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ETF Expert: Should You Be Buying What China Buys?

china3Historically speaking, U.S. Federal Reserve policy had a direct and sometimes predictable impact on investment direction. In the 20th century, lower overnight lending rates meant good things for stocks. And, if the Fed tightened its grip by raising target rates, you might cut back your equity exposure with great success. As we arrived in the 21st century, however, the results of "following the Fed's lead" has had mixed results. The Fed's rapid rate increases leading up to the dot-com collapse did little to deter Nasdaq euphoria... at least for several years. Then in March of 2000, the reality of the rate increases contributed to the quickness with which sentiment became bearish. (Only then did many exclaim, "See, you can't fight the Fed and win.") In 2004/2005/2006 the Fed raised rates consistently, albeit slowly.Yet stocks prospered throughout a rate raising environment. And even the dramatic rate cuts throughout 2008 did little to stop the 2nd worst bear in 100 years. In other words, you could easily have fought the Fed's rate cutting activity by deciding against the stock market... and won. Now the Fed is buying U.S. treasuries.  Most seem to think it would be a better idea to sell them. And the Fed is also buying mortgage-backed securities. Most seem to think this is actually a good investment. (See "Rethinking Mortgage-Debt ETFs.") Following the Fed in the 21st century, then... mixed results. Similarly, we might have been inclined to buy what the U.S. government wished to buy through its TARP program. Former Secretary Paulson infused capital into banks via preferred shares acquisitions. Even uber-bank-bear Meredith Whitney agreed that preferred shares were a good buy for investors. Yet nearly all preferred shares of the majors are trading at lower prices today than they were trading at when TARP 1.0 went into effect. In the end, one comes to the conclusion that there's no sure-fire thing. Just because your government's "doing it," does that mean you should jump on the same bandwagon? Sometimes yes, sometimes no. It follows that another major economic force in the world has been making scores of investment decisions. One has to wonder, might we choose to buy the things that China is buying? Full Story:  http://www.etfexpert.com/etf_expert/2009/04/etf-expert-buying-what-china-buys-may-yield-solid-investment-gains.html
ETF BASIC NEWS April 14, 2009 4:50pm

Tips for Investors Just Starting Out

new-investorNot so long ago, my newly employed friends and I applauded ourselves for being responsible and choosing to make high automatic contributions to our 401(k)s. A few years later, we've hardly been rewarded for taking the "prudent" route. Far from watching our savings grow, we've lost much of it.
NYSE:TMW April 14, 2009 2:34pm

ETF’S WITH A STAKE IN DENDREON CANCER VACCINE: IWM, IWO, IBB

dendreonNEW YORK (Reuters) - An experimental medicine from Dendreon Corp improved survival in men with advanced forms of prostate cancer, the company said on Tuesday, bolstering chances of it becoming the first approved therapeutic vaccine for any type of cancer. Shares of Dendreon (DNDN.O) more than tripled in heavy morning trading to as high as $22.10 as the study results suggested a revolutionary form of therapy is on the horizon for one of the most common cancers. Unlike traditional vaccines that prevent disease, the company's Provenge medicine treats it. "If you're in late stages of prostate cancer and your doctor says, 'You'll have no side effects with this drug and it will probably extend your life,' who's not going to take it?" said Sven Borho, an analyst with OrbiMed Advisors. The Phase III clinical trial met the main study goal of improving survival, prompting Dendreon to say it will seek U.S. regulatory approval of Provenge in the fourth quarter. "The successful outcome from the Phase 3 IMPACT study provides validation of the long-pursued goal of harnessing the human immune system against a patient's own cancer," Dendreon Chief Executive Mitchell Gold said in a statement. Prostate cancer is the most common cancer in American men other than skin cancers, according to the American Cancer Society. About one in six men will be diagnosed with prostate cancer during his lifetime. Full Story: http://www.reuters.com/article/hotStocksNews/idUSTRE53D4AB20090414
ETF BASIC NEWS April 14, 2009 2:08pm

Wall Street’s Last Hope for Profits

penniesUntil recently, investors had more than enough money for financial firms on and off Wall Street to earn monster profits. In the midst of this major recession, however, money managers have started fighting for every penny they can get. The latest evidence of how the fight for assets continues to intensify comes from recent announcements from Charles Schwab (Nasdaq: SCHW) and the Pimco unit of Allianz (NYSE: AZ) that they both intend to offer exchange-traded funds. Schwab's offering will use the Dow Jones U.S. Total Stock Market Index as its benchmark, while the Pimco fund will track an index of Treasury bonds. The move may seem relatively innocuous, especially since both firms have only registered a single fund with the SEC. Yet the decisions could have ripple effects throughout the industry. ETF domination Currently, a few firms dominate the ETF scene. Barclays (NYSE: BCS) has its iShares line of ETFs, with $254.7 billion under management as of Dec. 31, 2008. State Street (NYSE: STT), meanwhile, has its well-known SPDR offerings, which make up $159.5 billion. Those two firms make up more than three-quarters of the ETF universe. Smaller competitors, such as Vanguard, ProShares, and Invesco's (NYSE: IVZ) PowerShares, have found niches of their own to fill. Vanguard focuses on low-cost offerings, while PowerShares has tried to use less traditional indexes to track. ProShares has had great success from its leveraged funds, especially on the bear-market side. Where Schwab and Pimco will fit into the picture remains unclear. Of course, a single ETF is unlikely to do any lasting damage to their competitors. But the move could represent an opening salvo in a much larger war. Full Story:  http://www.fool.com/investing/etf/2009/03/09/wall-streets-last-hope-for-profits.aspx
ETF BASIC NEWS April 14, 2009 1:48pm

Stem Cell Index: YTD Analysis, Banking on NeoStem

biotechThe ETF Innovators Global Stem Cell and Regenerative Medicine Index tracks the performance of 40 stem cell and regenerative medicine companies on a global basis with market caps of less than $1 billion at the inception of the index. The total market value of the index will be tracked as a gauge of investor and trader sentiment toward stem cell companies from a starting value of 3,928 on 2/22/09. The accompanying table includes statistics for the 40 companies in the ETF Innovators Global Stem Cell and Regenerative Medicine Index, which is down 10% at a composite market value of 3,533 from 3,928 at the index inception on 2/22/09. The index is down by 23.7% over the past year on an equal-weight basis, compared to losses of 24.5% for the Healthcare Sector SPDR (XLV), 16.2% for iShares Nasdaq Biotech (IBB), 18.5% for SPDR S&P Biotech (XBI), 28.5% for PowerShares Biotech & Genome (PBE), and 36.9% for the S&P 500 SPDR (SPY). On a year-to-date basis (YTD), the stem cell index is up 28.8% on an equal-weight basis, thanks to major gains in many of the smallest companies in the index with the companies listed in the table in descending order by their YTD stock price changes. The stem cell index performance on a YTD basis compares favorably to losses of 9.1% for the Healthcare Sector SPDR (XLV), 6.8% for iShares Nasdaq Biotech (IBB), 13.5% for SPDR S&P Biotech (XBI), 6.6% for PowerShares Biotech & Genome (PBE), and 4.9% for the S&P 500 SPDR (SPY). Integra LifeSciences (IART) regained its position as the market cap leader in the index at $634M since I last wrote about the index one month ago. Osiris Therapeutics (OSIR) has lost over one-third of its market value so far this year after halting a Phase 3 clinical trial in late March for what the Company termed a flawed trial design resulting in higher than expected placebo response rates. The most widely followed and traded proxy included in the index is StemCells (STEM), which has gained about 15% YTD and 8% over the past year. One of the top 10 stock price gainers YTD (registering a gain of nearly 100%) is NeoStem (NBS), which is a leader in the pre-disease collection, processing and long-term storage of adult stem cells for future medical applications. Click here for a link to NeoStem's five minute adult stem cell documentary video, which is hosted at their website. Full Story:  http://biomedreports.com/articles/most-popular/800-stem-cell-index-ytd-analysis-banking-on-neostem.html
NASDAQ:IBB April 14, 2009 1:27pm

Midday Market Update: Markets In Red Despite Better Than Expected Earnings

down-arrowU.S. stocks and exchange traded funds (ETFs) are in the red in morning trading on unexpected declines in retail sales and producer prices, putting a halt in hopes that the economy has bottomed out.

The Commerce Department reported that retail sales declined 1.1% in March, making it the biggest decline in the last three months and a far cry from the 0.3% increase that analysts had forecast. The decline was lead by a slump in auto sales, restaurant, furniture and clothing stores and electronics sales, states the Martin Crutsinger of the Associated Press.

On a positive note, the Labor Department reported that wholesale prices plunged a whopping 1.2% in March as a result of a sharp decline in the cost of gasoline, other energy products and food. This snapped a two-month stretch of price gains, which indicates that the recession is keeping inflation under control. Additionally, business inventories fell for a sixth straight month, posting a 1.3% decline and right on target with analysts’ expectations.

The retail industry is crucial to the overall state of the nation’s economy and is generally a great indicator of consumer confidence. The aforementioned decline in retail sales sent the SPDR S&P Retail (XRT) down about 1.3% in intraday trading, despite being up 26% year to date.

Full Story:  http://www.etftrends.com/2009/04/midday-market-update-markets-in-red-despite-better-than-expected-earnings.html

NYSE:XRT April 14, 2009 1:12pm

iShares prepares for growth post sale

ishares_logo2US- Officials at iShares are making plans to fill vacant key roles and potentially shuffle its non-US personnel, as it breaks away from parent company Barclays and positions itself for overseas growth. Rory Tobin, global co-chief executive at exchange traded fund company iShares, says the firm will look for external candidates to fill some high-level positions, like that of a chief financial officer, which used to be covered by Barclays. Tobin told Global Pensions he and global co-chief executive Mike Latham "will spend time evaluating the organisational structure and how we will position the team." However, no changes will be made until the ‘go-shop provision’ has passed, a clause in the sale that allows other bidders to make offers for the business for the next 45 days. Barclays will begin accepting competing bids tomorrow. On Thursday, Barclays announced the sale of iShares for $4.4bn to private equity firm CVC Capital Partners, as it moved to raise cash and avoid joining the UK government’s asset protection scheme. The deal is expected to close in the fourth quarter of 2009. (Global Pensions, 4 April 2009) Tobin says the portfolio management team will remain intact, particularly in the US. "On the investment side, the transfer of the portfolio management and trading is dependent on location. We’re moving the entire portfolio management team in the US to the iShares business from the start." Full Story: http://globalpensions.com/showPage.html?page=gp_display_news&tempPageId=852151
ETF BASIC NEWS April 14, 2009 9:58am

China ETF Investment: PGJ and FXI

china2The Dow has been on a mini-roll. Therefore, most investors are thrilled to see battered stock portfolios recover even a smidgen of their massive losses. The problem is that these investors aren't paying attention to what's happening elsewhere around the globe. And they may be missing out on the opportunity of the decade! That's because the morsels of good economic news coming out of the U.S. are completely overshadowing what's happening in Asia.
China: A Bright Spot in the Region And the Global Economy
Just last week, a new report from the World Bank painted a very pretty picture about the economies of China, the world's third-biggest economy, and its Asian neighbors ...
The World Bank is forecasting that the Chinese economy will grow by 6.5 percent this year and expects it to really take off in 2010.
Thanks to China's $586 billion stimulus spending plan, the World Bank is forecasting that the Chinese economy will grow by 6.5 percent this year. Could you imagine the cartwheels Bernanke and Obama would do if the U.S. economy was growing by that amount?
Things are so positive in China that the World Bank called China "a bright spot in the region and the global economy" and expects the Chinese economy to really start rocking and rolling in 2010. Vikram Nehru, the World Bank's chief economist for its East Asia region, thinks the worst is behind China and that China has or is very close to bottoming. He said:
"The evidence on what's happening in China seems so pervasive and seems to cross so many indicators that I think there is now a growing degree of confidence that the stimulus package in China is having impact. Purchases of inputs have soared. Even consumer confidence is up and of course everybody knows bank lending has accelerated quite significantly."
Source: moneyandmarkets.com newsletter
ETF BASIC NEWS April 14, 2009 9:45am

NYSE wants ETFs exempt from short sale rules

shortsaleNEW YORK (Reuters) - The New York Stock Exchange will ask U.S. regulators to exempt exchange-traded funds from any new rules curbing short selling, an executive at the exchange operator said Monday. The Securities and Exchange Commission proposed five short sale restrictions last week and is now seeking public comment. It is under pressure to crack down on the trading strategy that profits from falling stocks, and has indicated it is considering including ETFs in any new rules. "We'll be including in our comment letter that we believe an exemption for ETF products is appropriate," Joseph Mecane, NYSE Euronext's executive vice president of U.S. cash markets, told Reuters in an interview. ETFs -- which have exploded in the last few years along with the growth in high-frequency trading firms -- are publicly traded products that track an index, commodity or some other underlying asset. Leveraged inverse ETFs, such as UltraShort ProShares, yield a compounded profit when the underlying asset falls. They have been blamed by some for exacerbating the sharp market drop that began last summer. "They seem to be functioning as intended," Mecane said of ETFs, which exchanges have come to rely on for continued growth in trading volumes. "We don't think they actually cause distortive behavior, and that's the main area where they've been villainized." Full Story: http://money.cnn.com/news/newsfeeds/articles/reuters/MTFH30679_2009-04-13_16-09-43_N13271703.htm
ETF BASIC NEWS April 14, 2009 8:27am

ETFs Gaining on Traditional Mutual Funds, Study Finds

exchange-traded-fundsExchange-traded funds are becoming a serious threat to traditional mutual funds, a trend that will gain pace over the next few years. That’s the word from Financial Research Corp. of Boston, Mass, which is releasing a study on ETFs today (Monday). In a survey of financial advisers, FRC found that 71% of the advisers it polled used ETFs in 2008, up from just 25% in 2003. ETFs, which are baskets of securities that trade on a stock exchange, have grown in assets at a more rapid clip than index funds in the last several years. Over that same period, traditional, actively-managed mutual funds have fallen in assets. Consider this: for every $100 invested in 2001, $90 went into mutual funds, $8 went into index funds, and $2 went into ETFs. Fast-forward seven years: By the end of 2008, the share of mutual funds fell to around $81.5, while index funds attracted $9.5 and the remaining $9 went into ETFs. FULL STORY: http://blogs.wsj.com/wallet/2009/04/13/etfs-gaining-on-traditional-mutual-funds-study-finds/
ETF BASIC NEWS April 13, 2009 5:37pm

Financials Extend Gains XLF Up 5.6%

surgeAfter opening this morning's session slightly lower, financial stocks across the board have rallied steadily throughout the day. The Financial Select SPDR ETF (NYSE: XLF) is now up 5.6% to $11.22 after starting today's trading session down more than 2% from Thursday's close. The FAS, or Financial Bull 3x ETF (NYSE: FAS) has now risen more than 13% after opening today down more than 6%.
ETF BASIC NEWS April 13, 2009 4:40pm

ETF Securities Ltd. Planned ETF & Japan Stimulus Plan Push Platinum to 6 Month High

platinum2April 13 (Bloomberg) -- Platinum climbed to a six-month high in New York on speculation that demand for the metal will rise in Japan after the government outlined a record stimulus package to help revive the country’s economy. Palladium gained. Japan’s Prime Minister Taro Aso’s 15.4 trillion yen ($153 billion) plan aims to revive an economy headed toward the worst recession since World War II. Including financial measures and guarantees, the effort will reach 56.8 trillion yen, Aso said in Tokyo on April 10. Platinum and palladium are mostly used in auto and truck pollution-control parts and in jewelry. “The Japanese came out with a stimulus package and that is a big factor in the platinum market,” said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. Platinum futures for July delivery gained $51.70, or 4.3 percent, to $1,247 an ounce on the New York Mercantile Exchange. The most-active contract earlier rose to $1,252 an ounce, the highest since Sept. 24. The metal may rise to $1,320 an ounce by late next month, Platt said. The most-active platinum contract has soared 32 percent this year, after tumbling 38 percent in 2008. Palladium futures for June delivery climbed $11.25, or 4.9 percent, to $242.35 an ounce on Nymex. The metal gained 2.7 percent last week and has surged 28 percent this year. Some investors buy platinum and palladium as alternatives to holding stocks, bonds and currencies. “It’s up on risk appetite,” said Tom Pawlicki, a metals analyst at MF Global Ltd. in Chicago. “Chinese car sales were strong in March; prospects for U.S. car sales are improving.” Full Story: http://www.bloomberg.com/apps/news?pid=20601012&sid=adynvjI2jUO0&refer=commodities
ETF BASIC NEWS April 13, 2009 2:06pm

Deal Or No Deal – Cash Or Stocks?

deal-or-no-dealInvestors are suffering from Howie Mandel's "Deal or no Deal syndrome:" You never know what's next, the banker is always against you and models (Wall Street puppets) can't give any profitable tips. Read this article to find out when to hold'em and when to fold'em.     Aside from the one million dollar price, investing in the markets has been somewhat like contending on Howie Mandel’s Deal or no Deal. Wall Street analysts and economist have given investors about as much profitable guidance about where the market’s going as Howie’s 26 models about where the million is hidden – none!

Unlike Howie’s guests, investors “play” with their own money, they have “skin in the game.” This market meltdown translates into more than just a few less cases (and ladies) to choose from. This is serious stuff, stuff that affects everyday life.

Unlike Howie’s contestants, each and every one of us knows how much our case of money (portfolio) is worth. The question is, should we cash in and protect what we have or “gamble” for higher values?

Today’s Wall Street “models”

Economist and Wall Street were just as baffled by the market meltdown as Jim Cramer and the likes who insist that nobody could’ve foreseen this turn of events.

At this point though, there is nothing we can do to undo the S&P’s (NYSEArca: SPY) and Russell 1000’s (NYSEArca: IWB) 50%+ top-to bottom drop. Rather than raising sunken ships to calm the storm, let’s fortify our ships. In other words, what did we learn that will protect our life savings in the future?

First and foremost, we need to remember not to allow our judgment to be clouded by complacency. As this rally continues, investors will grow more confident about a continuation of this rally. This entitlement of profits to come was the exactly sentiment that led to the post October ’07 meltdown. Be aware of a repeat!

Dr. Doom turns soft

In September 2006, Mr. Roubini, one of the few and probably the most popular economist who early on saw the writing on the wall, said that the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.

Full Story:  http://www.etfguide.com/research/155/8/Deal-Or-No-Deal-–-Cash-Or-Stocks?/

NYSE:IWB April 13, 2009 1:57pm

Highly Defensive Index: Opportunities In Healthcare

etf-news7The ETF Innovators Highly Defensive Index contains 32 market cap leading companies from the defensive industry groups (A-J) specified below in addition to one position reserved for the SPDR Gold Trust (GLD) as a hedge against long-term inflation and global currency devaluation. Since I last wrote about the index two months ago, Genentech has been acquired by Roche (RHHBY.PK) and the number of securities has been reduced from 40 to 33. Over the past year, the index has outpaced the overall market and all of its benchmark defensive ETFs on a total return basis through 4/13/09 with a loss of 14.2% compared to losses of 28.8% for the Sabrient Claymore Defensive ETF (DEF), 19% for the Consumer Staples Sector SPDR (XLP), 21.1% for the Healthcare Sector SPDR (XLV), 28.8% for the Utilities Sector SPDR (XLU), 35.2% for the Dow Jones Global Titans (DGT), 34.8% for the iShares Dow Jones Select Dividend (DVY), and 32.4% for the S&P 500 SPDR (SPY). This equally-weighted, highly defensive index is 60% as volatile as the overall market with an average market cap of $76B and an average dividend yield of 2.9%. The goal of this index is to provide a composite blend of traditional safe havens represented by the benchmark funds outlined above, rather than choosing a single sector (i.e. healthcare or consumer staples) or a specific strategy (i.e. high dividend yields or Dogs of the Dow). Full Story: http://www.istockanalyst.com/article/viewarticle/articleid/3192607
NYSE:GLD April 13, 2009 1:52pm

How This ETF and Market Bear Compares to Past Ones

bear-marketThe stock market and exchange traded funds (ETFs) have taken a bath over the past 15 months and some believe that a bottom has been hit.  When compared to other bear markets, just where does this one stand?  Henry Blodget of Tech Ticker describes the past 10 bear markets and bear market recoveries since 1950 and outlines the following points:
  • The 10 most recent bear markets have bottomed out down 20% to 57% off the peak.  As for the current market, it is the worst seen since the Great Depression, which posted a decline of 89% from its peak.
  • The bear phases lasted anywhere from three to 30 months; we are in month 17.  The Great Depression,  lasted 30 months.
  • Most the markets offered some sort of retest of the low, but some didn’t.
  • The S&P 500 is trading about in line with its long-term price trend after 15 years of trading above it and is likely that it will continue to trade below trend for a considerable period of time.
Full Story:  http://www.etftrends.com/2009/04/how-this-etf-and-market-bear-compares-to-past-ones.html
ETF BASIC NEWS April 13, 2009 10:54am

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