Financial Beat

April 26, 2002

Investor Confidence, Stocks, Fraud, Transportation

Financial Beat

Jump to:Choose article section... Investor Confidence: Are you more leery about investing your money? Stocks: Dividends should get more respect Fraud: Making a profit on these investments isn't guaranteed Transportation: Urban driving without the parking woes

By Yvonne Chilik Wollenberg

Investor Confidence: Are you more leery about investing your money?

Many investors lost faith in the stock market after Enron's well-publicized bankruptcy, according to a survey sponsored by TowersGroup, a public relations company. More than 40 percent of those responding say they now have less confidence in the stock market, while only 23 percent believe strongly that the market fairly reflects the true value of publicly traded companies.

Investors are split on how the Enron disaster will affect their confidence in the value of investment information or advice in the future. A third believe information will become more reliable, while 27 percent say they'll have less faith in such information.

Stocks: Dividends should get more respect

Companies that dole out cash to stockholders are usually a solid investment, says a study by Standard & Poor's. Stocks in the S&P 500 that pay dividends went up an average of 10.3 percent from the end of 1999 through December 14, 2001, while stocks without dividends fell by 9.6 percent.

Long-term performance for some 47 stocks that have consistently increased dividends in the past 10 years also excelled. The average stock in the group is now selling at more than four times its 1991 median price, while the average stock in the S&P 500 trades at about three times its 1991 price.

Fraud: Making a profit on these investments isn't guaranteed

Don't be fooled by claims that viatical settlements, which trade in death benefits, are as safe as certificates of deposit, warn state securities regulators. In a typical viatical transaction, a person holding a life insurance policy sells it to a third-party broker in return for a portion of the death benefit. The broker then sells shares of the policy to investors, who collect a share of the death benefit from the broker when the original policyholder dies.

Thousands of investors have lost more than $400 million over the past three years because of fraud and deceptive marketing practices that often fail to disclose the inherent risks, warns the North American Securities Administrators Association. Viatical investments, even when they're on the up-and-up, always involve a gamble on when the policyholder will die.

Transportation: Urban driving without the parking woes

City-dwellers who don't want the nuisance and expense of owning a car may still get behind the wheel whenever they want. Car-sharing companies, which offer members regular access to vehicles, currently operate in at least twelve cities across the country.

Unlike rentals, shared cars can be borrowed for a few hours at a time, and you don't have to fill out lengthy paperwork each time you drive. The cars are frequently available in various locations around the city.

Zipcar, located in Boston, New York, and Washington, DC, charges between $8 and $16 an hour, depending on the car and its location, plus 40 cents per mile. Members also pay $30 to apply and $75 in annual fees. Car-sharing fees generally include gas, maintenance, insurance, and parking fees. Rates and details of other plans vary. To get an update on what service is available in your city, visit www.carsharing.net .

 

Aspen, CORoaring Fork Valley VehiclesPalo Alto, CA

CarLink II
www.gocarlink.com

BostonZipcarPortland, ORFlexcar
Boulder, COBoulder CarShareSan FranciscoCity CarShare
Greenbelt, MDZipcarSeattleFlexcar
New York CityZipcarTraverse City, MICarSharing Traverse
Oakland, CACity CarShareWashington, DCFlexcar

 

The author is a freelance writer in Teaneck, NJ.

 

Yvonne Wollenberg. Financial Beat. Medical Economics 2002;8:14.

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