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By: Joanna Alexander Kathy Ratajczak Will Prout Courtney Potter What practices do money market funds currently employ? • Provide investors with a relatively safe alternative to savings accounts by investing in only low risk commodities • Funds encourage investors to believe they can never lose money What does the SEC propose to regulate? • Require money market funds to hold capital on the offchance that there are losses • Require money market funds to use a floating measure of their net asset value, making it more difficult for investors to withdraw cash Is what the SEC proposing beneficial? • Financial Markets held their breath on Tuesday as Italian Prime Minister Silvio Berlusconi’s reform shy government teetered on the brink. • Rome has displace Athens as the epicenter of the euro zone’s sovereign debt crisis. • Italy’s government bond yields have approached unsustainable levels. • Italian 10 year borrowing costs touched a new record 6.71% on Tuesday raising the risk that Rome’s massive debt , the 2nd highest in Europe at 120% of GDP could spiral out of control. Do you think a Republican or Democratic victory effects the stock market differently? • Stocks have rallied after every mid-term since 1942! • Stocks surge on average 18.3% in the 200 trading days after mid-term elections • The S&P 500 chalked up its biggest 200 day gain, 30.5% in 1942, as the tide began to turn in WWII • The smallest gain 3.9% came in 1946 as investors fretted that the economy would sink into another depression • The market has been essentially neutral about party changes in one or both houses of Congress • Historically it has been a good predictor of stock performance. • Since 1940 the S&P has returned a cumulative 9.3% on average in the first two years of presidential terms—slightly more than a third of the 25% cumulative return in the second two years! • Recently though, the presidential-cycle indicator has fallen flat • Bottom Line: Markets often find a way to upset our preconceived notions! • http://static5.businessinsider.com/image/4defa60c4bd7c8ba241a0000-400-300/maryschapiro.jpg • http://www.ehow.com/about_4700550_characteristics-money-market-funds.html • http://www.ft.com/intl/cms/s/0/bee8b3f4-0973-11e1-a2bb00144feabdc0.html#axzz1dQwEWnli • http://finance.yahoo.com/news/Italy-Greece-on-the-brink-rb-1374006010.html • http://www.kiplinger.com/columns/value/archive/how-elections-affect-the-stock-market.html
