market index fund, which invests in companies of all sizes. To complement that core holding, we have an actively managed large-cap fund along with more specialized small-cap and international picks for diversification and return potential. There's also an alternative-asset fund for additional balance.

Of course, mutual funds aren't the only option if you don't like to trade individual stocks. Exchange-traded funds (ETFs) continue to grow in both numbers and assets (there are now over 500 ETFs with some $480 billion in assets in the U.S., according to State Street Global Advisors).

And each of our mutual fund choices is accompanied by an ETF alternative. Those exchange-traded funds - which feature low expenses and are tax-efficient - may be right for you, particularly if you're looking to invest a large lump sum in the market. But if you plan to invest periodically, the mutual funds listed here can help you steer clear of the trading commissions that can add up when buying ETFs.

Total stock market
Whether you choose mutual funds or ETFs, broad-based indexes still make for sensible core holdings.

Our choice in this category last year, Vanguard Total Stock Market Index, remains an excellent option. But for investors looking to invest $10,000 or more, Fidelity Spartan Total Market Index (FSTMX (Charts) is even more appealing because it provides the same exposure and takes an even smaller cut of your money. (The expense ratio is just 0.10%.) The fund tracks the Dow Jones Wilshire 5000 total market index and holds more than 3,000 stocks.

That blend has helped it post annualized gains of 11.2 percent a year over the past five years, more than a percentage point better than the large-cap-dominated S&P 500.

For ETF buyers, Vanguard Total Stock Market (VTI (Charts) - a cousin of the mutual fund above - provides a broad basket of stocks on the cheap, with an expense ratio of 0.07 percent.

Large company stock
After years of being outperformed by small-cap stocks, large caps may finally be ready to reassert themselves as market leaders.

Over the past six months, the S&P 500 has gained 10.3 percent, edging out the 8.4 percent advance of the Russell 2000 small-cap index.

If that trend continues, the $4.5 billion Dreyfus Appreciation (DGAGX (Charts) fund should take off. We anticipated big gains for big caps when we added Dreyfus to our mix last year, but the fund has lagged behind the S&P 500 by three percentage points.

However, we still like veteran manager Fayez Sarofim's portfolio, which is heavy on blue chips such as Altria (Charts, Fortune 500) and Citigroup (Charts, Fortune 500). Extremely low turnover and a modest 0.95 percent expense ratio add to our conviction.

For a corresponding ETF, the iShares S&P Global 100 Index (IOO (Charts) pulls together the largest multinational giants under one umbrella.

Small company stock
Not that you should abandon the pip-squeaks. Even if market momentum shifts to larger stocks, small caps can diversify a portfolio and improve long-term returns.

And Royce's Pennsylvania Mutual (PENNX (Charts) fund remains a standout. The $4.9 billion portfolio holds more than 400 small- and mid-cap stocks and has posted three-year annualized returns of nearly 19 percent.

As an ETF alternative, the low-fee Vanguard Small Cap Value (VBR (Charts) offers an attractive 1.8 percent dividend yield.

Foreign value
Investors chasing grande returns in overseas markets have flooded money into foreign funds in recent years.

Following the trend, our pick, Dodge & Cox International Stock (DODFX (Charts), has ballooned to more than $41 billion in assets since it launched in 2001. But its growth hasn't hindered performance. The Dodge & Cox managers have posted total returns of 28 percent annually over the past three years by loading up on value stocks such as French pharmaceutical leader Sanofi-Aventis and Finnish mobile-phone maker Nokia.

Our new pick for an ETF alternative is the Vanguard FTSE All-World (VEU (Charts) ex-US, which was launched in March and includes 2,200 stocks from nearly 50 countries.

Alternative assets
No matter how spread out your stock bets are, you shouldn't live by equities alone. Our choice for diversification is the Pimco All Asset fund (PASDX (Charts), which focuses on capital preservation and aims for a 5 percent real return (above inflation).

Manager Rob Arnott invests in everything from commodities to bonds to real estate investment trusts, and his fund offers a generous yield of 5.2 percent. Arnott recently had 17 percent of his portfolio stashed in ultrasafe Treasury inflation-protected securities, or TIPS.

To mirror his position in Treasury bonds, investors who favor ETFs can buy the newly launched SPDR Barclays Capital TIPS (IPE (Charts).

Hertz, Avis Plan to Boost Hybrid Fleets

By Bree Fowler, AP Business Writer
Rental Car Companies Hertz, Avis Plan to Boost Hybrid Fleets to Meet Increased Demand


NEW YORK (AP) -- The increased demand for "green" vehicles is spilling over to the rental car counter, where many more drivers will soon be able to choose a hybrid vehicle. Hertz Global Holdings Inc. said Thursday it will spend $68 million to add 3,400 Toyota Prius hybrids to its fleets by 2008. And Avis Budget Group Inc. said this week it plans to make 1,000 hybrid Prius vehicles available for rent as early as next week.


Brian Chee, an automotive analyst for Autobytel.com's soon to be launched Web site MyRide.com, said that even with the fleet expansions, hybrid vehicles still represent a small part of rental car fleets.

"This is a first step," Chee said. "It'll be interesting to see if the rental car companies continue this. Like other companies, they're making a 'green' statement, and this is a good way to do it."

By replacing 1,000 of its ordinary rental cars with the gas-electric Prius models, Hertz said it will reduce carbon dioxide emissions by an estimated 3,000 tons per year.

"Today's announcement highlights the next step in what is already a multiyear effort by Hertz to promote environmental sustainability throughout the company," Mark Frissora, the company's chairman and chief executive, said at Thursday's announcement.

"As a global leader in car rentals, we recognize our unique opportunity and obligation to promote environmental practices and give our customers environmentally friendly options."

Hertz said its hybrid vehicles will be available for rent at 50 of the company's U.S. airport locations, with 100 of them reserved for its New York City fleet.

The stop-and-go flow of Manhattan traffic provides an ideal driving environment for the hybrids, allowing them to mainly operate off of their electric motors, the company said.

New York Mayor Michael Bloomberg said the greater availability of hybrid rental cars is in line with his city's goal to reduce its emissions by 30 percent by the year 2030.

"These hybrid cars really put Hertz in the driver's seat ... in meeting one of the greatest challenges of our time, which is global warming," Bloomberg told the gathering at the Museum of Natural History.

John Barrows, a spokesman for Avis, said this week his company will offer Prius hybrids in its California, Portland, Ore., Seattle and Washington, D.C., markets but may expand the locations in the future based on consumer demand.

Barrows said Avis also believes that the Prius rentals will not only appeal to travelers, but those interested in buying a hybrid.

"Obviously we have customers who want them," he said. "And there are other people out there who are interested in purchasing a hybrid but really want to check one out before buying one."

Chee, the automotive analyst, said the rentals offer Toyota Motor Corp. a chance to showcase the Prius, as well as give potential buyers a chance to decide if a hybrid is right for them.

"I do think it's a risky move for Toyota, because what they're saying is: 'Here's the car, here's how it drives, we stand by our power train, and we think it'll win people over,'" Chee said.

"It shows Toyota's confidence that it'll win over fans when they don't have to buy it."

Enterprise Rent-A-Car also operates a fleet of more than 3,000 hybrid vehicles, in addition to 41,000 flex-fuel cars and light trucks that can run on ethanol-based fuel, the company said.

Hertz Global Holdings Inc.: http://www.hertz.com

Avis Budget Group Inc.: http://www.avisbudgetgroup.com

Enterprise Rent-A-Car: http://www.enterprise.com

Hertz, Avis Plan to Boost Hybrid Fleets

AP
Hertz, Avis Plan to Boost Hybrid Fleets
Thursday June 14, 9:26 pm ET
By Bree Fowler, AP Business Writer
Rental Car Companies Hertz, Avis Plan to Boost Hybrid Fleets to Meet Increased Demand


NEW YORK (AP) -- The increased demand for "green" vehicles is spilling over to the rental car counter, where many more drivers will soon be able to choose a hybrid vehicle. Hertz Global Holdings Inc. said Thursday it will spend $68 million to add 3,400 Toyota Prius hybrids to its fleets by 2008. And Avis Budget Group Inc. said this week it plans to make 1,000 hybrid Prius vehicles available for rent as early as next week.

Brian Chee, an automotive analyst for Autobytel.com's soon to be launched Web site MyRide.com, said that even with the fleet expansions, hybrid vehicles still represent a small part of rental car fleets.

"This is a first step," Chee said. "It'll be interesting to see if the rental car companies continue this. Like other companies, they're making a 'green' statement, and this is a good way to do it."

By replacing 1,000 of its ordinary rental cars with the gas-electric Prius models, Hertz said it will reduce carbon dioxide emissions by an estimated 3,000 tons per year.

"Today's announcement highlights the next step in what is already a multiyear effort by Hertz to promote environmental sustainability throughout the company," Mark Frissora, the company's chairman and chief executive, said at Thursday's announcement.

"As a global leader in car rentals, we recognize our unique opportunity and obligation to promote environmental practices and give our customers environmentally friendly options."

Hertz said its hybrid vehicles will be available for rent at 50 of the company's U.S. airport locations, with 100 of them reserved for its New York City fleet.

The stop-and-go flow of Manhattan traffic provides an ideal driving environment for the hybrids, allowing them to mainly operate off of their electric motors, the company said.

New York Mayor Michael Bloomberg said the greater availability of hybrid rental cars is in line with his city's goal to reduce its emissions by 30 percent by the year 2030.

"These hybrid cars really put Hertz in the driver's seat ... in meeting one of the greatest challenges of our time, which is global warming," Bloomberg told the gathering at the Museum of Natural History.

John Barrows, a spokesman for Avis, said this week his company will offer Prius hybrids in its California, Portland, Ore., Seattle and Washington, D.C., markets but may expand the locations in the future based on consumer demand.

Barrows said Avis also believes that the Prius rentals will not only appeal to travelers, but those interested in buying a hybrid.

"Obviously we have customers who want them," he said. "And there are other people out there who are interested in purchasing a hybrid but really want to check one out before buying one."

Chee, the automotive analyst, said the rentals offer Toyota Motor Corp. a chance to showcase the Prius, as well as give potential buyers a chance to decide if a hybrid is right for them.

"I do think it's a risky move for Toyota, because what they're saying is: 'Here's the car, here's how it drives, we stand by our power train, and we think it'll win people over,'" Chee said.

"It shows Toyota's confidence that it'll win over fans when they don't have to buy it."

Enterprise Rent-A-Car also operates a fleet of more than 3,000 hybrid vehicles, in addition to 41,000 flex-fuel cars and light trucks that can run on ethanol-based fuel, the company said.

Hertz Global Holdings Inc.: http://www.hertz.com

Avis Budget Group Inc.: http://www.avisbudgetgroup.com

Enterprise Rent-A-Car: http://www.enterprise.com

Open letter to Pfizer's CEO

Open letter to Pfizer's CEO

Dear Jeff,

You made $11 million last year, you just fired 10,000 employees, and you got a 36% raise this year.

And that's the problem.

You can't cut back and fire ten thousand hardworking people, and tell them about the new management style you're bringing to the company, and then accept a 36% raise in base pay.

That makes you lose credibility. (And I'm not even taking into account how you fell flat on your face, trying to hype torcetrapib.)

Your predecessor was shipped out of Pfizer dressed in tar and feathers, holding his $200 million grab bag, to the sound of employees and shareholders chanting "Give it back, Hank." The WSJ even wrote an article with the headline "Off with their heads," based on Pfizer's executive pay for non-performance.

If you read what your employees are saying, such as this, you will realize you just lost their respect; they've stopped calling you Kindler and replaced that with Swindler.

And without those employees and their support, you are just one man, putting his legs into his pants, one at a time, like the rest of us.

Without the support of your employees, you will fail, just like your predecessor.

Jeff, please act like a leader: Don't accept the raise.

You already made $11.4 million in 2006. You can afford to do the right thing.

A year of Google acquisitions that points towards the future

Google Inc. (NASDAQ: GOOG)'s recent spate of acquisitions is nothing to sneeze at -- the web search giant (and internet advertising colossus) seems to be getting bigger in size, breadth and depth by the second, to the fear of Microsoft Corp. (NASDAQ: MSFT), Yahoo! Inc. (NASDAQ: YHOO) and many established industries from newspaper to radio. Google's intention, as I've said many times, is to become the largest advertising network on the planet, and the company is not leaving a single stone unturned in its quest to get there. With the billions Google has in the bank, along with marketable securities that it has ready to spend, the acquisition trail has not been light to the company. In fact, it's acquiring companies left and right -- some are high-profile deals while others are significant but small.

While not all of Google's acquisitions directly point to its goal of an all-powerful advertising behemoth, there are peripheral industries that produce acquisitions that are meant to help Google keep its stranglehold on the web browser and access to it where it can display its advertising, help connect buyers and sellers and take its traditional cut of the transaction. In fact, two of Google's largest acquisitions to date -- YouTube and DoubleClick -- are directly related to allowing the company to maintain its advertising grip while it expands its tentacles into any area that it can to allow for sustainable control over the face of advertising. One thing still slips past many: Google still makes virtually all of its money from web advertising. Make no mistake: protecting that is Google's #1 priority.

While it does that, though, Google's 11 company or technology purchases in the last year have helped the company fill gaps in its product portfolio for customers from offering web-based documents to integrating as many neat features into Google Earth as possible (which still makes a pittance in "pro" subscriptions). Interestingly, though, competitor Microsoft has made about 13 acquisitions during the same time period, with the most recent being aQuantive (a pure-play response to Google's huge advertising threat on the web).

How to Remove Your Blog from Google’s Supplemental Index

How to Remove Your Blog from Google’s Supplemental Index
Posted By TJP on May 27, 2007
In order to keep this blog running at optimal performance, I dedicate my weekends to performing routine site maintenance. This includes checking whether or not Google properly indexes all of my blog’s pages.
To my astonishment, 79% of my pages list in Google’s supplemental index. Google stores either duplicate or less significant web pages in the supplemental index, instead of placing them in the normal index.
How Do I Check My Blog’s Index Statistics?
Use the Supplemental index tool over at Seologs.com.
How Do I Get my pages back into Google’s Index?
Download the Wordpress SEO cure plugin.
Extra Safety: Upload a Good Robots.txt File
To insure Google crawls and blocks specific files within your website/blog, make sure to upload a good robots.txt file. Not so Boring Life wrote a good post on getting your blog out of the supplemental index.
How many pages did you have listed in Google’s supplemental Index?
*Update: My new posts keep falling into Google’s supplemental index. Does anyone have SEO experience out there?

UPDATE 1-EU says Google data retention limit "good step"

LUXEMBOURG, June 13 (Reuters) - Google Inc's. decision to scale back how long it keeps personally identifiable data accumulated from its Web users is "a good step", the European Union's top security official said on Wednesday.
The world's top provider of Web search services said this week it was ready to curtail the time it stored user data to a year and a half, seeking to mollify an EU watchdog that has questioned its privacy policies.
That was the low end of an 18- to 24-month period it had originally proposed to regulators in March.

"I think it is indeed a good step," EU Justice and Security Commissioner Franco Frattini told a news conference in Luxembourg.
"It is good to see Google (GOOG.O: Quote, Profile , Research) trying to meet our expectations," he said, also welcoming Google's announcement to explore ways to redesign cookies and reduce their expiration.
The European Union data watchdog, made up of national data protection supervisors of the bloc's 27 member states, said in May that Google seemed to be failing to respect EU privacy rules and asked for clarification before its next meeting in mid-June.
It is an advisory body which is independent from the European Commission.
Each time a Google user searches the Web, the company gathers information about that customer's tastes, interests and beliefs that could potentially be used by third parties such as advertisers. Google shares general user statistics but is adamant it never shares personal data outside the company.
"Retention of personal data was from the very beginning one concern of the European Commission," Frattini said.