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Retail, Financials and "Semis" In Extremely Oversold Territory (SMH, XLF, X
2008-03-11 18:38:00
If you held semiconductors for the last 5 years, you've been disappointed. The Semiconductors HOLDRs (SMH) drastically underperformed its sector peers in the bull run of 2003-2007. That said, there may be some upside for the troubled semiconductor segment. In fact, the biggest underperformers like the Financials Select Sector SPDR...
More About: Retail , Territory

Transportation ETF (IYT): Wanna Know When Things Will Get Better?
2008-03-10 19:12:00
Warren Buffett's Berkshire Hathaway owns nearly 20% of the nation's 2nd largest railroad company, Burlington Northern Santa Fe (BNI). Billionaire Carl Icahn has more than 50% in American Railcar (ARII). And each man's stake in transportation companies has increased dramatically over the last 6-9 months. What do the world's richest...
More About: Transportation , Things

Surviving a "Bear of a Time" in 2008 (BWX, PCY, FXE, DJP)
2008-03-07 21:01:00
Stay diversified if you want to succeed in tough times. This includes my long-time recommendations such as the Emerging Market Bond Fund (PCY) and the Lehman International Treasury Bond Fund (BWX). It also includes the Currency Shares Euro Trust (FXE) and the Dow Jones Commodity Index (DJP). Indeed, these are...
More About: Time , Bear , 2008

Ultra-Aggressive: Short-Term Bet Against the Bears (UYG, QLD)
2008-03-06 21:23:00
It's no secret. Everything has been going right for commodity investors. Each week seems to bring incredible news about "black gold" reaching new heights or "old gold" breaking $1000 per ounce. Similarly, we get story after story about the weak U.S. dollar. Many foreign currencies have successfully generated income as...
More About: Ultra , Bears , Short-term , Short , Term

Commodity Tracking: Record Highs or Record Hype?
2008-03-06 00:10:00
There's no debating the surging interest in commodity investing. Nor can one argue against the reality that the spot prices on "stuff" have been more profitable than the share prices on company stock. The media bombard us on a daily basis about the seemingly endless demand for metals, agriculture, livestock,...
More About: Hype , Tracking , Record , Commodity

ETFs for Buffett, ETFs for Cramer
2008-03-04 19:55:00
It doesn't matter what type of information that you follow -- technicals, fundamentals, contrarian indicators. On this terrible Tuesday, the markets seem content to flirt with the lows set in January. Does this mean that stock markets will ultimately break down further? Conversely, is this the type of stage-setting precursor...
More About: Buffett , Cramer

Decoupling Myth Aside... World Still Offering Better Value for the Investin
2008-03-03 19:23:00
To hear others tell it, things in North America are very bad. Subprime, Fannie, Ambac, AIG -- does it even matter? The U.S. is in a recession. (See my January 2 column on economic recession probabilities.) To hear me tell it, though, a recession is not the end of the...
More About: World , Myth

Financials: Seven Weeks After Cramer Called the "Bottom"
2008-02-29 20:57:00
It has been exactly 7 weeks since Jim Cramer made an emphatic call that "financials" had hit rock bottom. He made that prognostication on his Mad Money program on Thursday, January 10, 2008. With February closing on a sour note... and more subprime write-downs causing today's commotion... I thought it...
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Will U.S. Stock Assets Find Their Mojo?
2008-02-28 21:03:00
The U.S. dollar hits another record low against the Euro. Commodities set new record highs. Meanwhile, inflation-protected securities sit near a 52-week peak. Throughout 2007, I discussed the strength behind the Rydex CurrencyShares Euro (FXE) and the Dow Jones AIG Total Commodity Index (DJP). And those who may want easy...
More About: Stock , Find , Mojo

Is Water a Commodity Play or an Infrastructure Investment?
2008-02-27 21:10:00
Ever since Powershares first introduced the PowerShares Water Resources Portfolio (PHO), other sponsors have endeavored to capitalize on investor interest. Claymore served up the Claymore S&P Global Water Index Fund (CGW) in an effort to capture the demand for water services worldwide. Meanwhile, First Trust staked out territory with the...
More About: Investment , Play , Infrastructure , Commodity

Emerging European Markets or Emerging Energy?
2008-01-03 20:51:00
In 2007, emerging market ETFs made a whole lotta money. Yet most of that success came in the first 3 quarters. The iShares S&P Latin America 40 Index (ILF) didn't go far in the fourth quarter. And for that matter, the Asia Pacific region vis-a-vis the iShares MSCI Pacific ex-Japan (EPP) headed south of the flat line. Meanwhile, there's one region that managed to flourish in Q4 07: Eastern Europe. The SPDR S&P Emerging Europe (GUR) finished the year only a few percentage points off its 52-week high. In 2008, SPDR S&P Emerging Europe (GUR) continues to show solid demand. It "held serve" on January 2, when most domestic and foreign stock indexes fell with a "kerthump." And today, it gained 1%+ in early trading. It's almost as if countries like Austria, the Czech Republic and Hungary have won "immunity." Not exactly. Eastern/Central European investors need to thank the surge in crude oil for their success. I wrote about SPDR S&P Emerging Europe (GUR) ba...
More About: Energy , Markets , Rope

80% Chance of a Recession Presents Exchange-Traded Fund Opportunities
2008-01-02 17:59:00
On 12/18/07, I handicapped the probability of recession at 70% likely based on 5 of the best forward-looking indicators. With today's shockingly low Purchasing Managers' Index (PMI) registering a dismal 47.7, we need to revise the educated "guesstimate." On 12/18, I awarded 10 percentage points to the "recession camp" based on a 6-month trend of declining PMI readings. On the other hand, since November's number over 50 still pointed to expansion, albeit slower growth, I awarded 10 points to "recession-averted" crowd. No longer! The PMI below 50 now shifts to an even greater likelihood of a recession... call it 80% likely. In particular, the 47.7 reading is perilously close to the dreaded 47, consistent with the arrival of negative economic growth. With the probability of recession heading significantly higher, one need not be paralyzed; rather, he/she should be encouraged by the increasing certainty that the Fed will take action to minimize the se...
More About: Presents , Chance , Exchange , Opportunities , Fund

Taking Stock: A Preemptive Look At The "January Barometer"
2007-12-31 22:40:00
Yale Hirsch's Stock Trader Almanac gives an investor a historical basis for his/her expectations. For example, the "January Barometer" suggests that the performance of the S&P 500 in January will likely be indicative of the market's performance for the rest of the year. (The average advance for the S&P 500 is 14%.) Did the hallowed "January Barometer" demonstrate predictive powers in 2007? That depends on your perspective. January 07 did garner 1.4%. And the S&P 500 did end higher... 3.5% for the year. Yet that 3.5% is well short of the double-digit percentage expectation. In fact, the S&P 500's 3.5% is well short of the gain posted by short-term U.S. treasuries. (The Lehman 1-3 Year Short Term Treasury Bond Fund (SHY) claimed roughly 7%.) Granted, when we adjust for the reinvestment of dividends, the SPDR S&P 500 Trust (SPY) notched slightly more than 5%. That said, one is hard pressed to portray these stock market returns as venerable. Although i...
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Raw Profits: International Materials (DBN) May Be The Best Choice
2007-12-28 18:20:00
TheStockAdvisors.com is a great deal like Hulbert's Digest; that is, both publications survey the guidance of leading financial newsletters. Recently, newsletter advisors began giving their top picks for 2008. And there seems to be a substantial interest in capturing profits from global trends. For example, as emerging countries enhance their infrastructure, the demand for raw materials has increased exponentially. That's led some advisors to recommend specific stocks like Arcelor Mittal and BHP Billiton. It's also led some to take a sector approach by recommending the Select Materials Spider (XLB). Granted, companies like Phelps Dodge and Alcoa have helped propel XLB to a phenomenal year. Moreover, I gave the Select Materials Spider (XLB) my "thumbs up" back in March. Still, I think that there's an even stronger way to profit from what's happening worldwide. Specifically, the WisdomTree's International Basic Materials Sector Fund (DBN) scores even bigger successes...
More About: Profits , Choice

Canadian Energy Income: Falling Well Short of the Hype
2007-12-27 22:05:00
In 2007, several hundred new exchange-traded vehicles hit the U.S. Some lived up to the expectations from the get-go. For instance, the Market Vectors Agribusiness ETF (MOO) tracked the DAXglobal Agribusiness Index successfully AND made a pretty penny. (Read more about "MOO" in my recent review.) Still, there have been a wide variety of new investments that failed to live up to the hype. The worst may have been the Claymore/SWM Canadian Energy Income Fund (ENY). ENY was supposed to be a sure-fire winner in the energy arena. It had been designed to provide capital appreciation in Canadian oil royalty trusts. Meanwhile, diversification across dozens of "CANROYs" would lower the risk associated with both the commodity and exposure to a single entity. What's more, one could look forward to some level of income from the royalty stream. Talk about disappointment! For starters, ENY was plenty volatile, dropping more than 20% on more than one occasion. Secondly, whereas the Uni...
More About: Hype , Short

Emerging Markets Versus Developed Markets? What About All-World?
2007-12-27 00:28:00
For 5 years, the more investors moved into international stock assets, the more growth they had seen in their portfolios. And typically, the more exposure one has had to "less developed countries," the better those results. The desire for emerging market assets has grown so much, in fact, that many are showing interest in "frontier" markets; that is, they want to know what's going on in Viet Nam, Zimbabwe and Panama. (Who needs China or India!) The increasing appetite for risk, however, may ultimately lead to destruction. On the one hand, you have those pining for the next great list of under-developed nations. On the other hand, you have Greenspan describing China in the same way that he described the 90s tech boom (i.e., irrational exuberance). Of course, Greenspan's call on the dot-com bust vis-a-vis "irrational exuberance" came in 1996. That was 4 years early! It follows that few people are going to be willing to risk missing out on opportunities abroad -- opportuniti...
More About: World , Markets , Versus

MOOve Over Gold and Oil... Agribusiness Is Coming To Town
2007-12-24 17:47:00
Aaron Pressman of BusinessWeek noted that prices for commodities such as wheat and soybeans soared in 2007, as did shares of bioengineering giant Monsanto (MON). Similarly, the Street.com believes agriculture-enhancing businesses will continue to deliver gluttonous profits in 2008. One could invest directly in tractor makers like Deere (DE) or pesticide leaders like Syngenta (SYT). Of course, if you're an exchange-traded fund advocate like myself, you're going to look for the soybean lining... and that'd be the Market Vectors Agribusiness ETF (MOO). The Agribusiness ETF (MOO) tracks the DAXglobal Agribusiness Index -- an index that is north of 85% on the year. MOO, which has only has only been trading since September, is up roughly 40% and at a 52-week high. What makes the Market Vectors Agribusiness ETF (MOO) even more attractive is the fact that it's genuinely global in nature. It holds more than 40 companies on 13 different exchanges around the globe. Granted, the...
More About: Gold , Town

Health Care Check-Up: Devices (IHI) Not Far From Its Highs
2007-12-21 21:45:00
I'm sure that there are hundreds of left/right/red/blue/dove/hawk/liberal/con servative web logs out there. And the last thing that I want to do on this site is "get political." Nevertheless, we're going into an election year. It'll be difficult for me as a writer and as a money manager to ignore politics. For instance, the 2004 presidential race was largely shaped by the war on terrorism in Iraq. Ultimately, voters chose to give George W. more time. Meanwhile, smart-and-balanced investors were able to capitalize on defense spending. For instance, the SPADE Defense Index has beaten the S&P 500 every year since the 2004 election. Moreover, the PowerShares Aerospace & Defense Fund (PPA) which tracks the Spade Defense Index has outperformed the S&P 500 Trust (SPY) rather handily over the last year. On the 2008 campaign trail, however, military conflict abroad is likely to take a backseat to the economy at home. And perhaps the biggest concern of all may be in ...
More About: Health , Health Care , Devices , Care , Check

"Best of Breed" Or Exchange-Traded Index Fund?
2007-12-21 00:00:00
If you look at most individual stock selections by so-called pros, you will discover that few pros outperform comparable benchmarks over 5 to 10 years. It's so rare, in fact, that we find ourselves celebrating the handful of gurus who have managed to beat the S&P 500 on a risk-adjusted basis. If you do not believe it, you can check for yourself. Check out how each stock has done against a comparable index fund for the last 5 years. (What's more, take a look at an individual stock's volatility!) How about Microsoft or Intel versus the Technology Select SPDR (XLK)?  You'd have been better off with the index fund, XLK. What about "Big Energy?" Couldn't Exxon Mobil or Chevron out-hustle the Energy Select SPDR (XLE)? Nope. Sure you will have successes. Yet, when you add up all of your successes and all of your "not-as-good-as-the-index" results, you simply spend too much time. (And you make less money.) This is one of the chief reasons for using ex...
More About: Exchange , Fund , Index , Breed

2007 Opportunities That Will Continue Shining In 2008
2007-12-19 21:01:00
I was recently asked by a journalist at Investors Business Daily to identify some of the ETF successes from 2007. My first thought was to list several of the hot emerging market ETFs, like Brazil (EWZ) and Singapore (EWS). Then, I thought about the question some more. Did I really want to fuel the emerging market craze with 30% annual profit promises? Granted, the world has been beating the U.S. upside the head. The S&P 500 is clinging to gains in 2007, while the rest of the world has its 10% and then some. However, the real opportunities that came about in 2007 are those that help investors diversify their portfolios and protect against harsh downside risk. Indeed, even those who wish to continue funneling money into momentum markets need to have a plan for reducing the "beta" in their overall picture. That's why I listed the following concepts as the best concepts from 2007: 1. Foreign Fixed Income. Until this year, it was very difficult to diversify across ass...
More About: Opportunities , Shining , 2008 , Unit

The End of the World, Part II.
2007-11-09 20:21:00
The global "credit" crisis is still plaguing world markets. In July, a number of large financial companies that owned bad debt (a.k.a. sub-prime loans) collapsed. And the investment markets suffered. In August, the Federal Reserve came to the rescue by dramatically lowering interest rates. Lower interest rates typically encourage lenders to lend and consumers to spend. Rate cuts encourage investors as well. In fact, the August/September/October cuts propelled stock assets to new highs in early October. On October 31, however, the Fed hinted that it might not lower rates further. What’s more, economic data on lending and spending activity have been noticeably tame as banks/insurers/lenders report tremendous losses. Ever since, stock assets have fallen dramatically. We’ve seen the Dow Industrials move from 14000 to 13000 in a matter of days. We’ve seen the largest corporations in the S&P 500 collectively fall about 6.5% from highs. We’ve seen the smaller comp...
More About: World , The World , Part , End Of The World

Financials Entered A Bear Market... Opportunity Elsewhere
2007-11-08 20:48:00
Financial stocks in the Financial Select Sector SPDR (XLF) traded at a high of 38 in June of 07. They currently trade just below 30. That is a 21% decline... which is a bear market for this segment of the economy. The debate that the investment public is having about the financial turmoil is whether or not subprime/credit/lending/insuring/banking spills over. One day, major benchmarks are within striking distance of 52-week highs. The next? Monstrous sell-offs. Most corporations... outside of finance, real estate and auto... have been remarkably successful. Oil services, infrastructure stocks, alt energy, technology, aerospace -- they've been huge winners. Even more compelling has been the global growth story. Outside of the banks, in fact, the world keeps marching on. The iShares S&P Europe 350 Index (IEV) is up 15%+ in 2007, while the iShares MSCI Asia Pacific ex-Japan (EPP) has tacked on gyyy-normous 36%. The rewards abroad have not come without significant risks...
More About: Market , Opportunity , Bear Market , Bear , Unit

A Hedge Against the Speculative Oil Play?
2007-11-07 18:49:00
It used to be that Wall Street cheered milestones like Dow 10,000. More recently, it was Dow 14,000. Today, however, the most intriguing number to the "talkers" is the price per barrel on oil. The magic number, which nearly every investor seems to be demanding is $100. On the other side of the headlines, though, is the reality of a speculative bubble. No longer can genuine analysts say with a straight face that supply and demand drives the $100 target. Any reasonable assessment puts the price at $60. So why has crude run this high this quickly? Some say it's the storms brewing out over the oceans. Others talk about the premium on Middle East tensions. Still others talk about strikes, shutdowns, and bomb threats. And then there are those who still insist that China/India demand, coupled with a faltering U.S. dollar, is leading people to purchase the commodity. None of these explanations accurately reflect the difference between $60 per barrel 6 months ago and $100 per ba...
More About: Play , Hedge

Safe Haven: Global Consumer Staples (KXI) Still Strutting Its Stuff
2007-11-06 22:45:00
I read the news today... oh boy. Citigroup downgraded. Gold surged to a 28-year high. Crude futures hit an all-time record of $97 per barrel. What's a sane investor supposed to think? Apparently, you shouldn't "think" very much about any of it! Stock markets around the world posted remarkable gains of 1% or more. And here at home, the Nasdaq 100 (QQQQ) closed within 0.75% of its 52-week peak. Government bonds also tanked as money poured back into stocks. And why not? How attractive is a 4.35% yield for holding the 10-year Treasury note? (That depends on whomever you ask.) Tech looks good, financials look bad... what else is new? How about the iShares S&P Global Consumer Staples Fund (KXI) hitting a record at 62.5. Recently, P "Diddy" Combs entered into an agreement with Diageo to sell fine spirits (alcohol). And British Tobacco has never sold more cigarettes. Granted, there's a bit of sin in staples. Yet the iShares S&P Global Consumer Stap...
More About: Stuff , Safe

China Sell-Offs: Buying Opportunities or Bear Trap?
2007-11-05 20:57:00
Investing in China has been described as requiring "white knuckles" and "nerves of steel." For those who have had the fortitude and/or fearlessness, the rewards have been quite handsome. The iShares FTSE/Xinhua China 25 Index Fund (FXI) has garnered nearly 300% in 3 years. That's an incredible, portfolio delight by any investing standard. Of course, for better or worse, it is quite reminiscent of the late 90s. The Nasdaq was unstoppable. Even 30%+ pullbacks were merely buying opportunities for the Nasdaq 100 Trust (QQQQ). So today, what's an 8%-10% drop on the iShares FTSE/Xinhua China 25 Index Fund (FXI)? We've seen pullbacks of 20%+ at least 3 times since 2005. No sweat... right? Many thought "tech" was invincible for the new millennium. The 2000-2002 bear proved that it wasn't. Many believed that real estate had entered a new valuation paradigm in this decade. The 2007 "situation" with real estate has shown once again... bubbles always deflate. So now, the...
More About: Buying , Opportunities , Sell , Trap

"Strategy ETFs" Outperforming Broader U.S. Market (DBV, XRO, CRO, NFO, IRO)
2007-11-02 19:57:00
I have favored the use of several strategic ETFs in this column. In particular, I have advocated participating in "yen carry trade" profits from the use of the Powershares DB Currency Harvest Fund (DBV). I also like the historical record of the sector rotation strategy. It follows that I have been upbeat about incorporating the Claymore/Zacks Sector Rotation Fund (XRO) into some portfolios. However, I have offered a much chillier reception to other "ideas" that have hit Wall Street. Due to Claymore's success with XRO above, the ETF provider felt compelled to serve up an unproven "rotation" investment like the Claymore/Zacks Country Rotation Fund (CRO). (I suppose it could be worse. They could come up with zanier ideas like "dividend rotation" and "insider buying trends.") Oh, that's right... Claymore did introduce investments for these concepts/strategies as well. There is the Claymore/Zacks Dividend Rotation Fund (IRO) and the Claymore/Sabrient Insider Fund (NFO). ...
More About: Market , Strategy , Perform , Broad

Successful Investing: It's What You Do When You're Wrong That Matters!
2007-11-01 22:43:00
Ever since the famous 50 basis point cut by the Fed in August, I've been writing about the potential year-end run in bank stocks. And I've been wrong... dead wrong. The KBW Bank Index Fund (KRE) is lower than when I first expressed interest. On September 19, I wrote about what one does when the Fed drastically cuts rates and changes the rules of the game. On September 27, I talked about uber-investors like Warren Buffet and Joseph Lewis showing interest in battered financial companies. And on October 1, I emphasized Jeffrey Hirsch's historical assessment for the financial segment in Q4. Indeed, I had purchased the KBW Bank Index Fund (KRE). What's more, my clients lost money on this trade. Still, all of my clients understand that the success of their portfolios is most affected by how I manage incorrect decisions... not how I manage the winners. Let me explain. Every student of the markets... and any investment adviser who's worth his/her weight in gold at $800 per ounce......
More About: Investing , Wrong , Matters

Oh Canada! Glorious and Free!
2007-10-31 20:48:00
As a young New Yorker who spent summers at a camp in northern New Hampshire, I had the distinct privilege of learning the Canadian National Anthem. Of course, it didn't seem much like an honor at the time. I tried to appreciate it. Many of my friends lived in Quebec. Yet, "their" song was simply no match for the Star Spangled Banner. What's more, Canada just wasn't the U.S.A. Similarly, I spent several years living in Hong Kong and Taiwan. I positively loved the Chinese food... always have. But the greatest comfort in living abroad was the knowledge that a Mickey Dee's and a Pizza Hut were right down the street. Obviously, I am severely biased towards my homeland. (What American isn't!) It follows that I tend to look at other financial markets as... well... foreign! Fortunately, I have a keen respect for hard-working people in cultures around the world. Moreover, it's my calling to make money for my clients, listeners and readers. Otherwise, investing abroad might ...
More About: Free

Korea... I Once Knew A Place Named, "Korea"
2007-10-30 18:48:00
If you like value investing, the iShares South Kore a Fund (EWY) gives you one of the lowest price-to-earnings growth ratios around. And Warren Buffet owns roughly 5% of South Korea's 2nd largest company, steel-producing giant, Posco. If you like growth, South Korea's Samsung now has a larger market cap than rival Sony. What's more, you're getting emerging market-like GDP from a highly developed and technologically advanced Asian Tiger (i.e., South Korea, Taiwan, Hong Kong, Singapore). Yet, if there were nothing but upside, it wouldn't be "investing." So why would an investor be afraid to invest in South Korea (EWY) alone? For starters, the iShares South Korea Fund (EWY) is not particularly well-diversified. The top 5 holdings account for nearly 50% of the exchange-traded fund's direction. Moreover, roughly 25% of the fund's movement depends on the successes and the failures of Samsung. (Sure, the diversified electronics manufacturer of flat screens and mobile pho...
More About: Place

Can We Talk? Why International Communications Has Extraordinary Upside Pote
2007-10-29 20:58:00
Since 2003, international investing has been twice as rewarding for about twice the risk. When markets around the world have surged higher, the returns in Europe/Asia have doubled American stock assets. And when world markets have struggled, the declines in Europe/Asia have often fallen twice as hard as corresponding domestic declines. (So it all seems fair... right? It's all about the risk.) Perhaps. In recent months, however, there have been unique developments in certain sectors. And I can find no better example of the unique changes than the one that can be found in the telecommunications space. U.S-based telecom via the iShares Dow Jones Telecommunications Fund (IYZ) has been in a bit of a funk over the last 6 months. The returns have been negligible. And it even underperformed the broader S&P 500 SPDR Trust (SPY).Yet a funny thing has happened on the way to the global telecom gala. The iShares S&P Global Telecom Index (IXP) packed on a whopping 20% in the ...
More About: International , Talk , Communications , Extraordinary , Ordinary