Click on the link below to find out what 4 ETFs I feel will benefit from another round of quantitative easing by the Fed (QE3).
Click Here.
Market expert and TV personality Matt McCall blogs about what is really moving the markets. He will emphasize Exchange-Traded Funds (ETFs) and individual stocks throughout the trading day.
Thursday, August 30, 2012
Wednesday, August 29, 2012
Investing is Hardest Job
This is according to an interesting article I came across on the internet this week. Below is the article. I suggest anyone investing their own money or doing it for a living like myself should take a few minutes to read the entire article.
Being a professional investor is the hardest profession on the planet.
Not because the financial markets are global and 24/7. Not because the markets are full of extremely driven and intelligent competitors. Not because the emotional highs and lows can be soul crushing.
It is because of the constant and measurable competition against passive benchmarks.
Each day, month, quarter and year a professional investor’s performance is measured against both the benchmark and their peers. Outside of professional sports, I’m not sure there is any other industry that generates such objective and continuous measurements. And even in sports, there is no equivalent of a “passive benchmark”. If a player is struggling, teams do not have the option to replace that player with a benchmark that guarantees them the averaged production of every player at that position .
Benchmarks are the most ferocious of competitors. They show up for work everyday. They never get sick. They don’t take vacation. They are always 100% invested so their results are continuously compounding. Most importantly, they’re not aware of their own performance. The S&P 500 will never enter the 4th quarter feeling it needs to really press to have good numbers for the year. Nor will it take December off to “lock in” a good year.
Not only is the pressure unrelenting, but your failures are public on a scale that again only professional athletes can relate to. If you do become a successful professional investor and overcome all of the above, there is always the question of skill versus luck.
No fan in their right mind believes they have a chance of beating a Kobe Bryant or LeBron James at basketball. Yet any investor can now buy a portfolio of index funds and have a good chance to outperform not just a few, but the majority of mutual and hedge fund managers.
This inconvenient truth is like a little voice in the head of every successful investor – “Am I really good at this or have I just been lucky?”. A voice that never goes away as it only takes a couple bad years to destroy an lifelong track record.
A few quick thoughts I had after reading have to do with short-term results versus long-term investing. For example, investors love to know how they did last month or so far this year. When in reality they will not touch the money for at least 10 years if not longer. The real way to measure is over several years as there will always be up and down years. When basing long-term investing on short-term goals is the strategy, the odds of beating the market are very low.
Not because the financial markets are global and 24/7. Not because the markets are full of extremely driven and intelligent competitors. Not because the emotional highs and lows can be soul crushing.
It is because of the constant and measurable competition against passive benchmarks.
Each day, month, quarter and year a professional investor’s performance is measured against both the benchmark and their peers. Outside of professional sports, I’m not sure there is any other industry that generates such objective and continuous measurements. And even in sports, there is no equivalent of a “passive benchmark”. If a player is struggling, teams do not have the option to replace that player with a benchmark that guarantees them the averaged production of every player at that position .
Benchmarks are the most ferocious of competitors. They show up for work everyday. They never get sick. They don’t take vacation. They are always 100% invested so their results are continuously compounding. Most importantly, they’re not aware of their own performance. The S&P 500 will never enter the 4th quarter feeling it needs to really press to have good numbers for the year. Nor will it take December off to “lock in” a good year.
Not only is the pressure unrelenting, but your failures are public on a scale that again only professional athletes can relate to. If you do become a successful professional investor and overcome all of the above, there is always the question of skill versus luck.
No fan in their right mind believes they have a chance of beating a Kobe Bryant or LeBron James at basketball. Yet any investor can now buy a portfolio of index funds and have a good chance to outperform not just a few, but the majority of mutual and hedge fund managers.
This inconvenient truth is like a little voice in the head of every successful investor – “Am I really good at this or have I just been lucky?”. A voice that never goes away as it only takes a couple bad years to destroy an lifelong track record.
A few quick thoughts I had after reading have to do with short-term results versus long-term investing. For example, investors love to know how they did last month or so far this year. When in reality they will not touch the money for at least 10 years if not longer. The real way to measure is over several years as there will always be up and down years. When basing long-term investing on short-term goals is the strategy, the odds of beating the market are very low.
It also hit home with me as an advisor that not only deals with the markets 24/7, but also with many different views on the market via my clients (basically my many bosses). I really think this article will open the eyes of all investors and I suggest you pass it along to your friends.
Friday, August 17, 2012
Must See Chart #2
Earlier this week I shared a must see chart. Here is chart #2.
The chart shows the flow of money into equity funds and bond funds. As you can see the amount of money going into bond funds is astronomical as money continues to come out of equity funds. This major spread between the two asset classes is often a sign of a buyers market for stocks. The exact opposite occurs when the spread is flipped.
Look just before the tech bubble in 2000 and the financial collapse in 2007 - both times money was flowing into equities at a much higher pace than bonds. The result was market crashes. Now that the spread is opposite, is it a signal of a market that is poised to rally? I would have to say the answer is yes for long-term investors that have at least a 5-10 year time horizon in the market.
The chart shows the flow of money into equity funds and bond funds. As you can see the amount of money going into bond funds is astronomical as money continues to come out of equity funds. This major spread between the two asset classes is often a sign of a buyers market for stocks. The exact opposite occurs when the spread is flipped.
Look just before the tech bubble in 2000 and the financial collapse in 2007 - both times money was flowing into equities at a much higher pace than bonds. The result was market crashes. Now that the spread is opposite, is it a signal of a market that is poised to rally? I would have to say the answer is yes for long-term investors that have at least a 5-10 year time horizon in the market.
Top Sector ETFs in August
The S&P 500 is near a 4-year high and the month of August has been good for stocks in general. The SPDR S&P 500 ETF ($SPY) is up 2.3%.
The chart below shows the performance of 6 sector ETFs along with SPY. It is interested to see that the sectors outperforming are those that are perceived as "riskier" and the more "stable" sectors such as the Utilities ($XLU) are lagging.
The best performer is Technology ($XLK) up 5.3% as the Utilities are down 2.6%; an 8% difference in just over two weeks is significant and it shows how money can quickly rotate from one sector to another. If the SPY breaks out it will be good for the riskier sectors such as Technology, Financials ($XLF), Consumer Discretionary ($XLY), and Materials ($XLB). The Utilities and Health Care ($XLV) will likely lag behind.
To view the chart please click on the link below.
Comparison Chart
The chart below shows the performance of 6 sector ETFs along with SPY. It is interested to see that the sectors outperforming are those that are perceived as "riskier" and the more "stable" sectors such as the Utilities ($XLU) are lagging.
The best performer is Technology ($XLK) up 5.3% as the Utilities are down 2.6%; an 8% difference in just over two weeks is significant and it shows how money can quickly rotate from one sector to another. If the SPY breaks out it will be good for the riskier sectors such as Technology, Financials ($XLF), Consumer Discretionary ($XLY), and Materials ($XLB). The Utilities and Health Care ($XLV) will likely lag behind.
To view the chart please click on the link below.
Comparison Chart
My Appearance on BNN
Below is a link to my appearance today on Canada's BNN (Business News Network) talking about the markets, my favorite sectors, and some stock & ETF ideas.
Click Here to Watch.
Click Here to Watch.
Thursday, August 16, 2012
5 Stocks Sitting on Support
My morning stock scan was focused on stocks with strong uptrends that have pulled back from recent highs and are now near support levels and that have moved close to oversold levels. Five stocks that fit the bill are listed below.
- Public Storage ($PSA) - Stock was mentioned yesterday, the REIT pays a 3.0% dividend and has a solid business model and long-term chart.
- Realty Income Corp ($O) - REIT that invests in commercial retail real estate and pays a 4.3% dividend.
- Ultrapar Holdings ($UGP) - A Brazilian oil & gas company that pays a 2.6% dividend.
- Coca-Cola ($KO) - Warren Buffett's favorite stock pays a 1.3% dividend, but is a little pricey for me at current levels.
- Franklin Electric ($FELE) - The most interesting stock with a PEG ratio of only 0.44 and a 1.0% dividend yield. Keep an eye on this relatively unknown company.
Wednesday, August 15, 2012
Stock Market Predicts Obama Victory?
Is the action in the stock market predicting an Obama win in November?
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