ETF Buffers: How to Lessen Portfolio "Shrinkage"

Some thoughts are worth revisiting... like a post that I wrote back in the first week of June. Specifically, I wanted readers to get a feel for several ETFs that I thought could help in a sideways market.

Yet several of the ETFs that I discussed back then have proven much more valuable; that is, they have served as buffers in this painful July/August selloff.

The iPath Dow Jones-AIG Commodity Index (DJP), for example, has been flat over the past 5 days and is up 4% over the last 6 months. Meanwhile, the popular benchmark, the S&P 500 SPDR Trust (SPY), is down (-4%) over the last 5 days and has a big "goose egg" over the last 6 months.

The PowerShares DB G10 Currency Harvest (DBV) has also managed the market slide and kept it in perspective; DBV is down a bit more than 2% over the last 5 days, yet is up more than 7% over the last 6 months.

Granted, the iShares Lehman Long-Term Treasury (TLT) garners a fair amount of attention as a terrific safe haven in stock market slides. Yet the return is no better than the S&P 500 benchmark over the last 6 months.

In essence, two key points must be made. First, currencies and commodities often serve as buffers when there's excessive stock market volatility. Second, the potential for gains is often greater than traditional safe havens like treasury bonds.

Disclosure Statement:  As a Registered Investment Advisor, Pacific Park Financial, Inc. may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.