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Investing Specialists

Morningstar Runs the Numbers

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended March 29.

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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.

The market-cap-weighted price/fair value ratio is 1.03 for our entire equity coverage universe, suggesting the market is slightly overvalued, writes healthcare sector director Damien Conover in our first-quarter wrapup. On a sector-specific level, communication services continues to be the most undervalued sector, with a price/fair value of 0.86. Basic materials remains the most overvalued sector, with a price/fair value of 1.34. 

In the wake of  Facebook’s (FB) data breach and the subsequent possibility of increased regulation, the company’s shares have tumbled nearly 20%. But equity analyst Ali Mogharabi remains confident that the company can endure the short-term impact of the data breach; he does not expect a significant long-term negative impact on Facebook’s platform and operations. With the stock trading at a 0.77 price/fair value ratio, we think Facebook is worth a look. 

Every quarter, we reconstitute the Morningstar Wide Moat Focus Index. When we do this, we re-evaluate the index's holdings and add and remove stocks based on a preset methodology. This helps keep the index true to its aim of providing exposure to competitively advantaged (wide-moat) stocks selling at the lowest current market price/fair value ratios. See the 11 newest additions, as well as the 11 stocks we removed from the index. 

You may want to check out the blue moon this Saturday (March 31), even though it won't actually be blue. ("Blue moon" is the name given to the second full moon to occur in a single calendar month.) That’s because it’s the last blue moon that we’ll see until Halloween night 2020, according to the Weather Channel. Interestingly, though the idiomatic phrase “once in a blue moon” refers to an occurrence that happens only rarely, this is the second blue moon of 2018—the first one happened just two months ago, on Jan. 31.

According to data from Vanguard, many investors delay making their IRA contributions until the last possible moment. Some of that could be the result of strategic tax planning, but in other cases, it's probably inertia or just plain uncertainty. There are a bewildering array of rules about tax treatment, income limits, and age limits when it comes to Roth and traditional IRA contributions, says director of personal finance Christine Benz. To help clear up some of the confusion, she sets the record straight on 10 common misunderstanding and myths about IRA contributions. 

- $7.7 billion
February was a roller coaster for markets worldwide, and this volatility was reflected in fund flows. February's flows across all category types amounted to negative $7.7 billion, versus January's flows of positive $128.1 billion, writes senior quantitative analyst Alina Lamy. Read our full February asset flows commentary here

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