Investing in a turbulent market

Here are three of the week’s top pieces of financial insight, gathered from around the web:

Don’t trust the ‘mini-tender’ offer

Be very wary of companies that call you with an offer to buy your stock shares, said Ann Carrns in The New York Times. I recently received a letter in the mail from some company called Obatan seeking to buy stock that I held for $14.40 per share in cash. That was 27 percent less than the current stock price, which was almost $20. Who would sell for less than the market price? “Welcome to the strange world of ‘mini-tender’ offers.” The Securities and Exchange Commission says the bidders are attempting to fool shareholders who simply “assume the offer is a good deal.” They “generally don’t label their offers as mini-tenders, perhaps because of their dubious reputation.” Solicitors are required by the SEC to disclose if the offer is a discount, but the disclosure is easy to miss. 

Intuit drowning in arbitration claims

Intuit is the latest corporation facing a “mass arbitration” barrage, said Megan Leonhardt in Fortune. Many companies place mandatory arbitration clauses “deep in the fine print of user agreements” to keep their lawsuits out of the federal court system. Consumers are now starting to fight back. After Intuit’s arbitration policy blocked customers from moving forward with a class action lawsuit over misleading advertising around “free” tax filing products, law firm Keller Lenkner “flooded the arbitration system” with claims. The firm says it represents more than 100,000 consumers. If Intuit wanted to arbitrate all those cases, “the company would be on the hook for $175 million in fees.” Amazon last year ended its mandatory arbitration practice “after it faced 75,000 demands from Echo users.” 

Investing in a turbulent market

“Markets have been on edge for months,” said Mike Piershale in Kiplinger, and it’s important to stick to solid investing principles. It can be tough to stomach, but “continue contributing [to retirement plans] on a monthly basis even as the market goes down.” It’s never easy to time the market, and if you pull out or pause contributions near the bottom, “you may miss the recovery if the market rebounds, as it always has.” Staying diversified is the tried-and-true strategy, so “rebalance your portfolio once a year” to prevent overweighting in certain areas. One area that’s particularly easy to overweight is your company’s stock. However, “it’s not a good practice to put more than 5 or 10 percent of your 401(k) into your company stock,” especially in a downturn.

This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.


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