DOW CHEMICAL/ UBP AND BERNIE/BOND ETFS/ ISHARE'S NEW TARGET FUNDS

Although I do not have any position in Dow Chemical, it is one of about two hundred large caps that I follow on a regular basis.  I agree with the comment in a WSJ article that management can place a company that has stood the test of time in jeopardy.  WSJ.com   I was already skeptical of the price being paid for Rohm & HaasNotable News 10 23 2008, which has kept me out of both the common stock as well as the bonds, and the news over the weekend will keep me on the sidelines for the foreseeable future.  The article does state that the 750 million dollar break up fee is payable only if the deal does not secure regulatory approval and does not apply otherwise, and this does mean a lawsuit for damages in the event Dow tries to walk now, assuming the WSJ has its information correct on this point.  Whatever the outcome with Rohm, the outlook is too uncertain, even precarious, for me to even take a nibble. 

I keep reading about the Swiss firm UBP and its connections with Bernie Madoff and the Fairfield Greenwich firm.   WSJ.com

Judging from this last article in the WSJ, UBP is going to claim that it was relying on the SEC's regulation of Bernie.  Wow!  That would be a shocker for us peons in the U.S. to even think that the SEC is protecting investors or monitoring funds like the one being operated by Bernie, let alone in a meaningful way.  If the UBP clients present their case to a U.S. jury, with the facts presented on how much Fairfield and UBP were paid and proof of what they did do and most importantly what they did not do, I suspect the excuses and explanations that I have read to date from these purported financial advisors will find short shrift in the jury room.  Do they have any idea how all of this sounds to an average American who may be sitting in judgment of their due diligence?  

I noticed in the dividend section of the WSJ's market date page that some bond ETFs went ex dividend today.  This included LQD at $.4215; BWX at $.1142; WIP at $.1246; and TFI at $.0737Dividends - Markets Data Center - WSJ.com  Prior to this month, I reinvested all dividends paid by bond ETFs into buying additional shares and still do, except that I now take TFI in cash. 

While I was looking at this dividend page I saw several target funds offered by Ishares that I did not know about.   I checked out one for 2010 (TZD) which has an expense ratio of .25%. iShares S&P Target Date 2010 Index Fund (TZD): Overview   I am very disappointed with the return of a mutual fund that I have with the same date.   I will monitor these target funds to see if it might make sense to dump the mutual fund and substitute one the Ishares ETFs sometime in late 2009 or 2010.   The only other one that I will monitor is the 2015 target fund (TZE)iShares S&P Target Date 2015 Index Fund (TZE): Overview   I am looking at several alternatives to my current target fund including dumping the concept altogether. The major problem with the new Ishares target funds now is that they are just too small in terms of assets and may not even  have a trade on some days.  So I will just keep it on my radar screen to see how they do compared to the mutual fund that I have the misfortune of owning, which has been pathetic in 2008.   But assets are going to have to expand to over 50 million in TZD or TZE before I would even consider one of  them as a replacement.     

As of last Friday, returns on some 2010 Target funds, which would be the most conservative of any of these funds, for 2008 are as follows based on data from Barron's:

T.RowePrice:   -  28.3%

Vanguard:        -  22.2%

Fidelity:            -27.%

Others are in a similar range.  Given the glide path, moving away from stocks as years pass, it will take some time for these funds to recover from this year's loss even with a stock market in recovery mode.  Many had failures in parts of their bond portfolios which added to their stock woes.  Bonds may at some point start to falter when inflation rears its head again. As I said earlier, I made a mistake going this route when I chose to do it. (Buy High & Sell Low /Retrospective on the Good & Bad :  listed as my third mistake in that blog, in retrospect, looking in the rear view mirror at the period starting in late 2007).