Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

63 Morningstar analysts released their updated ratings on 63 529 college savings plans this week, upgrading six plans and downgrading six. In total, Morningstar analysts identified 33 plans that it believes to be best-in-class options, assigning these programs Analyst Ratings of Gold, Silver, and Bronze.

"These plans for the most part follow industry best practices, offering some combination of the following attractive features: a strong set of underlying investments, a solid manager selection process, a well-researched asset-allocation approach, an appropriate set of investment options to meet investor needs, low fees, and strong oversight from the state and program manager. These features improve the odds that the plan will continue to represent a strong option for investors. Gold-rated plans have all or a vast majority of these attributes. Silver- and Bronze-rated plans embody most of these qualities but often have some room for improvement."

Negative 2.3% Using First Trust Dorsey Wright Focus 5 ETF FV as an illustration, Morningstar's director of global ETF analysis Ben Johnson illustrates the how difficult many investors find it to stick with a momentum strategy.

2% Gizmodo reported this week that a patch to treat peanut allergies is showing promise in clinical trials. An estimated that 2% of Americans cannot tolerate peanuts, and it has become the leading cause of food-related anaphylaxis and death, according to Gizmodo.

"An ongoing clinical trial for Viaskin is being conducted by the Consortium of Food Allergy Research (CoFAR), who has partnered with the National Institutes of Health (NIH). Details of the one-year clinical trial were published today at the Journal of Allergy and Clinical Immunology. The patch has not yet been approved by the US Food and Drug administration, but if this trial is of any indication, it's right on track."

18 Morningstar consumer strategist R. J. Hottovy said that 18 fulfillment center openings were largely responsible for Amazon's operating income shortfall in the third quarter. Hottovy believes the investment will ultimately strengthen Amazon's wide moat, however.

"While these investments are likely to reignite concerns about Amazon's longer-term cash flow potential, we believe all of these investment areas strengthen Amazon's ecosystem, laying the foundation for future margin expansion. With so many retailers and consumer brands utilizing [fulfillment by Amazon] this holiday, we view the fulfillment center investments (as well as pricing/inventory storage changes designed to minimize last holiday's bottlenecks) as necessary, and we expect Amazon to exceed its fourth-quarter operating income outlook."

3 As 2016 winds down and talk of charitable giving before year-end heats up, Morningstar director of personal finance Christine Benz outlines three key investment-related charitable-giving strategies investors may want to consider.

"… Charitable strategies involving investments have the potential to deliver greater tax benefits than making plain-vanilla cash contributions. Tying those donations in with a portfolio maintenance regimen can also help improve your portfolio's risk/reward potential."

$18 billion

Morningstar strategist Mike Hodel believes

, and he remains disappointed in AT&T's capital allocation decisions. Based on Hodel's standalone Time Warner fair value estimate, AT&T is paying about $18 billion more than Time Warner is worth.

"AT&T will fund half of the purchase price with its shares, which we believe the deal terms overvalue. Thus, the net loss of value to AT&T will likely be in the range of $2 per share. Thus, we are lowering our AT&T fair value estimate to $35 from $36, reflecting our view of the value that will be transferred to Time Warner shareholders, offset in part by modest expectations for cost savings and an assumed 25% probability that the deal doesn't pass regulatory muster."

2.9% Gross domestic product expanded at a 2.9% annual rate in the third quarter, the Commerce Department said Friday. That's higher than the consensus of 2.5% and Morningstar director of economic analysis Bob Johnson's 2.4% estimate. Despite the strong headline number, however, Johnson says the report is "one of the worst GDP reports that we've seen in some time."

"The quality of the report was exceptionally low with a lot of the growth coming out of special factors. Exports in the quarter were up about 10% led by a giant move in soybean shipments. And so that had a big impact on the numbers, and exports contributed an amazing 1.2% to the GDP number. Without that number, and most of that was soybeans, the GDP number would have looked much more disappointing."

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