ETFs

Investing In ETFs: How Exchange-Traded Funds Can Save You Money

High commissions and management fees, along with taxes, can really cut into your returns.

That's where exchange-traded funds, or ETFs, come in. In today's investment world, ETFs are cheaper and more tax-friendly than mutual funds.

The average expense ratio for U.S.-listed ETFs is 0.4%, compared with 1.42% for diversified U.S. stock funds.They also give you exposure to an entire industry or market with the click of a mouse.

It's one of the reasons why exchange-traded funds are quickly becoming the investment of choice for investors seeking broad market exposure.

In fact, the number of ETFs has surged over 10-fold in the last decade.

The total number of ETFs in the market grew to 1,114 by October 2011, with assets over $1 trillion, according to the Investment Company Institute.

And the ETF market will expand to roughly $3.1 trillion by 2016, according to projections from the Financial Research Corp. in Boston.

So if you're looking to diversify your portfolio and save money doing it, ETFs may be the way to go.

Here's a primer on how ETFs can work for you.

To continue reading, please click here...

The Case for Spitting into the Wind (At Least for Now)

You've heard the expression "You don't spit into the wind," haven't you?

Well, it's true when it comes to trading and investing, too. You keep the wind at your back, and you don't give up easy profits by bucking the trend.

That's all well and good, so long as the wind is coming from a discernible direction. I prefer a warm southwest breeze myself. That's why I live where I live (in Miami).

But we have no control over the many ill winds that blow over our investing horizons.

The best we can do is stay aware of subtle shifts in directional changes, and watch out they don't strengthen into hurricane-force monsters.

I've been cautiously (too cautious, I admit) bullish since October, and I remain optimistic that stocks have enough momentum to try and push through important psychological barriers - such as 13,000 on the Dow, 1,375 and 1,400 on the S&P 500, and 3,000 on Nasdaq.

That doesn't mean we won't see a correction first. Or that last Tuesday wasn't a tiny correction in and of itself.

But 30 years of hardcore trading, and catching every major move in that long time span (no, I hardly ever pick the exact top or bottom, but I have come close) has taught me to go with my gut, to know when I "blink" that it means something.

And lately, I'm starting to "blink" more and more...

I'm getting the feeling that something's wrong, and, somewhere, the eye of a terrible storm could be forming. There's nothing out there that I've read (and I read a lot), or heard, or come across in any research, either quantitative or fundamental, that articulates what this nagging feeling is that's hanging over markets.

So, it looks like I'll have to be the one to put it out there.

But first let me be clear. I'm not spitting into the wind here. I'm still going with the path of least resistance.

What I am doing is presenting the backdrop of what people have lost sight of as they look front and center on the investing stage.

Am I saying the eye of a hurricane is forming? No. I'm saying it already has formed.

I'm saying keep buying cautiously and keep raising your stops as markets go higher, if they do. I'm saying keep watching these developments with me.

Things change, and this brewing storm could dissipate, but it could also turn really ugly, really quickly.

If the storm strengthens, and that's my bet, have a fail-safe plan to get out of speculative long positions, a plan to selectively add to core positions on the way down, and a plan to put on short-side positions that will make you a ton of money if I'm right.

Okay, ready?

Here's where the winds have shifted...

To continue reading, please click here...

Five Savvy Ways to Conquer the Wall of Worry


If you like extreme risk and consider living on the edge to be "normal," today's column isn't for you.

Today I'm writing to the millions of investors who are completely terrified by the prospect of what's next and who simply want their faith restored - not to mention their investments.

To all of them I would say: You are not alone and you're not wrong to be apprehensive.

Our political situation is an embarrassing train wreck, our national debt looks like a one way trip to financial hell, housing remains in the dungeon, unemployment is unacceptably high and Europe...oh Europe.

It's nothing short of a gigantic wall of worry.

Plus, there have been so many attempts to "fix" things that I've lost count. Throwing good money after bad is a fool's game and one that will have very real and inevitable consequences.

So what should investors do?

The Fed's War on Capitalism

Here's how I see things. The "Whitewash Ministry" has basically five options:

  1. Repression
  2. Devaluation
  3. Austerity
  4. Deflation
  5. Inflation
You can forget the double "d's" - devaluation and deflation.

Even though both would be the proper way for free markets to bleed out the excesses of the past, they are essentially political nukes and nobody has the willpower to touch either one of them.

The third, austerity, is being tried but only halfheartedly. Our leaders have no idea what this actually means. Since they remain completely unaccountable, there is no true incentive.

Besides, large numbers of people have figured out it's easier to be on the dole than it is to actually work, so this is another disincentive for meaningful cuts in spending.

As for inflation, this too is officially a non-starter as long as interest rates are held near zero. Unofficially, it's a different story. Most investors I know are feeling the heat of 12% to 15% a year in their wallets.

That leaves option number one - repression.

You can call it what you want, but repression is really a fancy way of saying that our government is conducting punitive monetary policy.

While they mouth off about how they want to create jobs and take care of the middle class, in reality they're eviscerating it.

How?

To continue reading, please click here....

The Hunt for Higher Yield: Investors Pour into Emerging Market Debt

The never-ending hunt for higher yield is leading investors to bet record amounts on emerging market debt.

In just the first two weeks of 2012, governments of undeveloped economies from Asia to Africa sold more than $30.6 billion in dollar-denominated bonds according to Bloomberg News.

That's up from roughly $19.9 billion in the same period last year and the most since 1999, when Bloomberg began collecting data.

Typically, investors shun emerging market bonds during times of uncertainty in favor of "safer" assets like gold and U.S. Treasuries.

But that has started to change.

The Big Move Into Emerging Market Debt

In fact, investor demand is overwhelming supplies as orders have outstripped the amount of bonds being sold.

During a recent auction, the Philippines received $12.5 billion of orders for $1.5 billion of 25-year bonds, pushing the yield down to a record-low 5%. Indonesia sold 30-year bonds at a record-low yield of 5.375% and Colombia sold $1.5 billion of 29-year bonds at 4.964%.

Analysts say the debt crisis in Europe, along with record low yields on U.S Treasuries, has investors on the hunt.

They are now buying the debt of undeveloped nations like Indonesia, Mexico and Brazil, even though credit-rating firms rank them as more risky than their European counterparts

"What we're seeing is a re-evaluation of sovereign-credit risk, increasingly being driven more by fundamentals than by classifications," Eric Stein, a portfolio manager at Eaton Vance Corp. (NYSE: EV) told The Wall Street Journal.

According to the J.P. Morgan Emerging Markets Bond Index, investment-grade sovereign emerging-market bonds are yielding an average of 4.7%.

By contrast, Italian 30-year debt yields 7%, while Spanish 30-year debt yields 6.1%.

One reason emerging market bonds are attracting interest is...



To continue reading, please click here...

From Rogues to Riches: How ETFs are Lining Wall Street's Pockets – While Picking Yours

Maybe you didn't know that the rogue trader at UBS AG (NYSE: UBS) who lost $2.3 billion last week was trading exchange-traded funds (ETFs). Or that Jerome Kerviel, another rogue trader at Societe Generale SA (PINK ADR: SCGLY) who lost $7.2 billion in 2008, was trading ETFs.

Maybe you didn't know that ETF trading accounts for 35% to 40% of all exchange volume, according to Morningstar Inc. (Nasdaq: MORN).

Maybe you didn't know that the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC), the Financial Stability Board (FSB) and the Bank of England (BOE) are each concerned that ETFs pose potential systemic risks.

Maybe what you don't know can actually hurt you.

ETFs: Growing Popularity, Growing Danger?

Just when you thought that exchange-traded funds were a simple, smart and safe way to diversify out of underperforming stock-and-bond mutual funds, along comes reality.

What these regulators and financial- stability oversight agencies are increasingly worried about is whether Wall Street's presumed good intention in creating these hugely popular investment vehicles is being undermined by unintended consequences.

But, let's not forget, we're talking about Wall Street, where unintended consequences are a rarity. The reality is that ETFs were originally conceived - and are increasingly being engineered - to ratchet up trading for the Street's own benefit.

And while you may not think that affects your investing or trading of ETFs, or your portfolio-diversification plans, you'll be surprised - and maybe even alarmed - to learn that you're wrong.

Let me explain ...

Instruments of Diversification ... Or Disaster?

ETFs started out as tradable alternatives to mutual funds. Initially, product portfolios consisted of stocks, or baskets of stocks, that replicated such key indexes as the Dow Jones Industrial Average, the Standard & Poor's 500, or the Nasdaq Composite Index.

The idea was to offer products that mirrored benchmarks - and that traded all day, like stocks. The tradability of these instruments offers effective liquidity that conventional mutual funds lack , with the added benefit that ETFs would also be easy to short.

Product offerings multiplied quickly. In addition to exchange-traded funds based on stocks, product sponsors created ETFs that replicated oil-and-gas, gold-and-silver and diversified-commodities portfolios - all of which were based on futures contracts.

A lot of ETFs started out as a cheaper alternative to futures trading. Futures traders must cover high initial-margin deposits. And positions are marked-to-market daily, which requires immediate additional margin coverage when losses arise. The upshot: f utures trading is too expensive and too volatile for investors who are used to traditional stock market investing.

Today, investors can find exchange-traded funds that offer exposure to all kinds of risk instruments - from currencies and bonds, to thin slices of the yield curve and volatility. And there are even "leveraged" and "inverse" ETFs that multiply risk exposure and allow traders to make all kinds of directional bets.



To continue reading, please click here...

Four Reasons to Invest in ETFs – And Five Ways to Get Started

A mere 15 years ago, selecting the right exchange-traded fund (ETF) was no big challenge. That's because the first ETF wasn't introduced until 1993, and the second didn't follow until 1995. Since then, however, the growth rate among these versatile investment vehicles has been exponential - so fast, in fact, that the monitoring firm Morningstar now tracks the performance of 854 ETFs, with new funds being added almost weekly.

So, from this mushrooming roster of new ETFs - now covering virtually every market sector, both domestic and international - how do you select the right one (or, more likely, ones) for your portfolio?

If you're not already familiar with ETFs, here are four reasons why you should consider adding some balance to your portfolio.

Read More…

How to Use Utilities Stocks to Pump Up Your Portfolio

There was a time when the words "widows and orphans" pretty much defined utilities stocks. As well-regulated monopolies whose products were in constant and increasing demand, they provided a steady stream of income with a level of safety adequate for even the most conservative portfolios.

Because of more competition, looser rate regulation, and slower growth, utility stocks aren't quite the safe haven they once were. But with interest rates at all-time lows and continuing economic turmoil, they still have something to offer most investors.

Of course, the public utilities field today is considerably less broad and diverse than when your grandmother went looking for her retirement stocks.

Following the dismantling of Ma Bell (the original AT&T), which began in 1974, regulated phone utilities gradually disappeared in all but a few rural areas, leading to today's highly competitive tangle of publicly traded telephone companies.

Similarly, most of the smaller public water companies have been snapped up by a few big players - like American Water Works Co. Inc. (NYSE: AWK) - who run them as state-regulated subsidiaries.

That makes energy companies the most viable options for utilities stocks. And recent numbers indicate a turnaround is brewing in that sector.

Read More…

Investing Strategies: How to Build a Global-Investing Portfolio Using ETFs

It wasn't all that long ago that global investing was an activity that was restricted to only the wealthiest U.S. investors. If you weren't one of America's ultra-rich, you weren't able to access foreign markets.

That began to change in the 1950s, with the advent of international and global mutual funds, and access further expanded over the next three decades with the introduction of single-country closed-end funds. Today, thanks to the recent explosion in exchange-traded funds (ETFs), investing in overseas stocks is now almost as easy as targeting a given market sector here at home.

In fact, although it has been a mere 17 years since the first ETF began trading in the United States (in 1993), the most recent count finds more than 290 international, regional and foreign-country-focused funds listed on the various U.S. exchanges - enough to entice any investor with even a modest yen for overseas portfolio exposure.

Read More…

Special Report: How to Buy Gold

As an analyst and editor who specializes in the natural-resources sector, I spend a lot of time writing about gold, gold mining, and gold investing. Those are popular - and even emotional - topics with investors, which means that the columns, essays and advisories I write tend to generate a lot of comments and questions.

I think that's great. After all, an engaged investor tends to be a successful investor.

Not surprisingly, one question dominates. And that's the question we're addressing in this special report.

The question: "How do I buy gold?"

As a service to the Money Morning readers who have asked that question, or who've had that same thought, I've put together this overview - or primer - that addresses the basic ins and outs of buying gold. In this feature, I address some of the more-common and more-timely questions that I've been getting.



To find out how to buy gold, please read on...

Money Morning Mid-Year Forecast: Why China's Economy Will Exceed Expectations in the Second Half of 2010

The rapid growth China's economy experienced in the first half of the year was a blessing and a curse. It helped propel the world out of a disastrous recession, but it forced policymakers into action to prevent overheating - which scared off many investors.

But the fact is that while most of the world was struggling to keep the engine of economic recovery from sputtering to a halt, China spent the first half of 2010 with its foot on the brake. And now that the Red Dragon has reigned in growth, the second half of 2010 will likely look very different from the first.

Money Morning Chief Investment Strategist Keith Fitz-Gerald says nearly everyone felt the first quarter's 11.9% growth in Chinese gross domestic product (GDP) was "too hot." But the 10.3% growth China saw in the second quarter will likely be topped in the second half.

The reasons for that are simple:

"From an investment perspective, the single biggest concern right now is how hard and for how long the Chinese government will keep tapping on the brakes," says Fitz-Gerald. "I personally don't think it's going to be too much longer - an easing sometime in the third quarter now seems realistic."

Read More…

After a Strong First Half, Is the U.S. Dollar Headed for a Reversal?

In spite of an assortment of economic uncertainties at home, the U.S. dollar has been the star of the currency world for most of 2010. Spooked by persistent and seemingly insurmountable debt problems in the European Union - and the specter of unsustainable growth and potential inflation in China - investors fled European and Asian currencies for the perceived relative safe haven of the dollar.

But the U.S. dollar may have topped out.

Let me explain ...

Read More…

Are 'Pure-Play' ETFs a Shrewd Investment – Or a Risk Not Worth Taking?

They're called "pure-play" exchange-traded funds (ETFs). And they're the latest rage in the ETF sector.

But are they too much of a risk?

According to Dictionary.com, a mutual fund is an investment company "that gives small investors access to a well-diversified portfolio of equities, bonds and other securities," professionally managed to "match the objective stated in the (fund's) prospectus."

Read More…

Chinese Real Estate: Four Ways to Profit From the Biggest Urban Migration in History

SHANGHAI, The People's Republic of China - Given what you may have heard about Chinese property values in recent months, it may surprise you to learn that Chinese real estate investors are extremely value oriented.

And so are the institutional investors I've run into during my latest investment-research visit to this country. These institutional players want to lock up some valuable land parcels before 2020. That's the date by which 500 million Chinese citizens are expected to have moved into China's cities as part of the greatest urban migration ever recorded.

You can do the math: We're talking about a group that's 1.6 times the entire U.S. population ... moving from China's countryside to its cities in the next 10 years.



To discover four ways to profit from this massive migration, read on...

Low Stock Market Volume: It's Even Weaker Than You Think

Conventional investing wisdom tells us that when stocks rally on low stock market volume, traders perceive that lack of widespread participation as an indicator of the market's future vulnerability.

And as torrid as this rally in U.S. stock prices has been, the lack of trading volume has been a consistent cause for concern.

Unfortunately for market bulls, even this well-chronicled concern doesn't tell the whole story. That's because U.S. stock market volume is even worse - actually, much worse - than anyone realizes. And this ultra-low stock market volume should be sending up some serious red flags for investors.

To find out how Wall Street is artificially inflating stock-market volume, read on ...

© 2015 Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201, Email: customerservice@MoneyMorning.com