Archive for the ‘CVX’ Category
NEW YORK (TheStreet) -- It's the start of the 2016 political season. With Hillary Clinton, Jeb Bush and other candidates in the presidential race, it's time for someone to perhaps suggest a new idea that could really help our economy and the general welfare, and set a candidate apart from the rest. Here's one: A new, national 50-cent gasoline tax.Must Read: Warren Buffett's 7 Secrets to Dividend Investing Revealed I make the case for a 50-cent gasoline tax in my new book Shale Boom, Shale Bust and also argue the timing is uniquely right to push for it now when gasoline prices are depressed and a gas tax would hardly be noticed by consumers. The plusses to a gas tax are multiple, especially if it were committed to U.S. infrastructure improvements and support of renewable energy development, both of which are in dire need of funding. Needed infrastructure spending in order to just maintain the current quality of our roads, trains, bridges, tunnels and airports are estimated at more than $2 trillion dollars. A 50-cent gas tax would be a great start, raising almost $70 billion a year. Without a program to restore our roads and bridges, we are going to see wide-scale outright failures in transportation soon. Also, the quickest way to support our recovering economy would be with federal infrastructure spending, providing much needed construction jobs. Renewable energy progress has stalled with the downturn in the prices for fossil fuels. In Europe, the investment into renewables will be in 2015 at their lowest levels in five years. Progress in renewable technology cannot be made without increasing investment, particularly in solar and wind, also at the lowest levels in nearly five years. While the G7 produces platitudes about reaching a 100% renewable future by the end of the century, a gas tax actually provides some of the incentive to make that a reality. The concurrent hit to the economy cannot be considered very deep. Lower gas prices since the fall of 2014 have not translated into tremendous windfalls for the consumer, as many thought would happen. Nor did the high prices for gas nearing $5 a gallon in 2013 tend to slow down the recovery. Too much importance has been placed on the price of gas as a motivator of economic activity. We will never get as good an opportunity to discuss a gas tax as right now. Although it is a tough conversation to have, and one that causes politicians to run screaming in the opposite direction, a smart candidate looking to separate himself or herself from a very large pack might want to take the case of a 50-cent gas tax to the public. As a matter of public policy supporting the general good, a national gas tax is an idea whose time has come. Must Read: 9 Risky S&P 500 Companies to Sell Right NowClick to view a price quote on XOM. Click to research the Energy industry.
NEW YORK (TheStreet) -- Most exchange-traded stock funds favor companies with big market caps over smaller ones, a process known as cap weighting. For example, cap-weighted S&P 500 funds will feature Apple as their largest holding, because Apple has the largest market cap in the world. A cap-weighted energy ETF will hold ExxonMobil as its largest constituent because it's the largest U.S. oil company. Must Read: 10 New Stocks Billionaire David Einhorn Loves But cap weighting isn't always a good idea. In fact, sector ETFs that are cap weighted expose investors to excessive single-stock risk. Remember back in 2012 when Apple tanked? That was problematic for sector funds like the Technology Select Sector SPDR , an ETF that now devotes a whopping 18% of its weight to Apple, nearly double the weight of its second-largest holding. Cap-weighted energy funds are similarly flawed as many allocate anywhere from 28% to 33% of their combined weight to ExxonMobil and Chevron . If you want to avoid that kind of scenario, there are ETFs that attempt to give equal weight to every stock they hold. For example, a hypothetical equal-weight ETF with 100 stocks would allocate 1% to each. Some equal-weight ETFs have outperformed their cap-weighted counterparts. The Guggenheim S&P 500 Equal Weight Technology ETF , for example, is only 1.54% Apple stock. The fund is up 4.1% so far this year, but has soared 92% over the past three years.The cap-weighted version of the fund, which holds more Apple stock, has had a bigger gain this year, but is up 63% over three years, an impressive gain but still below the equal-weight fund."The composition of the nine S&P 500 sector indices can differ significantly when you compare the cap-weight version to the equal weight version," said Guggenheim Managing Director William Belden. "Some of the cap-weight indices are heavily overweighted to the mega-cap stocks in their sector." Equal weighting is boosting the performance of some health care sector ETFs, too. Cap-weighted funds tracking this year's top-performing sector are usually heavily tilted toward Dow components Johnson & Johnson , Pfizer and Merck . That is not the case for the Guggenheim S&P Equal Weight Healthcare ETF That ETF devotes just 5.3% of its combined weight to those blue-chip pharmaceuticals, but that has not stopped the fund from climbing 11.5% this year. Over the past three years, the Guggenheim S&P Equal Weight Healthcare ETF is up 129.1% compared to a gain of 121.5% for the cap-weighted Vanguard Health Care ETF . Making RYH's performance all the more impressive is the fund's comparatively small biotech weight. While cap-weighted health care ETFs feature biotech weights in excess of 20%, that sector accounts for just 12.5% of RYH. Investors looking for equal-weight broad market ETFs have options, too, and a new kid on the block is one of the more compelling choices. The PowerShares Russell 1000 Equal Weight Portfolio , which debuted in December, is an equal-weight ETF with a twist. Not only does the fund equal weight its stocks, but its sector exposures are also equally weighted. That is not common among equal-weight broad market ETFs. Traditional equal weighting "introduces static sector biases since the weight allocated to each sector is determined solely by the number of companies in the sector," according to PowerShares. EQAL's advantages include reduced sector biases and broader diversification. The strategy is working. Since coming to market, the PowerShares funds has outpaced its traditional equal-weight and cap-weighted rivals. Must Read: How to Trade Bonds, Gold, Crude Oil, Dollar Using ETFsClick to view a price quote on RYT. Click to research the Financial Services industry.