Until now, it hasn’t been entirely clear how much damage will result from the Lehman bankruptcy. An auction taking place today will be an important step in assessing which financial institutions stand to take a hit.

Today’s auction involves a type of security that many people know little about or have only heard of recently: credit default swaps. Read the full article

Today’s post continuues Part 1 with a further explanation of this rapidly-growing alternative to the mutual fund. In my initial post I explained that ETFs

• are created by financial institutions in large blocks that can be freely converted into underlying securities
• are transparent, meaning that the underlying securities are publicly disclosed on a continuous basis
• trade continuously on financial exchanges at prices that generally move closely with the underlying securities
• are generally liquid, reflecting the liquidity of the underlying securities
• are usually (but not necessarily) linked to a securities index
• tend to have low management costs

Read the full article

In the last four years or so, there has been explosion of newly created exchange traded funds (ETFs) in the financial marketplace. What are these investment products, and how are they different from the more familiar mutual funds? Read the full article

Wall Street is licking its wounds this weekend, no doubt, after being pretty badly clawed by what is almost certainly a bear market. In the coming days you’ll see all sorts of articles offering you free advice, e.g. identifying “Bear Market Stocks You Should Buy Now,” providing lists of the mutual funds into which you should put all your money, and so forth. What should you do? Read the full article

How much do you pay each year in mutual fund fees? Investors who ignore this question stand to lose a considerable percentage of their investment returns over the long-term. Read the full article

Although hedge funds have been in the news a lot lately, the average person probably has only a vague idea what they are. A few years ago my wife asked me what a hedge fund was, and I realized that I couldn’t give her a simple answer. Partly this was because there is no single answer, and partly it was because I couldn’t think of a way to do it without lapsing into financial buzzwords. So this post is in honor of my wife, who gave me the idea for it. Read the full article

When I meet with a prospective client for the first time, I try to explain a little about my approach to investments. On a couple of occasions when I’ve mentioned “index mutual funds,” someone has asked me, “what’s an index?” I’m always happy to get this kind of question; such questions help me remember that not everyone on the planet is a personal finance geek (and that’s a good thing). Read the full article

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