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Better to hire big fish from little ponds; Companies are getting better at spotting great character

June 2, 2014 3:34 pm

Better to hire big fish from little ponds

By Philip Delves Broughton

Companies are getting better at spotting great character

In the recent National Football League draft, the New York Giants had an unusual criterion for selecting players from college. Obviously, it wanted big, fast, strong young men, able to endure the brutality of professional American football. But it also wanted them “clean” and upstanding, with no scandals and no behavioural problems. And of its seven draftees, five had served as captains on their college teams.

Tom Coughlin, the Giants’ manager, explained why this mattered: “It’s someone who leads by example. It isn’t about talking; it isn’t about all that stuff. It’s about playing hard, being consistent, having virtues and values that you believe in and are not willing to sacrifice them for popularity.” Read more of this post

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Returns of pre-packaged fund – also known as model portfolios – hit by huge fees

June 2, 2014 7:42 pm

Packaged fund returns hit by huge fees

By Emma Dunkley

The investment returns on “pre-packaged” portfolios sold by wealth managers could vary by as much as £46,000 over a decade on a £500,000 pension due to the wide range of fees charged, a report reveals.

Research by investment platform Skandia based on data from The Lang Cat, an independent consultancy, shows the total cost of investing in these pre-packaged funds – also known as model portfolios – can have a substantial impact, knocking thousands of pounds off returns.

Model portfolios invest in a number of funds to target a level of returns and a degree of risk. Wealth managers may offer a number of such portfolios, often assigning them a risk rating to suit different types of investor. Read more of this post

China faces crucial choice over future growth; Growth can be robust or consumption-led but not both

June 2, 2014 6:08 am

China faces crucial choice over future growth

By Manoj Pradhan

Growth can be robust or consumption-led but not both

China has always divided investor opinion. The biggest debate now is about the future path China’s growth will take. Bulls say the transition to sustainable growth will be smooth; bears argue it will be volatile. Yet both agree consumption will rise to offset weaker investment. The result? Economic growth of 6 per cent, give or take, led by consumption.

This may turn out to be wishful thinking. Growth in China can either be robust, or consumption-led, but not both. If China chooses consumption-led growth, it could also be choosing much lower growth than the 6 per cent or so most have in mind.

There are three reasons for this. First, high investment growth in the past few years has added capital and supported labour income and hence consumption. Lower investment growth would weaken that support. Read more of this post

Do not be fooled by fund rankings; Memory of risks fades as crisis drops out of performance tables

Last updated: June 2, 2014 11:18 am

Do not be fooled by fund rankings

By Stephen Foley

Memory of risks fades as crisis drops out of performance tables

To the extent that good can come from calamity, the silver lining of the credit crunch is that it has begat an era of more cautious lending, tougher capital rules and wider regulation, plus more risk-aware investment processes. The crisis was so searing that its lessons will be carried by a whole generation of finance professionals.

It is not the fading of human memories that should worry us most. It is a fading of statistical memory.

As we have checked off the string of “fifth anniversaries” of credit crisis milestones, the period is being erased from some of the most important metrics used by investors to plan their portfolios – with the result that the risks in those portfolios may be unwittingly drifting upwards. Read more of this post

Australia: End of the boom; A cooling Chinese economy has hurt the mining sector, prompting protests over the tough new budget

June 2, 2014 6:19 pm

Australia: End of the boom

By Jamie Smyth

A cooling Chinese economy has hurt the mining sector, prompting protests over the tough new budget

The small coal mining town of Singleton was so over-run by contractors seeking jobs during Australia’s decade-long mining boom that some had to join waiting lists for apartments. Unemployment was virtually non-existent and businesses thrived as an army of workers arrived to work in the dozen mines that ring the town.

“It was so vibrant here it was impossible to keep good staff. Most went to highly paid jobs in the mines,” says Danny Gresham, director of the Singleton Tyre and Battery Centre, a local industry supplier. Read more of this post

New Immunotherapy Drug Data Show Promise in Treating Cancer; Drugs From Bristol-Myers and Merck Shown to Prolong Lives of Some Cancer Patients

New Immunotherapy Drug Data Show Promise in Treating Cancer

Drugs From Bristol-Myers and Merck Shown to Prolong Lives of Some Cancer Patients

PETER LOFTUS and RON WINSLOW

June 2, 2014 7:30 a.m. ET

Drugs designed to unleash the body’s own immune system against cancer are significantly prolonging the lives of some people with hard-to-treat forms of the deadly disease. WSJ’s Jeanne Whalen joins Tanya Rivero on Lunch Break to explain. Photo: Getty

CHICAGO—Drugs designed to unleash the body’s own immune system against cancer are significantly prolonging the lives of some people with hard-to-treat forms of the deadly disease.

The latest evidence: Patients with the skin cancer melanoma who received a combination of two Bristol-Myers Squibb Co. BMY -1.31% immunotherapies in a clinical trial lived an average of more than three years, researchers reported Monday. In another study, about 70% of advanced melanoma patients receiving aMerck MRK +0.12% & Co. immunotherapy were still alive after one year of treatment. Read more of this post

Economic Wind Doesn’t Fill Companies’ Sales; This is a break from the usual pattern, where public-company sales increase at a much faster pace than overall sales during economic expansions and fall much more during recessions.

Economic Wind Doesn’t Fill Companies’ Sales

JUSTIN LAHART

Updated June 2, 2014 3:48 p.m. ET

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Even with a tepid economy, it is surprising just how difficult it has been for U.S. companies to get sales going.

With nearly all the results in, it looks like revenue at companies in the S&P 500 rose 3.6% in the first quarter from a year earlier, according to S&P Dow Jones Indices. That is only marginally higher than the 3.4% gain in economywide sales, as measured by final sales of goods and services produced in the U.S.

This is a break from the usual pattern, where public-company sales increase at a much faster pace than overall sales during economic expansions and fall much more during recessions. Nor is the weakness of corporate sales a recent phenomenon. They have increased just 3.4% over the past two years, while economywide sales have risen 6.9%. Read more of this post

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