July 30, 2007
Gisele Bundchen Index Struts its Stuff Past Dow
Supermodel Gisele Bundchen evidently has justification for the $33 million she earned last year. The stocks of companies she promotes have had a good 2007 so far, according to stockerblog.com, which has developed a series of indexes based on the exploits of actresses, singers and supermodels. The Gisele Index was up 15% during the last three months, substantially outperforming the Dow Jones Industrial Average which was up only 8.2%. Its holdings include Limited Brands, owner of Victoria's Secret, and Moet Hennessy Louis Vuitton, which holds several companies for which Bundchen is the spokeswoman, including Louis Vuitton, Givenchy, Guerlain and Celine.
TheStreet.com went a step further, to look at earnings in relation to Bundchen's deals with various companies, and found that when clothing store C&A Brazil hired her to star in its television commercials, the company's revenue increased 30%.
Grossed-Out at PIMCO
It was surprising to find such an egalitarian commentary, inclusive of a mea culpa, by PIMCO Managing Director Bill Gross, one of the highest-paid and most famous fund managers in the nation, posted on fintag.com, a website that bills itself as providing news, gossip and opinions on hedge funds. In it, Gross bemoans the fact that the 0.01% richest Americans in 2005-a mere 14,588 families, who made more than $9.5 million that year-controlled 5% of the nation's wealth, and that no time since the Great Depression has there been such a vast disparity. Gross calls the government's current debate on whether to raise their taxes from 15% to the nearly 30% that the mass population pays a "farce" because it isn't likely to happen, as private equity and hedge fund managers cry to the government that if they are taxed at higher rates, they won't work as hard, and, thus, won't be able to contribute as much to business or philanthropic pursuits.
Gross then quotes Warren Buffet on the need to "place an initial emphasis on abundance but then to redistribute the abundance more equitably."
In his own words, Gross said: "When the rich get richer and the middle and lower classes struggle to keep their heads above water, as is clearly the case today, then the system ultimately breaks down. With exceptions, and plaudits for the Gates and Buffets of the mega-rich, the inefficiencies of wealth redistribution by the Forbes 400 mega-rich and their wannabes are perhaps as egregious and wasteful as any government agency, if not more."
Then Gross goes on to even take jabs at himself: "Trust funds for the kids, inheritances for the grandkids, multiple vacation homes, private planes, multi-million dollar birthday bashes and ego-rich donations to local art museums and concert halls, [which amount to] Napoleonic coronations, are but a few of the ways that rich people waste money-and I must admit, I am guilty of at least one of these on this admittedly short list of sins."
Gross ends this tirade by urging the government to rectify today's imbalances by raising taxes on the very wealthy-and then he segues into the apparent real reason for his candor: caution on the excesses of the credit markets. Hundreds of billions of dollars' worth of bank loans and high-yield debt to fund private equity and leveraged buyout deals have artificially propelled the Dow to 14,000, he said. This is why, Gross noted, the Federal Reserve has taken the rare move of raising yields 150 basis points in the course of a mere month and a half, to increase the cost of financing and reduce the inherent risks.
The U.S. Still Has Might
While the media has been emphasizing the impending doom of the U.S. economy and the imminent rise of markets in Brazil, Russia, India and China, etfexpert.com isn't so sure. Yes, international investors have seen far greater gains over the past five years, the website concedes, but comparing sector exchange-traded funds focused on U.S. markets with international sector ETFs proves otherwise. The Energy Select Sector SPDR not only has outpaced the iShares S&P Global Energy fund over the past two years, but enjoys a healthier trading volume. The U.S. fund has risen 60% over that time, while the international fund is up 52%.
Skeptics Scoff at Nasdaq Plan to Create ETF Market