U.S. small-cap value stocks have been the worst performers so far this year, but recent history shows they could emerge as the frontrunners if the economy stages a recovery.
Of course, corporate earnings still face serious financial headwinds and investors could pay a steep price for getting in too early.
Nonetheless, Russell Investments recently examined the stock market’s performance during the five recessions that have hit the U.S. economy since 1980, including the current credit malaise. The research uncovered clear trends in how growth and value stocks perform during recessions. Read more…
ETF BASIC NEWS
In a universe of ETFs that covers everything from timber — Claymore/Clear Global Timber(CUT Quote) — to Taiwan — iShares MSCI Taiwan Index(EWT Quote) — investors are seeking protection as well as opportunity.
The iShares Barclays TIPS Bond (TIP Quote) Fund is one of the more conservative portfolio choices that equity-wary investors have added to their ETF picks as the question of inflation looms larger on the horizon. TIP tracks an index of U.S. Treasury inflation-protected securities (TIPS) that have at least one year remaining to maturity, an investment-grade rating and more than a $250 million face value.
Inflation, or at least the fear of inflation, could be the result of the hefty stimulus package proposed by the current administration. A recent Bloomberg News survey of 57 economists suggested that U.S. consumer prices may rise 1.6 percent in 2010.
While TIPS pay a lower coupon than regular Treasuries, the advantages in an inflation-fearful economy may be worth the wait. According to the Merrill Lynch bond indices, regular Treasuries have lost 3.9 percent including interest payments this year while TIPS have returned 3.6 percent.
Full Story: http://www.thestreet.com/_yahoo/story/10505685/1/a-tip-for-the-inflation-wary-etf-trader.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
NYSE:CUT, NYSE:EWT, TIP
In the past year, cash became a very appealing place to be. Believe us, we know–our own Hands-On tactical portfolio had nearly 60% of assets in cash through much of the crisis. However, as the economy bottoms out (as it seems to be doing) and risk appetites return, we have looked to get back into assets that can generate returns over the longer term, or at least save us from the potential ramifications of today’s loose monetary policy. The quick stimulus spending and cheap cash churned out by the U.S. government and Federal Reserve seem to have helped avoid a Great Depression-style collapse, but it will be extremely difficult in the future for policymakers to steer between the Scylla and Charybdis of excessive tightening triggering a new recession and continued lax monetary policy generating rampant inflation. In this tricky investment environment, we have heard that a new class of ETF is being offered as the answer: currency funds. Read more…
ETF BASIC NEWS
Although our markets began to climb alongside the improved news in financials, the best ETFs over the last 3 months revolve around metals and materials used to build things. Here are the 5 best ETFs (excluding financials) on a rolling 3-month basis:
Best Non-Financial ETFs Over 3 Months (2/27/09-3/26/09)
% Gain
Claymore China Real Estate (TAO) 79%
Market Vectors Steel (SLX) 69%
Claymore Global Timber (CUT) 68%
SPDR Metals and Mining (XME) 56%
First Trust Materials (FXZ) 56%
The implications here are twofold. One, the companies involved in the production, extraction and transportation of basic materials as well as industrial metals and lumber have collectively seen their share prices surge. Two, we can credit China’s infrastructure stimulus package in addition to the Chinese consumer.
For all of the talk about rebuilding U.S. infrastructure, only 5% of our stimulus package is going to these efforts. China? Some $300 billion of the $600 billion
Full Story: http://www.etfexpert.com/etf_expert/2009/05/etf-expert-best-etfs-tap-singular-theme-lets-build-stuff.html
NYSE:CUT, NYSE:FXZ, SLX, TAO, XME
Investors buying PowerShares WilderHill Clean Energy Fund (NYSEArca: PBW) likely agree with most of the following theses: Carbon dioxide emissions must be curbed, developed countries will vigorously pursue energy independence, research and investment financing will be available at reasonable rates, and governmental subsidies will remain large and persist long enough for alternative technologies to reach cost competitiveness.
[But] while the thought of environmentally friendly renewable power sources that would grant the industrialized world energy independence is a laudable goal, the economics and feasibility of the technologies proposed remains questionable. Read more…
PBW
The euro has jumped in value against the dollar since March, and the charts still sound the all-clear for euro bulls.
“Momentum precedes price” is a mantra used by many technical analysts to spot early trend changes in a stock, commodity, bond or even currencies.
Over the last year, measuring the euro’s changing momentum could have helped many investors conserve capital or even profit from the currency’s changing trend.
The first chart below displays a chart of the CurrencyShares Euro (FXE) exchange-traded fund (ETF). This currency-tracking stock reflects the euro’s changes as it appreciates and depreciates against other foreign currencies. Momentum, in this case, is measured using the two-line moving average convergence-divergence indicator. We could say that the MACD measures the trend’s underlying strength.
Full Story: http://www.forbes.com/2009/05/27/euro-dollar-forex-personal-finance-investing-ideas-currency-trading.html?feed=rss_finance
ETF BASIC NEWS, NYSE:FXE
“Don’t be fooled by bear market rallies, which are sharp, short-lived and, in some cases, extremely powerful,” says Martin Weiss. In his The Safe Money Report, he looks at inverse ETFs.
“Bear market rallies prompt short-sellers to panic, bears to mellow, bulls to come out of hiding, and Washington to declare ‘the worst is over.’ That’s precisely what’s happening today. But don’t be fooled!
“So our targets for this bear market are unchanged: 5000 on the Dow, 500 on the S&P 500, and 850 on the Nasdaq. Meanwhile, here are some of the best investments for protection and profit as the bear market resumes:…… Read more…
NYSE:DOG, PSQ, SEF
IT GETS dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it
IT GETS dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. Warren Buffett. The bedrock case for gold:
THE basic premise is not new, but then nothing’s changed much… Ludwig von Mises, the father of Austrian economics, who recognised early on that government attempts to massage the credit cycle always end in tears, memorably described the phenomenon as follows: “There is no means of avoiding the final collapse of a boom expansion brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”……. Read more…
NYSE:GLD
iShares S&P North American Natural Resources Sector Index (IGE) is an equity ETF that tracks an index based on US traded natural resources related stocks.
iShares IGE ETF is a passive fund and seeks to replicate the performance of the underlying index. At any given point, it invests about 90% of its assets in the underlying index related stocks.
The iShares IGE ETF has a total operating expense of 0.48%. The iShares IGE ETF may declare and pay out a dividend semi-annually and if there are any capital gains from sales of its assets, it may pay that at the end of the year.
Full Story: http://seekingalpha.com/article/139866-ishares-natural-resources-sector-etf-a-good-passive-investment-vehicle
IGE
Silver has a long history. Ancient cultures used silver for trade, jewelry, and crafts. Silver ore was first processed by the Chaldeans around 2500 BC as well as in Asia Minor (Turkey). In an effort to meet rising societal demand, ancient Mediterranean cultures eventually looked to silver deposits in modern-day Armenia.
Later, Rome exploited deposits from the Laurium mines in the Black Sea region. The Romans used silver and other metals for coinage. The Carthaginians looked to Spanish mines for their silver ore supply. Most cultures have valued that shiny metal known as “gold’s poor cousin.” Read more…
NYSE:AGQ, SLV
One important facet of portfolio construction and portfolio management is diversification. By offsetting the risk associated with individual assets, diversification reduces the variability of portfolio returns.
To achieve diversification, the returns on the various assets in a portfolio should not be highly correlated. Adding securities whose returns are highly correlation does not reduce the variability of the portfolio return and does not contribute to diversification and the reduction of risk. Thus, the investor or portfolio manager needs to identify assets with returns that are low or even negatively correlated.
Exchange-traded funds (ETFs) have become a popular investment vehicle, since the investor acquires a basket of securities without having to select individual stocks or bonds. ETFs may be promoted as a means to achieve diversification and manage risk. Diversification, however, will not be achieved if returns on the various ETFs are highly correlated.
The following tables report the correlation coefficients for a variety of ETFs. Weekly returns are computed from the date of each ETF’s inception. The resulting returns are used for the calculation of correlation coefficients. While some ETFs (e.g., the SPDRs based on the S&P 500 stock index) have existed for several years, many are relatively new, having been created only in the last few years. The relative newness of many ETFs limits the number of time periods that may be used to calculate the returns. While the results may be considered preliminary, they do suggest that the returns on many ETFs are highly correlated and hence their ability to contribution to diversification is limited.
Full Story: http://www.indexuniverse.com/sections/research/5911-etfs-a-diversification.html
ETF BASIC NEWS
Brokerage firm Kotak Securities today tied up with Denmark-based Saxo Capital Markets to launch a trading platform that provides real-time access to equities across 24 stock exchanges.
Kotak Trader provides direct access to equities, ETF’s and Real Estate Investment Trusts spanning 24 stock exchanges across the USA, Europe, Asia and Australia, Kotak Securities said in a release. Read more…
ETF BASIC NEWS
The “final and total catastrophe of the currency system”, is in this case the dollar. If you believe that’s where we are headed then gold still has some way to go. To believe it doesn’t is to believe the worst is pretty much over, that the excesses have all been unwound, that the central banks have triumphed, that paper currencies have won the day… without threat of inflation.
What about deflation? All over the world the central bankers’ reaction to the threat of a slowdown has been the same: print more money, slash interest rates, find ways to stimulate. If the patient is going to die, even the most radical course of action is better than doing nothing. Most paper currencies will suffer the consequences.” – could be authored by Ludwig von Mises and/or Marc Faber – take your pick.
versus:
“The gold ETF (GLD) is the 6th largest holder of gold in the world – the whole world, even ahead of China. When investors buy GLD they have to go out and buy gold driving up the prices. This raises a little question – who will be buying this gold from GLD when investors will decide to sell it? Gold is one of those weird assets where nobody knows what it is really worth. You cannot run discounted cash flow analysis to value it – it has no cash flows. It is an asset where perception and realityaredeeply intertwined. Read more…
NYSE:GLD
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