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.

42 million

1 Maciej Kowara and Eric Jacobson, senior analysts on our fixed-income manager research team, explored the effect that interest-rate rises have on high-dividend stocks. The conventional wisdom holds that rising rates will hurt high-dividend stocks, and indeed, the authors note that there is a statistical relationship between Treasury yield movements and high-dividend stock returns: For high-dividend stocks versus the 10-year Treasury, the regression coefficient is 1. So, in theory, for every 100-basis-point move in Treasury yields, you would expect a 1% drop or rise in high-dividend stocks. However, the authors note, all things are not equal, and statistical significance doesn't necessarily translate into actionable investment decisions.

"Nothing in capital markets happens in a vacuum. Although we have statistical tools to measure the impact and influence of various markets on each other, most intermarket relationships aren't exclusive. In other words, if we're looking at the interplay between two markets, it's just as likely that either one or both might be affected by movements in at least one other market, if not many markets."

4 Speaking of Apple, the stock hit an all-time closing high this week as excitement brewed over anticipated features on the new iPhone. Though we think the firm is fairly valued at this point, there are some tech stocks we feel are trading at compelling valuations. We highlight four of our best ideas in the tech sector.

6

Sometimes manager changes come out of nowhere, writes director of fund research Russ Kinnel. Recently, two fund managers younger than 50 retired: Chuck Myers of

"The most important thing to do is monitor your funds on a regular basis. Check them quarterly or monthly, whatever works for you. But the things to check for are manager or category changes rather than performance. These are the things that signal an important change. You can track our analyses to see our assessments of the changes, too."

GBP 2 million ($2.5 million) Thieves stole GBP 2 million worth of rare books. They avoided detection by a security system by rappelling through a skylight in a west London warehouse, the Guardian reported.

"One dealer lost GBP 680,000 worth of material. Experts said the most valuable item in the stolen haul was a 1566 copy of Nicolaus Copernicus's De Revolutionibus Orbium Coelestium, worth about GBP 215,000. Among the other books stolen were early works by Galileo, Isaac Newton, Leonardo da Vinci and a 1569 edition of Dante's Divine Comedy."

$1,000 Director of financial planning Christine Benz pointed out that many investors know that investing in a deductible IRA entitles them to a deduction on the contribution. But many are overlooking an additional credit they may be eligible for: the retirement saver's credit.

"Investors with lower and even middle incomes have an added incentive to get money into an IRA--or into a 401(k), for that matter. Assuming their income falls below certain thresholds, they can take advantage of a saver's credit, in addition to the usual tax breaks that accrue to IRA or 401(k) investors. The maximum credit is $1,000 for single filers and $2,000 for married couples filing jointly."

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