ETF Answers

Beginners Guide To Oil ETFs & ETNs

2011-09-28T11:46:00.003-05:00

Over the past decade oil has become a very popular investment theme as demand from China and India as well as other developing countries has pushed demand up to the available supply. At the same time innovative new products such as the Oil ETF have caused a sharp rise in investor demand. A persistently weak dollar over the past 10 years has also been a source of market support and many think this trend will continue or get worse. Is Oil Investing something you should consider? If the answer is yes, how should you invest?

There is really only one reason to invest in oil as a commodity and that is if you believe the price will rise in terms of U.S. Dollars in the future. If you would've purchased crude oil in 1998 when it was trading just above $10 you could've made huge profits by 2008 when prices soared to over $145 per barrel. The biggest issue with high gas and fuel prices has been that it takes the wind out of the U.S. economy which in turn causes a slowdown in consumer spending as well as gas demand. Huge swings in the demand for gasoline and fuel especially in the U.S. tends to cause big swings in the price of crude oil and related products as well. For example, after climbing from $10 all the way to $145 over a 10 year period 1998-2008 it only took about 6 months to fall all the way back to $30 during the great recession, so things can get wild.

Most people are much better off owning an oil stock etf which contains a basket of oil related stocks instead of owning the actual commodity. This is because the earnings of oil companies tend to be less volatile than the price of oil and oil companies can continue to rake in the cash even if oil prices just stay where they are instead of rising. If you look back at comparisons of the price performance between USO the most popular crude oil etf and XLE the most popular Oil Stock ETF you will see that XLE has strongly outperformed USO since it's inception and this will most likely continue into the future.

USO or even the double oil etf - UCO can be used for trading short term swings in the price of crude oil, but you need to have good timing skills to make money at that game. Another way traders use financial derivatives is to short the crude oil market by using the double short ETN DTO or double short ETF SCO. Both of these will rise 2% on a day when crude oil falls 1%. Professional traders are the ones who most consistently do well with most of these ETFs, even they have trouble getting in and out fast enough. For most of us we are much better off in a good oil stock etf such as OIH or XLE.

Time To Look Into Oil Stocks?

2011-08-25T08:47:00.002-05:00

A few months ago (in fact until a few weeks ago) oil stocks were on a roll and one of the strongest performing sectors in the market. The recent downturn however absolutely crushed oil stocks so now could be a good time to consider investing in oil or oil stocks.

My favorite ways to play oil are using the Oil Stock ETF - XLE as it tends to outperform any of the oil futures based ETFs. If you are a long term investor it's tough to beat the performance you get from ETFs like XLE and XOP.

For short term trades I used to use the Crude Oil Futures but with all the volatility I'm not comfortable being in a trade without being at my desk. So now days I tend to use the 3x Leveraged Oil ETF (ERX) for bullish moves and ERY for bearish moves. These ETFs move dramatically just like the oil futures but since you purchase them as shares you can have much more control over your exposure compared to futures contracts.

The Bullish Percentage for Oil Stocks bottomed out at 2 (most bearish since 2008) and is just turning up so that's why it's a good time to look into oil for investment opportunities!

Platinum and Palladium Down On Japanese Car Factory Shutdowns

2011-03-14T12:29:00.003-05:00

Both platinum and palladium are lower today as Japanese car production has been dramatically reduced due to a lack of electricity and numerous supply disruptions. The Palladium ETF - PALL is trading off 1.34% while the Platinum ETF - PPLT is down 1.43% both noticeable but not nearly as dramatic as the Uranium stocks and ETF.

Palladium was the #1 performing metal in 2010 just ahead of silver so the palladium etf had a spectacular first year of trading and has become a very active contract for such a small market. In fact, it accumulated nearly $1 billion in assets in the first 12 months making it one of the most successful ETF launches of the year. PPLT (the platinum etf) also attracted $815 million in assets but the price action has been much more subdued. In fact, platinum which had a price shock earlier in the decade has been losing ground to the other precious metals consistently for the past year.

There is little doubt that this dip in automobile production is a temporary event and that worldwide production will likely still meet it's goals. But after the big run palladium has had over the past year the market was due for a breather and this event appears to be enough of a catalyst, at least in the short run.

Uranium ETF Dives 20% On Japanese Reactor Worries

2011-03-14T12:10:00.002-05:00

One of the first things that sprung into my mind on Friday as we saw the huge tsunami waves wreaking havoc in Japan was their nuclear power plants. Japan has a very limited supply of natural resources for generating electricity so they began to rely upon nuclear as their economy developed. In fact, with 53 active reactors Japan was 3 behind the U.S. and France in the number of active nuclear power plants.

This morning as news spread of yet another reactor issue and video of women and children being screened for radiation poisoning the shares of Uranium production companies such as Cameco plunged. In fact the Uranium ETF - URA which is comprised of 23 companies involved in the production of uranium dropped over 20% at one point which is very dramatic for a single session.

It remains to be seen how long the effect will last but there is little doubt that this incident will once again cast a shadow of doubt over the entire industry. The thought of radiation poisoning (a silent and deadly killer) is far worse than putting up with a little pollution which is why Coal is one of the few things that is up today. It also appears that the Natural Gas ETFs are perking up as well as the low prices and abundant supplies are very attractive in light of current events. There is little doubt that natural gas will play a bigger role in our energy future however the severe price spikes in the past decade still has energy producers leaning toward coal.

Silver ETF - SLV Closes Above Resistance

2011-02-04T08:08:00.002-06:00

Gold finally broke it's down trend yesterday and that's all it took to allow the silver ETF - SLV to close above the final resistance at $28. SLV is once again trading above the 10, 20, 50 and 200 day simple moving averages. In other words, the bull market is back.

About a week ago silver made an outside day key reversal and closed on the high of the day. That was the initial indication that silver had reached a selling climax. At the same time the Gold Stocks held support at the 200 day moving average. Silver had been trying to rally the past week but gold remained below the 10 day moving average (steep downtrend) so silver was having a hard time breaking out. Yesterday gold cleared both the 10 and 20 day moving averages as the Euro came under renewed pressure. This allowed silver to punch through the final moving average and close at the high of the day. Silver will often go back and test the breakout, so if that occurs and SLV can stay above $28 that would be a signal to traders that the uptrend is still intact.

Silver ETFs Finishing 2010 At Record Highs

2010-12-31T12:21:00.002-06:00

It looks like all the Silver ETFs are going to push into the new year at all-time highs! Silver is trading at levels not seen in over 30 years and all the silver ETF contracts are making new record highs today.

Double Silver ETF - AGQ is up over 137% on the year.
The largest ETF - SLV is up almost 65.91% on the year.
SIVR is up 65.80% on the year as well.

Other less active silver funds like DBS and USV were up 65.10% and 64.45% respectively.

Closing the year at new all time highs bodes well for these markets in 2011 as well at least in the beginning of the year. Many market watchers including myself expect silver to explode to new all time highs ($50+) before this bull market is ultimately over. Whether that happens in 2011 remains to be seen.

It should be another interesting year!

Happy New Year!

Silver ETF Trend Remains Bullish

2010-12-13T11:52:00.003-06:00

The short trade in silver using the double short silver etf - ZSL only netted $130 before the silver market found support. This market remains incredibly strong and can't even go through an overdue correction. After watching the action unfold last week I sold ZSL and purchased the silver mining etf - SIL which is the Global X Silver Miners.

The precious metals miners have been outperforming the metals since the rally began in August. During the credit crunch the miners fell much harder than metal prices so they still remain at a substantial discount to the metals on a historical basis. The following chart shows the large cap miners represented by GDX and you can see they have not made up the gap that was created during the decline in 2008. SIL didn't start trading until after the crash so that's why I used GDX for the illustration.

Taking Another Shot At ZSL - Short Silver ETF

2010-12-07T14:31:00.004-06:00

The silver market blasted to another new high just over $30 per ounce and everyone is bullish so it's time to take a trade on the short side. The lowest risk way to do this is using the double short silver ETF - ZSL. It's so beaten down that I was able to buy it at $10.50 per share and I'm only going to risk it to today's low so it's a pretty small bet.

I don't think the ultimate top is in for silver, but this could easily be a short term top that will lead to a moderate correction. If you look at the chart below, you can see that the Relative Strength Indicator (RSI) failed to make a new high as the Silver ETF - SIVR went to new highs. This is called Divergence and is often a sign that the market is getting over bought and is due for a correction.

The largest Silver ETF - SLV stopped right at the psychological $30 level.

Brazil ETF Review - Putting The B In BRIC

2010-12-02T14:34:00.004-06:00

The lead country in the emerging market BRIC community is Brazil. Rich in natural resources the Brazilian economy has been growing rapidly this past decade along with commodity prices.

The oldest and most established Brazil ETF is EWZ from iShares. As you can see from the chart below this ETF had a tremendous run from 2003-2008 then came crashing down with the rest of the global markets losing a whopping 70% only to turn around and regain much of that ground in 2009 rising as much as 150%. It's no wonder long term emerging markets investors have to develop nerves of steel in order to not get shaken out of their positions.

For the past year and a half there has been a better performing ETF available and this one is a small cap Brazil ETF that trades under the ticker symbol BRF. You can see by the chart below that BRF has been dramatically outperforming EWZ. When you think about it that makes sense because Small Caps normally outperform Large Caps following a recession. If this is true in developed nations, it's probably even more true for emerging countries. However, it will be interesting to see what happens to these Emerging Country small caps when the next financial crisis hits... I imagine it wont' be pretty.

There are several other newer Brazil ETFs as well, these include:

BRAQ - The Global X Brazil Consumer ETF

BRXX - A Brazil Infrastructure ETF

BRAZ - Global X Brazil Mid Cap ETF which focuses on mid-cap stocks.

The way things are going it's only a matter of time before Brazil will no longer be considered an Emerging Market. It seems to be developing at a rather fast pace!

Short Bond ETFs Spike Sharply Higher

2010-12-01T15:24:00.003-06:00

Just yesterday long term bonds were rallying on a worsening European debt crisis but what a difference a day makes. Today all the Short Bond ETFs rallied sharply and closed with very strong gains as bond prices collapsed following the latest ADP jobs report.

Active Bond ETF Performance:

The Direxion 3x Leveraged Short Bond ETF - TMV closed up $2.51 or 6.36%

TBT the 2x Leveraged Short Bond ETF closed up $1.46 or 4.20%

TLT - the most actively traded Treasury Bond ETF closed down $2.51 or 2.56% on nearly twice the normal daily volume.

LQD - the investment grade corporate debt held up better losing only .61% as a stronger economy tends to reduce the risk premium between corporate bonds and government treasuries.

Municipal Bond ETF - MUB was down almost 1% ending a rebound rally from the $99 low set a couple weeks ago. It will be interesting to see if it can retest and successfully hold the old lows if the long term bond market continues to unravel.

Gold ETF Funds - Reviewed

2010-12-01T08:50:00.003-06:00

With Gold near all time highs there is strong investor demand for all types of Gold ETF products. Initially during the first stages of a bull market people tend to favor the metal and large cap mining stocks.

The top Gold ETF Funds are: GLD, IAU and SGOL

The leading Gold Mining ETF is GDX

Then as speculative fever takes over investors (and especially traders) become more aggressive so they move into Leveraged Gold ETFs such as: DGP and UGL. They also move from the large cap gold stocks into the small cap or "Junior" mining stocks which tend to be much more volatile. The best ETF to capture the movement of these small cap miners is GDXJ which is only a year old but already trades over 2,200,000 shares per day on average.

During strong bull markets you will find that Silver generally outperforms gold as well just as the Nasdaq tends to outperform the S&P500 during strong stock market rallies.

Once the tide turns, which they always do then investors will be looking for ways to play the down side. There are several short gold etf products to choose from:

DGZ is the only one that is an unleveraged short gold etf.

UGL is a double short Gold ETF

DZZ is a double short Gold ETN

If you compare the performance of DZZ and UGL you will see they have very similar characteristics but the actual contract risk in a time of crisis may differ. Some pundits say that ETNs have more contractual risk because of the way they are structured.

Palladium ETF Still Top Performer For 2010

2010-11-30T16:48:00.004-06:00

Despite the strong rally in silver recently the Palladium ETF remains the top performer since it's inception last January. Up over 60% it has been trading in lock step with SLV lately but still maintains a 10% lead in overall performance this year.

The Platinum ETF remains the weakest of the metal complex barely showing a gain at all since it's inception on the same day as palladium. Platinum was apparently over priced in relation to the other metals and those who have been buying the weakest precious metal hoping for a catch up rally have been disappointed thus far. If this precious metal rally continues from here however, there is little doubt that Platinum should participate going forward.

Another Big Day For Silver ETFs

2010-11-30T16:30:00.004-06:00

The Silver ETF - SLV closed up 89 cents (3.35%) after being up over $1 earlier in the day. In the past few days SLV had retested the 20 day simple moving average and again found support at that level. These $1+ moves are something that metals traders haven't seen in many years but are becoming increasingly common as this bull market wears on.

Junior Gold Stocks - GDXJ was the second strongest non-leveraged ETF up 2.72%

The Silver Miners - SIL was up 1.95% on the day

The Gold ETF - GLD was up 1.42% while the Gold Mining ETF - GDX was up only 1.07%

The Double Silver ETF - AGQ was once again the superstar up a whopping 6.65% today and nearly 120% since the rally began the 3rd week of August.

Junior Gold ETF Continues To Outperform

2010-11-30T12:14:00.004-06:00

Ever since the break out in late August the Junior Gold ETF - GDXJ has been strongly outperforming the Gold ETF - GLD. Since inception GDXJ is up about 62% versus a 25% rise in gold over the same period of time (since Nov 2009).

Junior gold stocks tend to perform best after a well established uptrend has already taken place in physical gold prices so many are looking for this out performance to continue for some time. They are extremely volatile however so even though they tend to outperform on the upside they normally under-perform when the market turns south so caution is in order. Since individual companies tend to be risky this explains why the Junior Mining ETF has been so popular, it's an easy way to diversify. Average daily volume has been running in excess of 2.2 million shares so that's incredibly strong for a Gold Mining ETF that's only a year old. It wasn't too long ago that investors would laugh when you mentioned mining stocks.

Here is the price chart for GDXJ since inception:

Oil ETFs Rally

2010-11-24T10:29:00.003-06:00

This week the Crude Oil complex has been testing support similar to the way gold and silver tested support last week. Crude Oil found support at the 50 day simple moving average the way that gold did and is moving up sharply today.

There are several different ways to play a rise in crude oil prices. You can choose an unleveraged oil etf such as USO, USL or DBO. You can also choose the double oil etf UCO which has traded over 6.5 million shares today.

Yet another way to play is through by using an oil stock etf such as XLE or OIH. Of course the oil stocks also have their versions of Leveraged ETFs as well with the double leveraged - DIG (based on the DJ Oil and Gas Index and the triple leveraged ERX which is based on the Russell 1000 energy index.

So as you can see there are several investment alternatives across the entire risk spectrum for those who want to play a rise in crude oil prices.

Silver ETFs Explode Higher

2010-11-18T17:55:00.002-06:00

Silver ETFs exploded higher today after holding support on a closing basis at the 20 day simple moving average. SLV, the most active Silver ETF has not closed below this level since the uptrend began in late August. Today on the news that Ireland would be bailed out all the precious metals (especially silver) blasted higher with SLV closing $1.35 higher (5.4%) and the Double Silver ETF AGQ up more than 10%. That is a tremendous move and it shows just how volatile the markets have become.

According to the last commitment of traders report, a couple large commercial banks are still holding enormous short positions. Whether or not they are eventually forced to cover those positions is probably the biggest unknown variable in this market. It will be fascinating to watch this unfold.

Update On Silver Mania 2

2010-11-04T12:19:00.004-05:00

A few weeks ago I wrote a couple different pieces talking about the potential for another Silver Mania occurring. Silver had blasted up by 33% without the slightest hesitation along the way, something I hadn't witnessed in my 22 year trading career. Since then we formed a double top in the $25 area and tried to set back yesterday falling to just under $24 before Bernanke started talking.

Once again, Bernanke threw fuel on the fire and today all the gold and silver etfs are going through the roof. Let's face it, Bernanke is trying to use "trickle down" monetary policy to stimulate the job market the same way republicans used fiscal stimulus in the 80s. Whether or not that works one thing is for certain, it is fueling the fire in an already revved up precious metals market.

One thing I'm going to be watching is the latest release of the Commitment of Traders report, specifically the "Bank Participation Report" to see how much of the HUGE short position has been covered. In my opinion that has been the oxygen to go along with the Fed Fuel. The two combined have created an explosive combination.

Here is a reminder of what happened 30 years ago!

Precious Metals and Emerging Markets ETFs Hit New Highs

2010-11-04T09:18:00.002-05:00

Luckily I was smart enough to use the $1 break in silver yesterday to take profits out of ZSL and I actually bought the Global X Silver Miners - SIL . I bought the miners this time instead of silver itself because in the later stages of precious metals rallies it's usually the mining stocks that go crazy. That doesn't mean this time can't be different but history is usually a pretty good guide. So far in this bull market the mining stocks have underperformed the precious metals.

Another area blasting to new highs "Post Bernanke" is the Emerging Markets ETF category. Whether you look at large cap or small caps most are hitting new highs today. The 3x leveraged etf EDC was up over 5% earlier today, quite a move!

Palladium ETF Continues To Outperform

2010-11-02T12:00:00.003-05:00

Gold has been in the spotlight for several years and recently attention has turned to silver, but the real superstar of 2010 is actually Palladium.

As of the high yesterday at $65 the Palladium ETF (PALL) was up 50% year to date far out-pacing Gold which was up about 18% and even Silver which was up approximately 33%. The primary driver for this outperformance is the fact that industrial applications have been switching from Platinum to Palladium due to the fact that it's much cheaper.

If you are looking for market direction in the precious metals, keep an eye on palladium since it has been the market leader all year.

Double Top In Silver ETFs

2010-11-01T15:59:00.002-05:00

Both of the most active silver etfs SLV and SIVR made a double top today. The high on SLV was 24.42 which was exactly the all time high, same with SIVR which reached 24.88 which was the all time high set a couple weeks ago.

The futures actually went to a new contract high early this morning before failing. When a contract goes to a new all time high and then fails I always called this the "Kiss Of Death Trade" because it is deadly accurate. Paul Tudor Jones used to love this trade where the professionals would push to new contract highs, triggering all the "Buy Stops" and then use that volume to establish short positions.

The way to trade this is to go short with a stop above today's high. If the market takes out the high today, odds are the trade is no good. I'm choosing to use the Short Silver ETF ZSL instead with a sell stop below today's low.

The beauty of the Kiss Of Death type trade is that the risk is normally quite small and if the trade turns out the gains are normally HUGE!

Short Bond ETF Review

2010-10-21T09:29:00.002-05:00

With long term interest rates coming off historic lows and the fed pursuing an initiative to bring inflation rates back up to "normal", many people feel that a perfect storm is coming for the bond market. Anyone who has experienced these in the past knows how violent the bond market can retreat when inflation or even "inflation expectations" enter the picture.

If you are wanting to use a Short Bond ETF to capitalize on a collapse in bond prices you have 3 solid choices, it just depends on how much leverage you want to use.

TBF - Inverse Bond ETF (No Leverage)seeks to provide -100% of the daily performance of TLT

TBT - Double Short Bond ETF (2x Inverse) seeks to deliver -200% of the daily performance of TLT

TMV - Triple Short Bond ETF (3x Inverse) seeks to deliver -300% of the daily performance of the NYSE 30 Yr Treasury Index.

If you are not experienced with Short ETF products make sure you do your research before diving in. These ETFs are designed to track the "Daily" performance of the underlying security, so they reset each night after the close. This characteristic makes it a short term trading vehicle but not suitable for long term positions.

If you are expecting a sharp move lower in bonds, one of these could be a good way to play it. Just do your research first!

Big Day For "Beat Up" Leveraged Inverse ETFs

2010-10-19T17:09:00.003-05:00

The big winners today were the Leveraged Inverse ETFs all of which have been pounded to death over the last 18 months. The 3 biggest winners were:

DTO (+10.07%) - ProShares Double Short Crude Oil ETN
EDZ (+9.67%) - Direxion 3x Leveraged Short Emerging Markets ETF
ZSL (+9.67%) - ProShares Ultra Short Silver ETF

All of these pops are strong "Counter Trend" reactions to the Chinese raising their key interest rate today which sparked a rally in the U.S. Dollar as well. Crude Oil, Emerging Markets and Silver have all been very strong performers the past 6 weeks in anticipation of the Federal Reserves QE2 Program.

Expect more volatility in the days ahead!

Double Silver ETF Interest Surges

2010-10-15T17:08:00.003-05:00

I noticed yesterday lots of people were searching Google looking for a Double Silver ETF as we were getting higher than normal traffic from that keyword phrase. Hopefully they will just do their research and wait for a better entry point as silver has run over 30% in the last 6 weeks. I don't believe silver is done yet, but I've taken profits and will wait for a setback before buying anything!

That said, we have been waiting for a setback the past couple weeks to add to positions and never got it. It appears the major commercial banks that held about 1/3 of all the short positions in Comex Silver have been trying to get out. Could get pretty wild.

AGQ is the ticker symbol for the Double Silver ETF

BRIC ETF - BKF Covers Brazil, Russia, India & China

2008-08-12T12:24:00.000-05:00

For the past several weeks I've been waiting for BKF to come down into the $45 range and it finally happened this past week. This etf is equally weighted between Brazil, Russia, India and China.... all of which have been suffering the past several months as investors have unwound huge "Emerging Market" over-weightings.

The Brazilian market is off over 25% due to the recent deflation in the energy and commodity markets.

The Russian market has been absolutely killed due to the war with Georgia as well as commodity declines. This has been a double whammy which has caused a 35% slide in the Templeton Russia Fund ( TRF ) in just the past 10 weeks.

There is pessimism over Chinese productivity due to the shut downs that have occurred in preparation for the olympic games. It's kind of amazing to think how poor the air quality must be over there to justify such an extreme measure.

India went through a good correction along with the others, but reached it's low in mid-July along with the U.S. markets.

I feel that investing in BKF is probably a better move for my SEP retirement account than trying to time the various emerging markets. There 4 markets all have different strengths ( China - Production, Russia - Vast Energy Reserves, India - IT Services, Brazil - Natural Resources & Agriculture ) and all 4 have incredible growth potential over the next 30-40 years.

Dow Jone Utility Average ( IDU )

2006-02-24T09:48:00.000-06:00

The Dow Jones Utility Average recently bounced off it's 200 day moving average so I decided to see if I could find an ETF that tracks the DJUA. What I found was the following iShare product:

Dow Jones U.S. Utilities Sector Index Fund (IDU)

Top Holdings* (Daily) as of 2/22/2006

7.95% Exelon Corp
5.30% Dominion Resources Inc
5.26% Southern Co (The)
5.22% Duke Energy Corp
4.69% TXU Corp
3.47% FirstEnergy Corp
3.43% Public Service Enterprise Group Inc
3.16% FPL Group Inc
3.13% Entergy Corp
2.92% PG&E Corp

*Holdings are subject to change. Check the IShares site for current info.

Top Sectors as of 2/22/2006

75.93% Electricity
23.61% Gas, Water & Multiutilities

It appears to mimic the Dow Jones Utility Average quite accurately and has good average daily volume of nearly 77,000 shares per day.

Worst Performing ETF's Of 2005

2006-01-18T09:35:00.000-06:00

For those of you who are contrarian by nature, you may be interested in the worst 10 performers of 2005. Many of these areas showed life in the first week of 2006.

Internet Infrastructure Holdrs - IIH (15.80%)
B2B Internet HOLDRS - BHH (10.88%)
Telecom HOLDRS - TTH (9.63%)
Internet HOLDRS - HHH (7.68%)
Internet Architecture HOLDRS - IAH (6.98%)
iShares:S&P Global Telecom - IXP (6.72%)
Consumer Discretionary SPDR - XLY (6.57%)
iShares Goldman Sachs Software Index - IGV (5.53%)
Vanguard Consumer Discretionary VIPERs - VCR (4.10%)
Pharmaceutical HOLDRS - PPH (3.71%)

The worst performing ETFs of 2005 are dominated by Merrill Lynch Technology Holdrs, Telecom, Big Pharma and Large Cap Growth.

The Best ETFs Of 2005

2006-01-18T09:11:00.000-06:00

According to the end of the year data provided by Yahoo Finance, here is a list of the top 10 performing etf's for 2005.

iShares S&P Latin America 40 Index - ILF 54.59%
iShares MSCI South Korea Index - EWY 53.90%
iShares MSCI Brazil (Free) Index - EWZ 52.66%
iShares MSCI Mexico (Free) Index - EWW 43.82%
BLDRS Emerging Markets 50 ADR Index ADRE 40.80%
Energy Select Sector SPDR - XLE 40.17%
Vanguard Energy VIPERs - VDE 39.05%
iShares Goldman Sachs Natural Res. - IGE 35.98%
iShares Dow Jones US Energy - IYE 34.67%
iShares MSCI Emerg Mkts Index - EEM 32.62%

You can see a very clear pattern of Emerging Markets and Natural Resources (led by the energy complex). The Biotech Holdr BBH also had a good year posting a 31.29% gain and the rally in gold to 20 year highs led the streetTRACKS Gold Trust GLD to a 17.76% gain for the year.

Hot hand ETF for the new year

2006-01-04T10:19:00.000-06:00

By Jim Lowell
Last Updated: 1/3/2006 12:01:00 AM

"WATERTOWN, Mass. (MarketWatch) -- Unveiling of my Hot Hands ETF is now officially an annual event.
And, if you followed the Hot Hands for 2005, it would have been a profitable event: last year's Hot Hands ETF was the iShares S&P Latin American 40 - and it gained 54.5% in 2005, thank you very much.

What's a Hot Hands ETF you ask? Easy. Last year, I introduced a simple and straightforward way to invest in exchange-traded funds: buy last year's best performing one. At the start of each and every New Year, buying the prior year's top-performing ETF turns out to be a stellar strategy. See column from a year ago.

No way?

The rewards, as demonstrated since January 2001 (when there were enough ETFs in existence to start tracking this strategy), puts performance posers in their place -- and it doesn't cost an arm and a leg to sidle up to the bar of year-end results and spit in the eye of the nearest high priced hedge fund.

But before I get to the strategy's details, and before I count down to my Hot Hand ETF For 2006, let me throw what will now be my annual monkey wrench into this particular financial engine.

While this strategy does reveal a healthy trend, the data only goes back five years; hardly long term. Yes, of course, past performance doesn't guarantee that the sun will rise tomorrow, but it also doesn't mean that you shouldn't set the alarm clock. Further, I do not advocate sinking your entire investment kit and caboodle into one of anything -- ever. That would foolishly fly against the diversified investment approach that I practice and preach personally and professionally. So, be forewarned: this isn't meant to be an all-or-nothing strategy. But it could be a complementary one.

Read The Whole Story

3 New ETFs From PowerShares

2005-12-07T09:30:00.000-06:00

CHICAGO, IL.--(MARKET WIRE)--Dec 6, 2005 -- PowerShares Capital Management LLC continues to "Lead the Intelligent ETF Revolution" with the launch of four new Exchange Traded Funds (ETFs) today, December 6, 2005, at the American Stock Exchange. This launch includes the PowerShares Value Line Timeliness™ Select Portfolio and three industry group portfolios. The new PowerShares ETFs and ticker symbols are listed below.

-- (AMEX:PIV - News) PowerShares Value Line Timeliness™ Select Portfolio
-- (AMEX:PHO - News) PowerShares Water Resources Portfolio
-- (AMEX:PHW - News) PowerShares Dynamic Hardware & Consumer Electronics
Portfolio
-- (AMEX:PTE - News) PowerShares Dynamic Telecommunications & Wireless
Portfolio

The PowerShares Value Line Timeliness™ Select Portfolio is based on the Value Line Timeliness™ Select Index, which chooses securities using Value Lines' proprietary ranking systems of Timeliness™, Safety™ and Technicals™. The index seeks to identify companies that have the potential to outperform the overall U.S. equity market. The Value Line Timeliness™ Select Index has outperformed the S&P 500 benchmark over the past 1, 3, 5 and 10 year periods. (See table below)

Index History (%) as of 9/30/05 1 Year 3 Year 5 Year 10 Year
------------------------------- ------ ------ ------ -------
Value Line Timeliness™Select
Index 29.84 24.77 4.06 16.95
------------------------------- ------ ------ ------ -------
S&P 500 Index + 12.24 16.71 -1.49 9.49
------------------------------- ------ ------ ------ -------
Russell 2000 Index + 14.57 18.13 -0.72 9.54
------------------------------- ------ ------ ------ -------

The Index performance results are hypothetical and index returns do not represent Fund returns. An investor cannot invest directly in an index. The Index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the hypothetical performance shown nor does the index lend securities, and no revenues from securities lending were added to the performance shown. In addition, the results actual investors might have achieved would have differed from those shown because of differences in the timing, amounts of their investments, and fees and expenses associated with an investment in the Fund.

+The S&P 500 and Russell 2000 Indexes are unmanaged indexes used as a measurement of change in stock market conditions based on the average performance of approximately 500 and 2000 common stocks, respectively.

The PowerShares Water Resources Portfolio is based on the Palisades Water Index which seeks to identify companies that focus on the provision of potable water, the treatment of water, and the technology and services that are directly related to water consumption.

The PowerShares Dynamic Hardware & Consumer Electronics and PowerShares Dynamic Telecommunications & Wireless Portfolios are both based on Intellidex indexes which incorporate advanced quantitative methodologies to discriminate between securities and select the stocks within an industry group identified as having the greatest capital appreciation potential.

"Today, for the first time investors will have access to Value Lines proprietary ranking systems in a low cost ETF format," said Bruce Bond, President of PowerShares Capital Management. "Our Water Resource and Hardware & Consumer Electronics Portfolios are also industry firsts for the ETF market. We're pleased to offer these new PowerShares portfolios providing investors with unique options to meet their personal financial goals. The launch of these four new ETFs brings the total number of PowerShares ETF portfolios to 35."

PowerShares Capital Management, LLC

PowerShares Capital Management, LLC provides institutional caliber asset management and market exposure through the replication of enhanced indexes. PowerShares delivers this sophisticated asset management in one of the more benefit rich investment vehicles available today, the exchange traded fund. The firm is committed to theoretically sound portfolio construction and empirically verifiable investment management approaches. PowerShares' asset management philosophy and investment discipline are deeply rooted in the application of intuitive factor analysis and model implementation to enhance investment decisions.

Risks of Owning PowerShares

PowerShares funds are made up of publicly traded securities that can and will move higher and lower with market movements. You should anticipate that the value of the shares of each fund will advance or decline more or less in correlation with the advance or decline in value of the applicable index. The funds are not actively managed and shares of the funds may trade at or below the funds' NAV. Exchange traded funds are subject to risks similar to those of stocks, including risks associated with short-selling and margin account maintenance.

An investor should consider investment objectives, risks, charges and expenses carefully before investing. A prospectus which contains more complete information about PowerShares, including, risks, fees and expenses can be obtained by visiting the PowerShares web site at www.PowerShares.com or by calling 800-THE-AMEX. The prospectus should be read carefully before investing.

The information in the prospectus is not complete and may be changed. The portfolio may not sell its Shares until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell the portfolio Shares, nor is the portfolio soliciting an offer to buy its Shares in any jurisdiction where the offer or sale is not permitted.

ALPS Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust.

Contact:
For Media Inquiries Contact:
CTA Public Relations
Bill Conboy
303-665-4200 x 106
Email Contact

--------------------------------------------------------------------------------
Source: PowerShares Capital Management

New ETF Targets High Dividend Stocks

2005-11-16T16:16:00.000-06:00

The SPDR Dividend ETF (SDY.A: Quote, Profile, Research) tracks the Standard & Poor's High Yield Dividend Aristocrats Index, which includes 50 high- yielding companies in the S&P Composite of 1,500 stocks that meet certain criteria and have increased their dividends every year for at least 25 years.

Howard Silverblatt, market equity analyst for S&P, said at a briefing at the Amex that dividends have been regaining favor with investors since late in 2002, after a long period in which they were out of fashion.

"Basically, companies were penalized for returning cash to their owners," he said. But the bear market of 2000-2002 brought a change in the way companies and investors viewed dividends, he said.

The components must have a minimum market capitalization of $500 million and must trade an average of 1.5 million shares or more per year.

Concentration limits prevent any stock from being more than 4 percent of the index weight at the time of a quarterly re-balancing. Those issues with the highest yield get the biggest weight in the index.

Most recently, the yield on the portfolio was about 3.4 percent.

"There are other dividend products out there that are very heavily weighted toward utilities and financial," said Jim Ross, co-head of the SSgA Advisor Strategies Group.

The SPDR Dividend ETF is currently about 26 percent in financial stocks, and utilities and financials together make up less than 50 percent.

Stock Market News and Investment Information | Reuters.com

Beware The Faults in Homebuilding ETF

2005-11-14T00:20:00.000-06:00

PowerShares recently came out with an ETF aimed at the red hot housing sector. It's the Building and Construction Portfolio trading under the symbol PKB. At first it seemed like a great way to trade a basket of homebuilders, but as you will see upon examination, it's much broader than homebuilding stocks.

Here is a good indepth article that talks about the broad makeup of the portfolio.

Beware Faults in Homebuilding ETF

SMH Rallied & So Did The Nasdaq

2005-11-14T00:00:00.000-06:00

After getting to the middle of the range at 32.50 the Semiconductors staged a sharp rally that brought the SMH back over $35. The semiconductors haven't been leading the nasdaq's moves higher this year, but have been providing downward pressure. The fact that they had a sharp snap back rally, allowed the nasdaq to rally back toward it's highs.

Notice, the QQQQ (Nasdaq 100) has actually rallied to new highs for the year which means Large Cap Tech is leading the market. Another area of leadership has been the Dow Jones Transportation Index, which is surprising considering the high energy prices. If you are a believer in Dow Theory, a break out in the Dow Jones Industrials this fall would be very bullish!

The Dow Jones Utilities just completed the most incredible 3 year rally that looked more like a tech or biotech rally. But they have cooled off in recent weeks as the bond market moved lower.

SMH Has Been Pressuring The Nasdaq

2005-10-28T08:28:00.000-05:00

If you are looking for the source of weakness in the nasdaq, you need to look no further than the Semiconductors ( SMH ). After breaking out of it range (above $35) the SMH recently failed and broke back down through that level. It appears to want to test the bottom end of that range around $30. If that takes place it will continue to weigh on the nasdaq for the time being. A move back above $35 would allow the nasdaq to regain it's footing.

Here is the chart, for now it's rather ugly:

Semiconductor ETF ( SMH ) Testing Top Of Range

2005-05-26T12:36:00.000-05:00

After holding the bottom end of it's range near $30 the SMH ( Semiconductor Holdr ETF ) has rallied to the upper end of this year's trading range at $35. A convincing breakout above $35 would open the door to an extended rally in both the semiconductor index and the Nasdaq in general. As you can see however, the rsi is approaching 80 so some consolidation would be likely before a major breakout.

Here is a chart of the SMH over the past 6 months:

Nasdaq & qqqq breakout!

2005-05-18T11:27:00.000-05:00

The Nasdaq 100 index has broken and retested the downtrend line that has been in place all year. Today it also cleared the 200 day moving average. The Nasdaq 100 is represented by the qqqq etf. Each share of qqqq represents 1/40th of the index, in other words it would take 40 shares to equal 1 share of each stock in the Nasdaq 100 index.

The Semiconductors have been leading the way since holding support at the bottom end of their trading range. You can see that SMH ( The semiconductor holdr) broke out prior to the Nasdaq 100.

Breakouts like this can often be "fake outs" but in this case nearly every index is breaking out at the same time so that adds validity to the situation.

Rydex Investments Launches Mega-Cap Exchange Traded Fund (ETF) Benchmarked to Russell Top 50(TM) Index

2005-05-13T09:16:00.000-05:00

Press Release Source: Rydex Investments

Rydex Investments Launches Mega-Cap Exchange Traded Fund (ETF) Benchmarked to Russell Top 50(TM) Index

Tuesday May 10, 8:24 am ET

New ETF to Track the 50 Largest Companies in the U.S.

ROCKVILLE, Md., May 10 /PRNewswire/ -- Rydex Investments today announced the addition of a second ETF to its fund line up: Rydex Russell Top 50 ETF (Ticker: XLG). The fund, listed on the American Stock Exchange, tracks the newly created Russell Top 50(TM) Index and is designed to give investors exposure to the 50 largest companies in the U.S. These 50 mega-cap companies represent approximately 40% of the total U.S. market capitalization. The smallest security in the index has an approximate market cap of $46 billion.

"Russell's outstanding reputation in the industry, coupled with the experience of the American Stock Exchange and the innovation that Rydex has brought to the industry make this a particularly attractive product for certain investors (although no investment strategy can eliminate risk or guarantee investment returns)," commented Steve Sachs, director of trading, Rydex Investments. "There is certainly some belief in the market that large- caps have the potential to outperform given current market and economic conditions. A mega-cap fund has the potential to provide enhanced returns relative to other major market indices."

Rydex Russell Top 50 ETF is the only ETF of its kind focusing on the top 50 mega caps. This new ETF provides exposure to America's largest companies through one fund and has the potential to outperform in periods of mega-cap rallies, a common occurrence during a time of economic expansion. The Russell Top 50(TM) Index is reviewed annually and reconstituted in an effort to ensure the appropriate mega-cap exposure. In addition, companies are selected solely on their market cap, regardless of their sector or industry representation.

"At Rydex, we listen to our advisors and strive to respond to their investment needs -- and to those of their clients -- by providing innovative and timely solutions. This product is in direct response to those needs," said Carl Verboncoeur, chief executive officer, Rydex Investments. "Until now, there has been a gap in the ETF marketplace for a mega-cap investment option. We feel that this product fills that gap nicely."

XLG comes less than two years after the successful launch of Rydex's first ETF, Rydex S&P Equal Weight ETF (Ticker: RSP), which has garnered over $740 million in assets. While each fund has its own, unique investment strategy, both provide investors with the same benefits that are obtained by investing in an ETF. ETFs can be a relatively low cost investment vehicle and trade throughout the day on an exchange, much like a stock. However, like a stock, ETFs are subject to market risk and price fluctuation. In addition, the ETF structure can be an extremely tax-efficient investment and may reduce the risk, volatility, time and attention that could be involved in owning stock in individual companies.

About Rydex

Rydex Investments, the investment advisor to Rydex Funds, is a leader in developing specialized investments that are essential components of a modern portfolio. Through continuous innovation, Rydex attempts to anticipate the evolving needs of investors. Rydex is committed to helping investors and investment advisors maximize the value of our investing tools and strategies and to providing an outstanding level of customer service. Rydex manages $14 billion in assets via 45 mutual funds, two ETFs -- Rydex S&P Equal Weight ETF and Rydex Russell Top 50 ETF -- as well as Rydex SPhinX Fund, which is a registered fund of hedge funds.

For more complete information regarding Rydex funds call 800.820.0888 or visit http://www.rydexinvestments.com for a prospectus. Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. The fund's prospectus contains this and other information about the fund. Please read the prospectus carefully before you invest or send money.

Rydex Russell Top 50 ETF and Rydex S&P Equal Weight ETF are subject to risks similar to those of stocks and may not be suitable for all investors. Shares can be bought and sold through a broker and the selling shareholder may have to pay brokerage commissions in connection with the sale. Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Shares may only be redeemed directly from the fund by Authorized Participants via Creation Units. The elimination of the bias toward large-cap companies in the fund also lessens the impact of large-cap gains as compared to those reflected in funds benchmarked to the S&P 500 Index. Additionally, Rydex Russell Top 50 ETF is subject to the risk that large-capitalization stocks may underperform other segments of the equity market or the equity markets as a whole. Please see the prospectus for more details.

The fund is not sponsored, endorsed, sold or promoted by the Russell Investment Group, the creator of the Russell Top 50(TM) Index. Russell makes no representation regarding the advisability of investing in the fund.

"S&P®" and "S&P 500®" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Rydex Investments and its affiliates. Rydex S&P Equal Weight ETF is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the fund.

Rydex SPhinX Fund may not be suitable for all investors. Rydex SPhinX Fund invests primarily in unregistered hedge funds that are not subject to the regulations and standards afforded registered securities. These underlying hedge funds may use speculative investment strategies, such as leverage, derivatives and short sales of securities that involve significant risk. Shares of the fund are available only to eligible investors, are subject to restrictions on transferability and re-sale and have limited liquidity. Share repurchase offers are made at the sole discretion of the board. Shares repurchased within one year of the investor purchase date may be subject to a fee of 1%. Please see the prospectus for additional information.

Any overviews herein are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, financial or legal advice. Investors should seek such professional advice for their particular situation. Neither Rydex Distributors, Inc. nor any of its affiliates or representatives is providing tax, financial or legal advice.

Rydex Distributors, Inc., an affiliate of Rydex Investments, is the distributor of the Rydex funds.

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Source: Rydex Investments

SPY Breaking Downtrend Line

2005-05-04T13:34:00.000-05:00

The S&P 500 ETF (SPY) looks like it will close above the downtrend line that has been in place since the beginning of the year. With a strong close today the RSI will close above 50% and at it's highest level since March.

Double Bottom Formed In IBB

2005-05-03T10:06:00.000-05:00

As we discussed last week, the iShares Biotechnology ETF (IBB) contains a very diverse group of smaller biotech companies with the only large position being 16% in Amgen. It has been a tough year for biotech outside of Genentech (DNA) which has scored two product approvals in the past 60 days.

But now IBB has made a double bottom on the charts at $62 and change, which is just above the 52 week low of $61.22. This could be a sign that the downward pressure on the sector is subsiding.

In Semiconductor land, the iShares ETF (IGW) also held the bottom end of it's recent trading range at $47. Additionally, SMH (the semiconductor holdr) held the bottom of it's range near $30. These two sectors have significant corelation with the Nasdaq index, so if these sectors have found support it should help out the broader indices as well.

No DNA Found In IBB!

2005-04-28T12:38:00.000-05:00

Over the past 6 weeks the most explosive company in the Biotech industry has been Genentech (DNA). I assumed when I was hearing the good news that I was participating in the gains through my investments in Biotech iShares (IBB)in my retirement account. But recently I pulled up a chart and saw that while DNA and the BBH (Holdr) had both skyrocketed to new yearly highs, IBB was still skidding along the lows for the year. I was in shock!

It turns out that ALL ETF's ARE NOT CREATED EQUAL!

In fact, the differences between BBH and IBB are absolutely striking! The reason I purchase IBB shares is because they accept fractional share purchases from accounts like FolioFN and Sharebuilder. But with such sharp differences in investment styles these two ETF's show absolutely no correlation to each other!

In BBH their position in DNA makes up just over 40% of their portfolio today and Amgen is the second biggest holding making up over 24%. When I searched through the daily holdings report for IBB I couldn't find any position in DNA! Could this be possible? The only large position in IBB is in Amgen and that is only 16%, the next largest position is 4.19% position in Gidead (GILD). A biotech ETF having no position whatsoever in the company that has pulled ahead of Amgen to the #1 Biotech Company in the world? It seems impossible but you can check for yourself and you can look at the charts below and see that it appears to be true! How disappointing...... From now on I will examine the fund holdings much more closely before investing.

Here is the chart for Genentech ( DNA )

Here is the Chart For the BBH Holdr over the same period

Sadly, here is the Chart for the IBB iShare ETF over the same period

SMH Held Bottom End Of Trading Range

2005-04-27T18:34:00.000-05:00

The Semiconductor ETF (SMH) appears to have held support at the bottom of it's trading range which is $30. After a steep decline in 2004 SMH has been range bound between $30 and $35 for the past several months.

Oil Sector Appears To Be Topping

2005-04-27T18:32:00.000-05:00

Oil prices plunged today as the weekly inventory report once again showed a higher than expected build in crude oil inventories. Supplies of crude oil are actually well above the 5 year average, but traders have kept the market near all time highs based on a shortage of refinery capacity. It appears that the spectulators headed for the exits after todays numbers.

"Oil plummeted $2.59 to $51.61 on the New York Mercantile Exchange following the government's weekly inventory report, which showed a 5.5 million barrel increase in crude supplies, but a 300,000 barrel draw on gasoline; analysts had been hoping for a build. The energy stocks in the S&P 500 collectively shed 2.58 percent on the news, according to the ETF that tracks the sector; Exxon Mobil Corp. dropped 1.5 percent, or 89 cents, to $58.38, making it Dow's worst performing stock for the day."

The XLE ( Energy Services ETF ) has been one of the best performing of the year, but closed down over $1 today on heavy volume.

ETF Short Interest Rises In February

2005-03-24T08:35:00.000-06:00

According to the monthly report from Morgan Stanley, the percentage of the outstanding ETF shares sold short rose to 17.3% in February from an 18 month low of 16.8% in January. This indicates that a few market participants have turned bearish, but overall the level of optimism remains at lofty levels.

In other news, the growth of ETF's and ETF assets remained strong. 12 new ETF funds have been launched this year and Global Daily Trading volume has increased 19.4% year to date. Additionally, total ETF assets rose to $313.6 Billion which represents an increase of 1.7% over the previous month.

ETF's continue to be the fastest growing sector of the Investment MarketPlace as more and more people choose them for the flexibility and low fee structure. As more and more funds come to market, investors are able to customize their portfolios to fit their individual investment styles and objectives. As long as innovation continues the growth in assets should also.

Stock ETF inflows jump as fund sales sluggish

2005-03-15T13:40:00.000-06:00

"Meanwhile, cash flooded into exchange-traded funds that invest in domestic equities, as ETFs took in $4.8 billion last week after gathering $740 million the prior week. ETFs are baskets of securities that trade on exchanges like stocks.

ETFs and mutual funds are both seeing solid demand for international stocks, taking in $1 billion and $1.5 billion last week, respectively.

Two large and established ETFs investing in U.S. stocks, the S&P 500-tracking SPDR Trust ( SPY ) and the Nasdaq-100 Trust ( QQQQ ) , were hot sellers last week, gathering $2.3 billion and $1.2 billion."

Stock ETF inflows jump as fund sales sluggish

SMH Showing Strength & BBH Showing Weakness

2005-03-09T09:23:00.000-06:00

In the decline these past couple days one of the weakest sectors of the market remains the Biotechs. BBH (Biotech Holdr) at 134.28 are pushing four month lows and are in striking distance of 52 week lows which stand at 127.79. The biotechs were already under pressure at the time Biogen dropped their bombshell last week.

Semiconductors on the other hand as represented by the SMH (Semiconductor Holdr)has rallied back to multi-month highs and signigicant resistance in the $35 area. It's been a nice bounce off the sub $30 January lows, but to create a major breakout it will have to close above $35.

Is Inflation Back?

2005-03-06T17:43:00.000-06:00

"As recently as 2003, many U.S investors were worried about deflation. Investors feared that the US economy, characterized by falling prices for technology products, sky-high productivity growth and spare capacity would beging to resemble the moribund economy of the Japanese. In Japan, it was thought, interest rates already at .025% meant that economic stimulus had failed. A deflationary climate meant that businesses lacked pricing incentives and an already sluggish consumer was further encouraged to postpone. But hardly two years later, with US productivity growth slowing, oil hitting all-time highs, and the dollar collapsing, worries about deflation in the US economy seem a far-away dream. Investors are just starting to awaken to another possibility, the so-called I-word: inflation. While it is not clear that it is here yet, an attentive ETF investor will be aware of, and possibly prepared for, an inflationary economy."

Is Inflation Back?:

January's ETF short interest lowest since April 2003

2005-03-01T01:54:00.000-06:00

ETF Short Interest has once again fallen to levels not seen since April 2003. This means that investors are confident that the market is not going to decline significantly. This coincides with multi-year lows in volatility and a general complacency among traders. It will be interesting to see if the market can breakout above it's recent trading range without first experiencing a decline in order to rattle investor confidence.

---------

"January's level of short interest for U.S. exchange-traded funds as a percentage of shares outstanding was the lowest in nearly two years, according to a Monday report from Morgan Stanley.

The last time that ETF short interest dipped below January's level was in April 2003, when it was 500.5 million shares or 16.7 percent of shares outstanding, Morgan Stanley said.

ETF short interest peaked in March 2004 at 1.2 billion shares, or 34.3 percent of shares outstanding. Since then, it has steadily declined each month.

Short interest in publicly traded companies is normally much lower than ETFs, averaging 1 percent to 2 percent of market capitalization."

"The higher the short interest, the more investors are expecting a downturn," said Morgan Stanley analyst Deborah Fuhr. "Short positions tend to fall in value as stocks rise, and vice versa."

Read The Full Article:

January's ETF short interest lowest since April 2003 - Financial - Specialty Finance - Financial Services - Markets/Exchanges - Mutual Funds - Market News:

Jan. ETF assets fall to $222.9B

2005-02-27T19:31:00.000-06:00

"The combined assets under management of U.S. exchange-traded funds were down $3.3 billion to $222.9 billion in January, the Investment Company Institute, the fund industry's main trade group, reported Friday."

Jan. ETF assets fall to $222.9B

Green Energy ETF To Spring Soon

2005-02-17T21:01:00.000-06:00

A new energy ETF should benefit from rising oil prices, but it wonÂ't contain the typical oil refiners. ThatÂ's because it will follow an index of renewable or "greener" energy companies.

PowerShares WilderHill Clean Energy Portfolio (AMEX:PBW - News) is a bet on the emergence of green energy as a major economic force beyond its current niche markets. Component firms have gathered much of the knowledge of how to produce, sell and maintain state-of-the-art alternative energy systems including solar, wind and fuel cells. The fund is expected to trade in February or March 2005.

Green Energy ETF To Spring Soon

Rydex RSP - An ETF With A Balanced Approach To The S&P 500

2005-02-16T23:03:00.000-06:00

You may already know that the S&P 500 index is a market capitalization weighted index. That means the largest capitalization companies, make up the largest percentage of the index. It also means that "booming" sectors can become overweighted in the S&P 500 as well. In 1999-2000 for example both Telecom and Internet sectors became heavily overweighted in the index. Both have since fallen back to more reasonable levels, but that caused severe downward pressure on the S&P during the correction.

The Rydex RSP fund is different, it purchases an equal weighting of each of the stocks in the S&P 500. So .2% of the assets are invested in each of the S&P 500 stocks. At the end of each quarter, the fund is rebalanced to bring the equal weights back to .2% for each stock. This means the fund naturally buys under performing sectors and sells sectors that have outperformed the index at the end of each quarter. This in itself is a type of mechanical approach to "profit taking / bargain hunting". Also, by having .2% in each stock there is a greater emphasis on smaller stocks than there is in the traditional S&P 500 index.

These factors have lead to a steady RSP outperformance since it's inception when compared to the S&P 500 index. For more information please consult the fact sheet below and always remember to read the prospectus before making any investment decisions!

Rydex RSP Fund Fact Sheet

Rydex RSP Fund Prospectus

TIPS ETF offers solid hedge against inflation's bite

2005-02-14T08:33:00.000-06:00

Article Excerpt:

"'TIPS investors benefit from a rise in inflation because their value changes in line with the Consumer Price Index,' said Matthew Tucker, head of enhanced and index fixed-income strategy at San Francisco-based Barclays Global Investors, which oversees the TIPS ETF.

TIPS can reduce overall portfolio risk because their prices tend not to move in lockstep with stocks and conventional bonds.

For example, buying a 10-year inflation-protected bond with a 2 percent coupon locks in a yield 2 percent above inflation. If inflation averages 3 percent over that decade, the bond's yield equates to a 5 percent 10-year Treasury - absent a portion of the risk."

A Link To The Complete Article:

ETF Investing: TIPS ETF offers solid hedge against inflation's bite - Financial - Financial Services - Bond Market - Economy - Markets/Exchanges - Mutual Funds - Market News:

Energy ETF ( XLE ) Continues To Sizzle!

2005-02-12T11:36:00.000-06:00

With crude oil prices stubbornly holding above $40 per barrel one of the hottest etf sectors is energy. As you look at the XLE top 10 holdings, you see a mixture of Big Oil and Oil Services companies that will continue to benefit from sustained high prices.

EXXON MOBIL CP XOM 20.89% ( Now rivals GE for the largest market cap )
CHEVRONTEXACO CP CVX 14.33%
CONOCOPHILLIPS COP 8.18%
OCCIDENTAL PET OXY 3.87%
SCHLUMBERGER LTD SLB 3.68%
DEVON ENERGY CP (OK) DVN 3.46%
BURLINGTON RESOURCES BR 3.2%
HALLIBURTON HLDG CO HAL 3.19%
APACHE CP APA 2.97%
ANADARKO PETROLEUM APC 2.94%

A quick look at the short term chart shows a continuous march into 52 week and all time highs for XLE

Semiconductor ETF ( SMH ) clears 200 day moving average

2005-02-12T11:00:00.000-06:00

The weakest ETF of 2004 has finally managed to blast through it's 200 day moving average on heavy volume. The action in the semiconductors contributed directly to the strong performance of the Nasdaq on Friday. This could be the turn in semis that we have been waiting for.

Cash piles into real estate ETF

2005-02-08T12:01:00.000-06:00

"Roughly $660 million of the $830 million that flowed into sector ETFs last week went to the iShares Dow Jones U.S. Real Estate (IYR: news, chart, profile) fund, according to research released Monday by TrimTabs Investment Research.
The real estate ETF gained 3.1 percent last week. "

ETF Focus: Cash piles into real estate ETF

Clean Energy ETF Launches Feb 4th

2005-02-03T09:25:00.000-06:00

"An ETF based on an index of publicly-traded energy companies that focus on environmentally-friendly sources of energy and technologies is set to begin trading on the American Stock Exchange later this month.

The ETF, which will be managed by PowerShares Capital Management, will track the WilderHill Clean Energy Index, a benchmark calculated by the Amex that was launched in August. The Amex collaborated with index provider WilderShares, LLC in developing the index.

The index contains 37 companies that use greener and renewable energy alternatives such as wind, solar, and hydrogen fuel cells."

ETF Focus:

New ETFs Focus on Social Responsibility

2005-02-03T09:23:00.000-06:00

Socially responsible mutual funds have been around for years, not it's an ETF option also.
-----------

"On Monday, the iShares KLD Select Social Index Fund began trading on the New York Stock Exchange.

The ETF's tracking index, maintained by Boston-based research firm Kinder, Lyndenberg, Domini & Co., contains 250 to 350 large-cap non-tobacco companies taken from the S&P 500 and Russell 1000 indexes.
The stocks are then overweighted or underweighted based on how they score on social and environmental factors. "

Yahoo! News - New ETFs Focus on Social Responsibility

2nd Gold ETF Coming To Market

2005-01-30T23:09:00.000-06:00

Investor's Business Daily: 2nd Gold ETF To Trade:

"Barclays Capital deposited 15,000 ounces of gold with a custodian for the initial baskets for the gold ETF, according to a regulatory filing.

The ETF is slated to trade on the American Stock Exchange under the symbol 'IAU.'

The ETF's trustee, the Bank of New York, will value the trust's gold on the basis of that day's announced COMEX settlement price for the spot month gold futures contract.

COMEX is the exchange market on gold futures contracts operated by Commodity Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc."

ETF Fans Await Their Prague Spring

2005-01-26T16:37:00.000-06:00

ETF Fans Await Their Prague Spring

I find it amazing that there hasn't been enough evident demand for Eastern European investment vehicles to warrant an ETF....

"Eastern European stocks have been sizzling, but for ETF investors the region remains tantalizingly out of reach.

A leading index tracking shares in Russia, Poland, Hungary and the Czech Republic jumped 21.5% in local currencies in 2004. In dollar terms, last year's gain was 32.1% -- nearly triple the S&P 500's rise. "

U.S. ETF assets at $226 billion in December

2005-01-26T16:34:00.000-06:00

U.S. ETF assets at $226 billion in December:

"Equity-index ETF assets grew by $13.9 billion to $217.7 billion, with U.S. stock ETFs adding $10.7 billion, while international fund assets increased by $3.3 billion.

ETFs that invest in bonds saw assets grow $604 million to $8.5 billion, according to the ICI, the trade group for the mutual-fund industry.

In December, the value of all ETF shares issued exceeded that of shares redeemed by $8.7 billion. Stock-index ETFs experienced a positive net issuance of $8.2 billion, and bond ETFs also saw a positive net issuance of $557 million. "

ETF short interest at lowest since April 2003

2005-01-22T12:23:00.000-06:00

EFT short interest is becoming an excellent indicator for judging when the market reaches extremes. In March when the market was near it's lows for the year short interest grew to 34.3% of outstanding shares. By December, when the market was reaching a peak, EFT short interest had fallen to only 15.3%. This indicator will become more useful as history grows, it is currently being tracked by Morgan Stanley and you can read more about it at the following link:

ETF Short Interest Dries Up

Fixed Income ETFs in 2005

2005-01-19T13:06:00.000-06:00

Watching the Yield Curve: Fixed Income ETFs in 2005

"One thing that most market watchers predict for 2005 is higher interest rates. Higher interest rates affect all ETFs, but none more directly than fixed income ETFs. In general, higher rates generally reduce the value of existing fixed income portfolios. Lower rates, in turn, generally boost the value of fixed income portfolios. However, rate changes affect neither all bonds nor all bond ETFs equally. Given an environment of rising rates, what fixed income ETFs can be expected to outperform in 2005?"

ETF Focus: Gold ETF continues to shine as assets near $2B

2005-01-17T13:38:00.000-06:00

ETF Focus: Gold ETF continues to shine as assets near $2B - Financial - Financial Services - Commodities - Mutual Funds:

"In just the first eight trading days of the new year, the StreetTracks Gold Trust (GLD: news, chart, profile) added 47 tonnes to its gold holdings, or about half of the gold accumulated by the ETF between its launch and the end of 2004, according to a research note released Thursday by Mitsui Global Precious Metals analyst Andy Smith.

In other words, so far in 2005 the gold ETF has added three times last year's total sales of U.S. Eagle gold coins, or more than 1,500 tons on an annualized basis.

Through Thursday, the gold ETF had about 142.7 tonnes of the precious metal and a net asset value of more than $1.9 billion and 45.9 million shares outstanding, according to the StreetTracks Gold Shares Web site."

IGW: When Will The Pain End?

2005-01-11T16:26:00.000-06:00

The iShares Goldman Sachs Semiconductor ETF and the Merrill Lynch Semiconductor HOLDR continue to be among the weakest sectors of the market. This is unusual considering the underperformance in 2004. This article from Jonathan Berstein of the ETFzone talks about the fundamentals behind the recent moves.

In my opinion the Nasdaq will have a hard time rallying significantly until it gets a little help in the form the semis.

IGW: When Will The Pain End?

ETF Update - SPY Options Begin Trading

2005-01-11T08:59:00.000-06:00

SPY is the most actively traded ETF and market participants have awaited SPY options to allow smaller participants to participate in the movement of the S&P 500. Below is information directly from the Philadelphia Stock Exchange.

PHLX Launches Trading of Options in SPDR's (SPY) on PHLX XL Streaming Monday, Jan. 10

PHLX XLSM is the new electronic options trading system from the Philadelphia Stock Exchange (PHLX) that will maximize liquidity, encourage price competition and rapidly execute orders of all sizes. PHLX XL combines the best attributes of electronic and floor-based trading enhancing the PHLX's position as the most versatile options trading marketplace.

The following PHLX XL features have been activated:

'What You See Is What You Get' Options Trading Eliminates the distinction between the size for which the Exchange is firm for customer orders vs. broker-dealer orders.

Book Match - Enables the system to automatically match incoming customer and broker-dealer orders with orders on the specialists' books.

The Book Sweep Function - Sweeps the specialists' books based on movement
in the specialists' quoted market.

As a result, our customers are seeing much faster executions with less manual intervention.

Stay tuned. There's more to come...

PHLX XL enables market makers to electronically deliver streaming quotes, increasing liquidity and producing tighter, deeper markets. Streaming quotes will dramatically improve speed of execution by raising the number of participants electronically interacting with orders, thereby increasing the amount of orders automatically executed.

PHLX XL enhances electronic access and execution for customers, broker-dealers and market makers while leveraging the advantages of a floor-based environment.

Connectivity

Connecting to PHLX XL is easy. For current PHLX order flow providers, the transition is handled seamlessly, requiring no modifications. For new liquidity providers, there is a wide variety of vendors who can provide a complete quoting interface to PHLX XL, or the provider can choose to connect their host trading application directly with no intermediate hardware or software required.

For questions about connecting to PHLX XL, contact Marty Sonntag at 215-496-5458.

SPY Options begin trading

ARE ETFS STILL RIGHT FOR YOU?

2005-01-07T16:10:00.000-06:00

This is an interesting article from David Landis of Kipplinger that talks about the advantages and disadvantages of ETF vs No Load Index Funds. It seems the mutual fund industry is feeling some competition from the etf industry and accordingly has dropped fees on their indexed products. ETF's still have many advantages, but the article does have some interesting points.

"With the numbers so close, you'll have to weigh other factors to determine the better choice. The downside for ETFs is that, because they trade like stocks, you must pay a commission each time you trade. By contrast, you can buy or sell the Fidelity funds without paying commission. A plus for ETFs is that you can trade them any time the market is open. You can generally buy and sell regular funds just once a day, and fund companies discourage frequent trading.

High initial minimums also argue against regular funds. Fidelity requires $10,000 to invest in its Spartan line -- although the index-fund leader, Vanguard (800-635-1511), lets you in with just $3,000 (its Vanguard 500 Index charges 0.18% per year). Minimums are lower for retirement accounts. But you can buy as little as one ETF share at the going rate (recently $119 for the S&P ETFs), plus brokerage costs."

Kiplinger.com - are ETF's Still Right For You?

Buying The Hot ETF's In The New Year?

2005-01-03T09:51:00.000-06:00

Here is a completely different approach than the "Bargain Hunting" approach. It advocates buying the strongest indexes (Excludes Sector Funds) in the New Year.

"When it comes to investing in exchange-traded funds, buying last year's best performing ETF at the start of each and every New Year turns out to be a stellar strategy. The concept is so simple: buy whichever diversified ETF performed best in the previous year and, in the words of Bachman Turner Overdrive, 'Let it ride.'

The rewards, as demonstrated since January 2001 (where there were enough ETFs in existence to start tracking this strategy), are nothing short of eye-popping. But before I get to the strategy's details, and before I countdown to my Hot Hand ETF For 2005, let me throw a monkey wrench into my machinations.

While this strategy does reveal a healthy trend, the data only goes back four years; hardly long term. Also, I do not advocate sinking your entire stash into it. "

Jim Lowell: January surprise: A diversified ETF strategy

Fool.com: China ETF Choices

2004-12-31T06:17:00.000-06:00

Fool.com: China ETF Choices [Motley Fool Take]

China is clearly an area of investor interest since it offers much higher growth rates than the U.S. or European markets. In this article Roger Nusbaum compare the two most popular ETF options iShares FTSE/Xinhua China 25 Index Fund ( FXI ) and the PowerShares Golden Dragon Halter USX China Portfolio ( PGJ ).

CNBC: Fine-Tuning a Winning ETF Portfolio

2004-12-30T08:29:00.000-06:00

CNBC: Fine Tuning a Winning ETF Portfolio

Tim Middleton (MSN Money) tweaks his ETF portfolio for 2005.

He Sold a 10% position in ICF (a REIT ETF) because he feels REIT's are over priced. He is putting 5% into IGE which is the Goldman Sacks Natural Resources Fund and 5% into EEM an Emerging Markets fund.

Year End ETF Bargain Hunting

2004-12-28T23:29:00.000-06:00

The Year End Bargain Hunter Strategy

Since I first started watching the stock market, I've always noticed that the best performing investments of one year often turn out to be the worst performing the next year and vice versa. Many strategies have been devised to take advantage of this phenomena such as the "Dogs of the Dow" but it seems to be much more predictable using sectors rather than individual companies. Now with so many ETF categories available, you can truly take advantage of the herd mentality.

Since we are in a bull market phase, I am only looking to invest in underperforming sectors and sell any positions that have performed extremely well. In 2004 the best performing ETF was EWO ( Austria iShare ), with a 1 year return of 75.13%. EWO has been benefiting from the birth of capitalism across Eastern Europe. The best performing sector fund was XLE ( Energy Sector SPDR ) which has a one year return of 55.87%. Housing and other real estate sectors have also outperformed in the past year.

Now for finding the bargains! Doing a quick screen we find that there is a clear winner for the biggest loser.... SMH ( Semiconductor HOLDR ) -20.90% and IGW ( GS Semiconductor iShare ) with a -19.96% 1 yr return! Technology in general (IYW) is also down slightly over the past year.

Health Care ( IYH +3.35%) and Biotech ( IBB +1.66%) are two areas that have under-performed in the past 12 months but are slightly positive on the year.

Out of these areas the two that intrigue me are Semiconductors and Biotech. I tend to go with the highest volume ETF's so I'm using IBB and SMH. IBB recently crossed above it's 200 day moving average so that indicates to me the biotech sector is strengthening.

Right now SMH is trapped within a tight range between $32 and $35. The 200 day moving average also comes in at $34 so there is plenty of overhead resistance that needs to be cleared.

Some people prefer not to look at charts and simply move money at year-end into the underperforming sectors. Each investor needs to access their risk tolerance and determine which method is right for them.

Note: This is not intended to be investment advise and is only offered as an illustration of how to use ETF's to find value in the stock market. Please consult your investment advisor prior to making investment decisions.

Gold ETF - Some Perspective by Comparison

2004-12-17T11:27:00.000-06:00

Gold ETFs - Some Perspective by Comparison

For those who would like a summary of the above, the primary criticisms of GLD are: 1. The key custodian, HSBC, can use sub-custodians 2. HSBC is not liable for the acts or omissions of its sub-custodians 3. The locations of the vaults of the sub-custodians are not disclosed 4. Neither the Trustee or HSBC monitors the activities of sub-custodians 5. Recent analysis of the allocated bar listing reveals duplicated bar numbers 6. Long-term capital gains tax rate on GLD is 28% instead of usual 15%

Tackle ETF prospectus at benchmark, expense ratio

2004-12-13T15:23:00.000-06:00

When I first began investing in ETF's I just assumed that all of them operated the same way. I later found out that there are differences between them that can affect their performance. The biggest differences come in how they managed (actively or passively ) how they are "weighted" (based on capitalization or percentage) and also how dividend reinvestments are handled ( Unit Investment Trusts differ from Management Investment Companies).

For those of us who have grown to love etf investing there is nothing in this USA Today article that will scare us off, but it contains many good points that you should take the time to read.

Tackle ETF prospectus at benchmark, expense ratio

PowerShares Capital Management LLC Introduces Two New Exchange Traded Funds

2004-12-10T12:40:00.000-06:00

PowerShares Capital Management LLC Introduces Two New Exchange Traded Funds

PowerShares High Yield Equity Dividend Achievers(TM) Portfolio (AMEX:PEY - News) is designed for investors who seek a relative low-cost, tax-efficient investment in high yielding companies committed to consistently increasing their dividend. The PowerShares High Yield Equity Dividend Achievers(TM) Portfolio is based on the Mergent Dividend Achievers(TM) 50 Index which is comprised of the fifty highest dividend yielding companies with at least ten years of consecutive dividend increases. The index has a current dividend yield of 4.1% and average annual returns of 21.12%, 11.63% and 17.93% over the last 1 year, 3 year and 5 year periods compared with the S&P 500 returns of 13.87%, 4.04% and -1.31(1).

PowerShares Golden Dragon Halter USX China Portfolio (AMEX:PGJ - News) is designed for investors who seek relative low-cost, tax-efficient investment in mainland China with the added comfort of owning companies listed on U.S. stock exchanges. The PowerShares Golden Dragon Halter USX Portfolio is based on the Halter USX China Index(sm) which is designed to provide insight and access to the unique economic opportunities taking place in China while using domestic listed securities. The Halter USX China Index(sm) is comprised of U.S. listed companies which derive all or a majority of their revenue from the Peoples Republic of China.

Gold ETF (GLD) Is Hot, But Does It Mean The End For Gold's Bull Run?

2004-12-08T15:34:00.000-06:00

In my opinion, the launch of a new sector based ETF is probably one of the best contrarian indicators out there. Now, I'm not talking about the sector making a short term top, but rather an extreme high that stands for years to come.

This is not the fault of ETF's but simply the fact that those who launch a new ETF are doing so in response to investor demand. The same is true with the launch of sector mutual funds, futures or option products. They want to make sure they launch new products that create lots of volume and excitement. The most exciting ETF launch of this year has been in gold. Is it a coincidence that GLD debuted at the same time gold was hitting 16 year highs? I don't think so.

Just look at the trading volume of the Gold ( GLD ) ETF in the first 14 days of trading, volume has been between 4,000,000 and 10,000,000 shares every day which is extraordinary for any new investment vehicle. Granted, the new Gold ETF is probably the most efficient way to own the commodity so that accounts for part of it's instant appeal. But it also indicates that the interest in gold investing is also very high. This type of wildly bullish sentiment is often present at major market tops.

When other sectors ETF's have launched such as the BHH ( Business to Business Holders ), IYW ( Dow Jones Tech Index ), IYV ( DJ Internet Sector ) and IYZ ( DJ US Telecom ) all launched within weeks of major tops in each sector. Ironically, IYV launched at the top of the internet bubble and was closed right near the lows of all the major internet companies such as AMZN, EBAY, YHOO and others. All IYV holders (including me) were forced to cash in our shares at the bottom of a grueling sector bear market. The reason I had bought the ETF was to avoid having to pick which individual stocks were going to survive.

The only example I know of where an ETF was launched at the bottom of a sector cycle (I'm sure there are others) was in the energy services ( XLE ). If you would've bought it the day it opened, you would've entered near a major cycle low for oil stocks. Needless to say, XLE didn't have an average trading volume of 7.5 million per day when it launched. There is always much more enthusiasm at a major top!

Who knows how this will all play out, but it's definitely just another indicator to keep on the long term radar. If a sector is red hot and a new ETF comes to market based on that sector, you may want to think twice about plunking down that hard earned cash!

ETF Focus: ETF inventor Nate Most dies at 90 - Financial - Financial Services - Mutual Funds

2004-12-08T15:18:00.000-06:00

ETF Focus: ETF inventor Nate Most dies at 90 - Financial - Financial Services - Mutual Funds: ( Link to Full Story )

BOSTON (CBS.MW) -- Nathan "Nate" Most, who invented the first U.S. exchange-traded fund and spawned a growing $190 billion industry, died Friday at the age of 90.

"'Financial services has lost a real innovator and a true gentleman,' said Tom Taggart, a managing director at BGI who worked with Most for several years. 'Besides serving as the first chairman of the iShares board, he was a positive influence on so many people. He will be missed.'"

Halter USX China Index ETF to Begin Trading on the Amex December 9, 2004

2004-12-08T15:14:00.000-06:00

Halter USX China Index ETF to Begin Trading on the Amex December 9, 2004: (Link to full story)

"Effective December 9, 2004, PowerShares Capital Management LLC will introduce a new exchange traded fund (ETF) based on the Halter USX China Index, the only index in the world devoted exclusively to U.S.-listed securities of companies that derive a majority of their revenues from the People's Republic of China. The PowerShares Golden Dragon Halter USX China Portfolio (AMEX: PGJ) will begin trading on the American Stock Exchange December 9, 2004 and will mirror the Halter USX China Index. Currently, 38 public companies are represented in the Halter USX China Index. "

The Growing ETF Craze

2004-12-04T10:25:00.000-06:00

With the recent advent of the Gold ETF, better know as the StreetTracks Gold Trust (GLD), interest continues to build exponentially on Exchange-Traded Funds (ETF). For those that don't know, the GLD tracks the price of gold and trades just as a stock would. It is by far the easiest way for an investor to actually buy gold without having to worry about where to store or how to quickly sell the gold. This is exactly why ETFs are quickly becoming extremely popular, they make it very easy to buy and sell an entire industry (or sector) without having to worry about picking the right stock in the sector you like.

Allow me to provide a quick explanation on what ETFs are and that they do. ETFs are investments that track a particular index, a broad sector, or a group of international stocks through a basket of securities. Although they are constructed like mutual funds, ETFs trade like individual securities on stock exchanges. This gives investors the best of both worlds, as ETFs combine the conservative diversity of a mutual fund with the flexibility of a stock. Almost anything that can be done with a stock can be done with an ETF.

Although GLD has stolen most of the headlines recently in the world of ETFs, another significant development surfaced this week without much fanfare. The Investment Company Institute announced that total ETF assets rose to $190.5 billion in October, versus an increase to $181.4 billion in September. For the year, investors have poured nearly $40 billion into ETFs.

When one sees numbers like this it is clear that the future is indeed bright for ETFs, as the crowd is just beginning to take notice of all that ETFs offer.

Delving into the numbers a little more, we see that ETFs tied to bonds accounted for only $7.8 billion, or only four percent of the total assets in the U.S. From this point of view, we see that there is a substantial amount of room for investors to pile into bonds, which could be bullish in the longer-term.

However, with over 149 ETFs to choose from, as of the end of October, how do you know which one might be right for you? To help our subscribers ride this wave of interest in ETFs, we recently opened a new page on our website devoted specifically to following ETFs called the ETF Center. Follow this link to the ETF center, where you will also find a detailed explanation of ETFs, should you have any further questions.

Here at Schaeffer's, subscribers to our new ETF Master Portfolio have benefited mightily from Bernie's expertise in which sectors to play and which ones to avoid. Since its inception in May 2004, the ETF Master Portfolio has gained slightly less than 14 percent, doubling the S&P 500's (SPX) gain of seven percent. A few examples of the sectors that Bernie has been bullish on this year includes metals, energy, Internet, steel, and oil services. Just as importantly, he has avoided the lagging Big Cap stocks and Pharmaceutical companies that so many analysts recommend.
With ETFs providing the flexibility and diversity that investors demand, it might be worth a few minutes to take a closer look at this new investment vehicle to see if it is right for you.Ryan Detrick (rdetrick@sir-inc.com)
Schaeffer's Investment Research's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. We call this Expectational Analysis®. Click here for details.

Welcome To ETF Answers!

2004-12-03T09:46:00.000-06:00

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!