11/17/11 | 12:25 pm EST
The vast majority of the 1,300+ exchange-traded products now available to U.S. investors are alike in that they offer static exposure to a specific asset class, whether it be stocks, bonds, commodities, volatility futures, or other “exotic” securities. While the composition of the underlying portfolios changes regularly, the type of exposure offered–whether it be soybean futures, large cap U.S. stocks, or inflation-protected bonds–remains generally stable.
But a number of relatively new exchange-traded products differentiate themselves by offering “dynamic” investment strategies that have the potential to shift allocations between multiple asset classes depending on price trends, volatility, or other observable market conditions [see also Six Noteworthy ETF Innovations]. In ...
11/10/11 | 8:11 am EST
Motivational speakers frequently explain that the Chinese word for “crisis,” or “wei-ji,” represents a combination of “danger” (wei-xian) and “opportunity” (ji-hui). That said, how much opportunity can be found in crisis after catastrophe after calamity?
For instance, the PIGS (Portugal, Italy, Greece, Spain) have been responsible for staggering levels of market volatility for 24 months. Time and again, one or more of these debt-laden countries have caused what many market watchers would describe as chaotic.
Indeed, I have made sure to have neglible direct exposure to European equities for at least the last 2 years. Even when a number of credible experts began suggesting that enhanced Eurozone coordination in recent weeks has reduced risks, there has been scant ...
10/20/11 | 11:46 am EDT
There are 4 exchange-traded vehicles with sufficient volume that a master limited partnership (MLP) enthusiast should consider. More specifically, for those investors who do not wish to pick individual securities, there are several diversified MLP products offering the possibility of capital appreciation and the certainty of a solid income stream.
First, a quick primer on energy pipeline partnerships. Energy MLPs typically own the pipelines that transport crude oil and natural gas throughout the country. Although the underlying commodity can affect their price, the more significant driver tends to be genuine supply and demand. Most importantly, investors often buy MLP shares as “income producing properties,” since the distributions often range from 5% to 7%.
There are many ...
10/12/11 | 8:38 am EDT
United States Commodity Funds, the company behind the ultra-popular natural gas (UNG) and crude oil (USO) products, has laid the groundwork for another unique exchange-traded commodity product. In a recent SEC filing, USCF outlined some details for a proposed Asian Commodity Basket Fund, which would include exposure to commodities deemed to maintain “systemic importance to Asian economies, including the three major Asian economies of China, Japan, and India.” The filing noted that the proposed fund may also include futures contracts that trade on an Asian domiciled futures exchange.
The construction of the underlying index of commodity futures will take into account a number of different factors, including:
- Percentage of global production that occurs in Asian countries
- Percentage of ...
10/11/11 | 10:14 am EDT
Since 7/25/2011, market participants have been dealing with extraordinary volatility. In fact, for the past 11 weeks, the CBOE Volatility Index (VIX) hadn’t closed below a 50-day moving average.
Until now, that is. On 10/10/2011, the current price of the VIX closed below a key trendline.
In a similar vein, the S&P 500 hadn’t closed above a 50-day MA since 7/27/2011. Again… until now. (See chart below.) It has taken nearly the same 10+ weeks for U.S. stocks to demonstrate that a reversion to a bull market mean may yet be a possibility.
Considering just how many day traders, hedge funds and programs use simple moving averages to determine “buys” and “sells,” the simultaneous cross-overs are significant. On the other hand, investors are still caught in ...
09/27/11 | 10:31 am EDT
Most believe that an agreed-upon plan for the Eurozone will not go far enough to increase economic growth in the region. And nearly everyone expects Greece to “officially” default. What’s more, if tighten-the-belt austerity doesn’t sit well with disenchanted Greek workers, how will it sit in the stomachs of 2-hour, lunch-breaking Italian employees?
“Oh Gary,” you say, shaking your head. “Pray tell, sir, your reason for raising this sea-storm on a day when the Dow surges 270+ points!”
Simply put, the quagmire in Europe is likely to go through several more fits and starts before market confidence can genuinely return. Unless Germany, Austria, Belgium and the Netherlands tow more than their fair share of regional expansion — unless those same countries pay for ...
09/20/11 | 10:26 am EDT
Last October, enthusiasm for Brazil had reached epic proportions. And why not? Not only had the iShares MSCI Brazil Fund (EWZ) risen 175% off its November 2008 lows, but the country constitutes one of the essential building blocks in the BRIC (Brazil, Russia, China, India) fortress.
Indeed, the country boasts the world’s 7th largest economy, a consumption-oriented middle class and a treasure trove of natural resources. What’s more, Brazil figures to see a surge in tourism as well as infrastructure commitment due to the 2014 FIFA World Cup and the 2016 Olympics.
So what in the world is wrong with Brazil ETFs? Year-over-year, they’ve experienced some of the harshest capital depreciation in the exchange-traded universe.
| Popular Brazil ETFs: 1 Year Underperformance | | |
| | | ...
09/15/11 | 11:45 am EDT
The motion picture, “Contagion,” tracks the movement of a lethal virus that kills millions in a matter of days. Will the worldwide community come up with a cure? Or will the pandemic spread, annihilating every creature in its path?
I don’t know the answer… I haven’t seen the movie. In fact, I don’t even plan to see the film because I feel like I’ve seen it before.
Perhaps ironically, many are asking if the poisonous sovereign debt of the PIGS (Portugal, Italy, Greece, Spain) will cause a global meltdown in equities… the same way that toxic subprime mortgages did. For all the nay-saying, it seems that the stock markets won’t relax until Europe comes up with a credible TARP program to bolster the European banks… the same way U.S. TARP supported U.S. ...
09/14/11 | 8:36 am EDT
The number “88″ means a lot of different things to different people around the world. For some, it expresses the notion that the universe is both infinitely large and infinitely small. Others see it as a message of eternal love. Meanwhile, Chinese culture recognizes “8″ as its luckiest number, with “88″ symbolizing even greater fortunes.
However, 8/8 is a rather dismal date for the investing public. Investors in U.S. stocks will remember it as the ugliest finish to a trading session in 2011. (At least so far.)
Granted, there were several occasions in August when the S&P 500 tested its lowest closing price, including 8/10, 8/19 and 8/22. As of now, though, 8/8 is the bottom of the calendar year barrel.
For the time being, the sovereign debt crisis in ...
09/09/11 | 11:39 am EDT
Forget the idea that the economy will contract in upcoming quarters… at least for a moment. And put aside the idea that housing prices have yet to bottom out. Instead, let’s focus entirely on the price movement of a premier benchmark in this year’s stock market correction.
Specifically, U.S. stocks in the S&P 500 fell from a May 2 intra-day peak of 1370 to an August 9 intra-day low of 1101, shedding a confidence-shaking -19.6%. That’s not quite enough damage to constitute a bear. Nevertheless, it is a 3-month period with very few fans beyond the short-selling crowd.
By the end of August, however, the large-cap index had clawed its way back to 1230. What’s more, the price of the S&P 500 tested the 1230 area for several days, but simply couldn’t break on ...
