Invest for College

        CONTACT: In China:
        Ms. Lei Wang
        Bona Film Group Limited
        Tel: +86 10-5928-3663-264
        ir@bonafilm.cn
        Wendy Sun
        The Piacente Group, Inc.
        Investor Relations
        Tel: +86 10-6590-7991
        bona@tpg-ir.com
        Jannie Poon
        News Corporation
        +852 26218619
        JPoon@newscorp.com
        In the U.S.:
        The Piacente Group, Inc.
        Investor Relations
        Brandi Floberg or Lee Roth
        Tel: (212) 481-2050
        bona@tpg-ir.com
        Dan Berger
        News Corporation
        (310) 369-1274
        dberger@newscorp.com

{ 0 comments }

Just hours after President Barack Obama’s re-election campaign tied Mitt Romney to the bankruptcy of a Missouri steel company, the Romney campaign is out with its own Web video highlighting a steel company it says Romney helped save.

The video, entitled “American Dream,” zeroes in on Steel Dynamics Inc., an Indiana company that Bain Capital invested in when Romney worked at the venture capital firm.

The video features Steel Dynamics employees talking about the company’s origins and current success—with an unidentified man, speaking in a voice-over, suggesting it wouldn’t be possible had Romney and his “private sector leadership team” not gotten involved.

“SDI almost never got started,” the ad says. “When others shied away, Mitt Romney’s private sector leadership team stepped in.”

Notably, the minute-long ad never mentions Bain, Romney’s former employer, by name. And it also doesn’t bring up the $37 million in government subsidies the company received that contributed to its survival.

More popular Yahoo! News stories:

• Newsweek cover: Obama ‘first gay president’

• How White House gay marriage declarations are affecting other Democratic candidates

• Secret Service sex scandal: Congressional members call for wider probe, more female agents

Want more of our best political stories? Visit The Ticket or connect with us on Facebook, follow us on Twitter or add us on Tumblr. Handy with a camera? Join our Election 2012 Flickr group to submit your photos of the campaign in action.

{ 0 comments }

 JPMorgan Chase CEO Jamie Dimon

My retirement portfolio is down 2.85% from its recent high.  The allocation of 55% domestic stocks (10% Fidelity Contrafund, 7% T Rowe Price Equity Income, 7% Fidelity Extended Market Index and a handful of Fidelity Select Funds), 7% foreign stocks, 6% bonds and 30% Fidelity Cash Reserves is down less than the 4.65% decline in the SP  500 index since its high on April 2.

Good job, right? Not by the standards by which many people seem to be judging Jamie Dimon and his risk management crew over at JPMorgan Chase Co.’s Chief Investment Office, including risk guru Ina Drew and the London Whale trader who is fingered for losing the firm a cool $2 billion in losing trades.

The investment unit will lose $800 million this quarter after netting out the losses against winning trades. While the sheer dollar volume of the boneheaded trade is prone to elicit a dyspeptic response in anybody who hears it, the proportion of the loss to the total assets managed by Ms. Drew and a network of guys on trading desks like Monsieur Bruno à Londres is not terribly large.  A $2 billion loss on $370 billion is a scant 0.54%.  Of course, the performance of the whale measured by what he lost to what he risked is much worse, but for the overall bank, they’re doing better than both me and the U.S. stock market.

Check out the Market Blaster video for a look at the stain on Jamie Dimon’s sterling reputation as a suave CEO who could walk on water when everyone else was drowning.  With a dividend yield near 3% and coming off of a one-day drop of 9.2%, is JPM a falling knife worth catching?  It would seem that the punishment inflicted on Friday–the loss of about $15 billion in market capitalization–is a bit disproportionate to the $800 million net investment loss by the poorly executed, monitored and conceived derivatives trades.  Citigroup and Morgan Stanley shares both lost 4.2%.

We also check out some of the social media stocks like Groupon, Zynga, Pandora and LinkedIn that have come public before Facebook, which is expected to unload about $11 billion worth of stock to eager investors next Friday.  Is there a cautionary tale to be told from the likes of GRPN, ZNGA and P, or an ode to joy to be sung if Facebook shares follow a trajectory like those of LinkedIn?  From the level of mania around Facebook, investors may hold their noses at the rich valuations for FB and drive it higher out of the gate, but growing from a base of 900 million users does get harder.  Plus it needs to learn how to start making more money from smartphone usage.

{ 0 comments }

A new headache for JPMorgan chief Jamie Dimon. (Image credit: Getty Images via @daylife)

JPMorgan Chase said it has encountered significant mark-to-market losses in its Chief Investment Office (CIO) since the end of the first quarter, and faces an $800 million loss in its corporate and private equity segment during the second quarter.

In a filing after the closing bell Thursday, JPMorgan said net income in its Corporate unit will be more volatile in future periods. The CIO has seen significant mark-to-market losses in its synthetic credit portfolio, the firm said, a portfolio that has “proven to be riskier, more volatile and less effective as an economic hedge than the Firm previously believed.”

The full details came in a 10-Q filed with the SEC after the bell Thursday.

On a rapidly-arranged conference call, Chairman and Chief Executive Jamie Dimon called the strategy “flawed.” Its execution was riddled with “errors, sloppiness and bad judgement,” Dimon said, reminding those on the call that the issues had nothing to do with clients, though readily admitting it “puts egg on our face and we deserve any criticism we get.”

Dimon warned that unwinding the “egregious” and “self-inflicted” mistakes will be rectified, during a period that may entail some increased volatility because the firm will be responsible in in getting out of the positions. “We’re not going to do something stupid,” he said. “Volatility will be high, and it could cost $1 billion or more.” During a conference call after the news came out, Dimon said the $800 million loss figure could get better or worse during the quarter. Hopefully, by the end of the year the impact will not be significant, he said, though the trading losses were pegged at approximately $2 billion to date. (See “Why It Matters That JPMorgan Lost $2B In Six Weeks.”)

Dealing with the issue will not impact the firm’s plans to return capital to shareholders via dividends and buybacks in 2012, Dimon said. When asked why the firm decided to disclose the information, he said “it’s not going to stop us from building a great company,” but that JPMorgan wanted to be transparent given that the situation arose so soon after the end of the first quarter.

As for whether the strategy may have run afoul of regulators, the JPMorgan chief said that whether or not the trading was above-board under the Volcker Rule, “it violates the Dimon Principle.”

Shares of JPMorgan, frequently held up as an example of a bank that withstood the bursting of the housing bubble and subsequent crisis better than most, plunged 6.9% to $37.94 in uncommonly high volume trading after hours. Analyst Mike Mayo called the bank “best in class” in a recent note, but still smacked the stock with a two-notch downgrade.

The firm was also hit by a cut to the ratings of its residential mortgage servicing unit from Standard Poor’s after the bell Thursday. The action is not exactly the rating cuts Wall Street watchers have been waiting for, with Moody’s due to wrap up a review of its ratings on firms including Morgan Stanley and Bank of America in the near future.

The other banks were in rocky shape after-hours as well — Dimon would not discuss whether other banks may have had similar strategies on saying that “just because we were stupid” doesn’t mean everybody else was — with BofA off 2.6%, Citigroup down 2.6%, Morgan Stanley 3.1% and Goldman Sachs 2.6%.

Follow @SchaeferStreet on Twitter or subscribe through Forbes or Facebook at the top of this post.

{ 0 comments }

Investors constantly balance their desire for the highest possible returns against their desire to guard against big losses. For many people, that balance was thrown off in recent years with the wild swings in financial markets. The prospect of further downturns has left them shaken—and more cautious.

One result is increased interest in putting at least some of their retirement assets in variable annuities. Variable annuities are a tax-advantaged way of investing in stock, bond and other funds. For an additional fee, many come with guarantees of lifetime minimum income paid out even if the underlying funds tank.

Critics say these annuities are too costly. The relatively high fees annuity investors pay can eat up a significant amount of money over the long term, they say, and investors also can get more-favorable tax treatment with some other investments.

Proponents say the cost of annuities is worth it for the security they offer. No other investment, they say, can protect investors as well and still give them the chance to earn something more than a nominal return on their investment.

Ellie Lowder, a financial consultant based in Tucson, Ariz., says variable annuities are a good investment. Lewis Altfest, chief investment officer at Altfest Personal Wealth Management in New York and an associate professor of finance at Pace University, says in most cases they’re not.

Yes: You’ll Sleep a Lot Better

By Ellie Lowder

There’s a fear factor in the financial markets today that variable annuities are uniquely equipped to address.

The fear comes both from the market gyrations of recent years and from uncertainty about the future.

St. Jude’s Research Hospital

ELLIE LOWDER: ‘Variable annuities offer investors reassurance about the return of their money.’

Share prices have now plunged twice since the year 2000, first when the tech bubble burst, then when the financial crisis reared its ugly head. Investors have been reminded that share prices do not always go up, and many individuals still haven’t fully recovered the heavy losses they suffered during those two events.

On top of that, investors can no longer rely on what were once considered two dependable sources of at least some of their retirement income: Defined-benefit pension plans have been disappearing for years, and those that remain are either being diluted or are in danger of being diluted—if not gutted or simply shut down. And there is justifiable concern among many investors that the Social Security benefits they are expecting may be reduced as well.

All this uncertainty has changed the mind-set of many investors in a fundamental way that’s captured in a quote variously attributed to Will Rogers and Mark Twain. It goes something like this: “I am not as concerned with the return on my money as I am the return of my money.”

Variable annuities offer investors reassurance about the return of their money, without sacrificing the opportunity for a healthy return on their money. They give investors control over their retirement assets—an important feature when so much on the financial and economic landscape seems to be out of control.

An Attractive Package

Variable annuities are a package of products and features not to be found in combination anywhere else.

The Wall Street Journal

They address the fear factor by offering guarantees of various kinds. The most prominent of these in many variable annuities is a guarantee of lifetime minimum withdrawals, so that no matter what happens in the financial markets, investors know that they will receive a certain annual income for the rest of their lives. Investors can also choose various kinds of death benefits to protect the value of their investment for their heirs.

Detractors point out that benefits like these aren’t free. Investors generally pay higher fees for variable annuities than they do for other kinds of investments.

Higher fees mean lower returns, which can really make a big difference over a number of years.

People can do better, say the critics of variable annuities, by investing in lower-cost mutual funds that will provide better returns. Or, if safety is the primary concern, investors can buy certain kinds of bonds that don’t offer much in the way of returns but are very unlikely to lose their value and also can be had for lower fees than an annuity.

The Safety to Take Risks

But no alternative offers the safety of a variable annuity and the potential to reap substantial returns if stocks do well. The guarantees offered by variable annuities don’t preclude big gains, they just protect against big losses.

With a guarantee of a set lifetime income in hand, even an investor with little or no risk tolerance can stay invested in stocks. If share prices soar, the annuity investor reaps those returns, while bond investors can only wish they were doing so well.

Granted, the annuity investor’s returns might not be as big as those of an investor who bought the same type of equity options through a 401(k), but if the markets turn suddenly—again—the annuity investor has no reason to panic and pull everything out of stocks at exactly the wrong time.

Variable annuities also generally include a feature called a fixed account, which is a portion of the money in the annuity that isn’t invested in any stock-market assets and earns a fixed interest rate established by the company you buy the annuity from—basically an interest-bearing CD type of account. This pool of money can be used to buy equities using dollar-cost averaging—investing a set amount at regular intervals—which is a widely recommended strategy to help investors take advantage of the ups and downs of share prices.

Under the umbrella of the variable annuity, investors also have the ability to contribute to a variety of money managers—not just the managers available in one family of mutual funds.

As with any purchase, investors should weigh the benefits of a particular annuity and its particular features versus their cost.

Annuity terms can be confusing, but a financial adviser can help you understand and compare what’s out there. And yes, some other types of investments offer more-powerful tax benefits than annuities. But there’s room in your retirement plan for both.

Don’t let the annuity critics dissuade you from putting at least a portion of your savings where your comfort level is greatest.

Ms. Lowder is a retirement plan consultant based in Tucson, Ariz. She can be reached at reports@wsj.com.

No: They’re Not as They Seem

By Lewis Altfest

Variable annuities offer the siren song of guaranteed returns and tax benefits. But when we look behind the curtain, we see that the guarantee may not be as strong as it seems and in any event may not provide much more safety than a bond—and it costs too much. Plus, the tax benefits aren’t that powerful when compared with those of other investment alternatives.

What that all adds up to is this: Annuities are too costly for the benefits they provide.

Altfest Personal Wealth Management

LEWIS ALTFEST: ‘A properly constructed, widely diversified investment portfolio’ will serve you better.

Total fees for variable annuities—including the fees charged by the company that sells the annuity, those charged by the funds available to investors in the annuity, and the extra amounts that investors have to pay for the guarantees that make annuities so attractive to so many people—can come to about 4% annually. If that doesn’t sound like too much, look at it this way: Fees that high can easily reduce an investor’s returns by as much as 50%.

Fees can be kept down by purchasing an annuity from a no-load provider and by choosing bond funds or passively managed index funds—which generally charge lower fees than other kinds of funds—from the annuity’s menu of investment options. But even with those savings, direct investment in mutual funds is cheaper, as are other alternatives.

Tax Considerations

A far better alternative to a variable annuity is to put that money into a pension plan that allows pretax dollar contributions and has lower overhead costs than an annuity. That way the investor not only sacrifices less in fees but also gains a more significant tax advantage.

Both variable annuities and so-called qualified pension plans—including 401(k)s, individual retirement accounts, defined-benefit plans and profit-sharing plans—allow an investor’s money to grow tax-free and then be taxed as regular income when it is withdrawn. The difference in the tax bite comes up front, in the money the investor puts into the account. For investors in variable annuities, in most cases, that is income that has already been taxed. But the money investors put into qualified pension plans is deducted from their taxable income, resulting in a substantial additional tax benefit.

Even mutual funds bought directly, outside a retirement account, are preferable to annuities, because the taxes on their dividends and capital gains can add up to less than the ordinary-income tax investors pay on withdrawals from annuities.

Nothing Is Free

Another significant issue with variable annuities is the need to read and evaluate the fine print in these contracts. One annuity we evaluated, issued by a major insurance company, guaranteed a minimum 5% annual return regardless of which investment options you selected from the annuity’s menu. Who could resist that? You could invest in aggressive equity funds and get all the upside potential without concern about losing money.

We looked at the fine print on that contract and found that the guarantee would only be in effect if the variable annuity were ultimately converted into an immediate annuity. That means the investor gives up the entire amount of the account in exchange for set payments that often extend over the rest of his life. No more choosing from a menu of investment options, and the payments usually reflect a modest rate of return—currently below 4% in many cases. And generally the investor’s heirs receive nothing after his death.

At the time, our client owned a $500,000 annuity that had declined to about $400,000. It became apparent that even with the $500,000 guarantee the annual payments that would be received from that company’s immediate annuity were only equal to the amount that would be paid by a $400,000 policy from a low-load annuity company.

The moral is, there is no free ride in annuities. Extra benefits come with extra costs, some priced separately, others hard to calculate and compare. Even financial advisers sometimes have to take hours to fully decipher them.

Another feature that many people find attractive in a variable annuity is a guarantee that your estate will at least receive your original investment back at the time of your death, regardless of the performance of the fund. Since you may hold the annuity for 20 years or more before that happens, this is a somewhat bogus benefit, as stock-market performance has never been negative over that time frame. But you’re still paying for that guarantee.

Too many people are looking into variable annuities now because they’ve lost money in stocks in the most recent plunge of share prices amid the financial crisis, or in past bear markets. But just when things seem particularly risky, the future for equities is brighter. In comparison with an annuity, a properly constructed, widely diversified investment portfolio adjusted for your personal tolerance for risk will serve you much better.

Dr. Altfest is chief investment officer at Altfest Personal Wealth Management in New York and an associate professor of finance at Pace University. He can be reached at reports@wsj.com.

{ 0 comments }

        Two Harbors Investment Corp.
        Christine Battist, 612-629-2507
        Investor Relations
        Christine.Battist@twoharborsinvestment.com

{ 0 comments }

        Media Inquiries            Investor Inquiries
        Andrea Simpson             Kristina Lennox
        Director, Marketing        Investor Relations Coordinator
        617/684-1511               301/998-8265
        asimpson@federalrealty.com klennox@federalrealty.com

{ 0 comments }