In this little blog, I will post various information regarding one of my favorite investment vehicles, ETF's
Roughly three years ago I started investing in EFT's. At the time, the Nasdaq was retracing it's 1999 gains and was trading at about 3000. I thought it was a good time to start bargain hunting so I bought tech ishares such as IYW. Needless to say I was quite a bit early and I won't see daylight in those first purchases for quite awhile. But what was nice is that I felt comfortable buying more as the prices continued to drop, because I knew the sector as a whole would one day recover. I wasn't quite so sure about many of the individual stocks in my portfolio.
As we neared the end of a grueling bear market I found that many of my individual stocks ( especially tech stocks ) had been beaten down 80-90%. I knew I should put more money into them to get my cost basis down, but which ones were going to survive? I tried to buy those that were trading near their cash value and had "cash burn rates" that would allow them to stay in business for at least 2-3 more years even if things didn't turn around. Needless to say, I wasn't very comfortable with any of my tech holdings. When the market bounced back in 2003 I was relieved to see several of them come back to levels that I thought were more reasonable. By January of 2004 I was actually starting to feel pretty good again. But since then, many of the tech stocks have slowly erroded for much of the year. Which leads me to my point. It's much easier to invest in Sector Based ETF's than it is to pick individual stocks within that sector. Since January of this year the sectors that have been the biggest losers are the drug, biotechs and semiconductors. Instead of going out and picking individual stocks I'm much more interested in building positions in the biotech and semiconductor iShares ( IBB and IGW ) as opposed to picking which will be the next big winner.
Granted the reward might not be as great as it would be if you correctly picked the next Dell or Oracle, but as I've learned the odds of that happening are very, very slim. Through this blog I will be sharing my EFT thought with you as well as different things I use to determine when I should buy or sell a particular EFT. I'm not an investment advisor or broker so I won't be giving you any recommendations, but I do have 16 years of experience in the markets and I think you will enjoy some of my insights ( I was a commodity broker for 8 years and a born trader ). So come back and visit again!
