ETF Expert

Nothing is working. You can scour the data for the diamond in the rough, but when it comes to stock funds… it's an exercise in futility.

Well, okay… let's give short-sellers the respect they demand. Those that have shorted stocks using funds like ProShares Short S&P 500 (SH) are making a Cream de Menthe.

Yet bear market funds are primarily tools for traders. And successful traders over the long-term are those folks who buy and sell rather quickly.

Instead, I chose to focus on longer-term investments that have gains over the last 6 months. I am not suggesting that 6 months is a magical time period for inquiry. However, the 1/2 year does encompass the credit collapse of September-November, the Obama hope rally of late November-early-January, and the January-February erosion of confidence.

I examined stock, bond, currency and commodity ETFs. However, there are no winners in stock ETFs. (Yep… not a single gainer in the long stock ETFs that I came across!)

Gold's dominance hasn't surprised the gold bugs. They argue that all paper currencies are suspect. Many are hedging against future inflation. Others outline supply and demand, particularly in countries like India and China where gold is a heavy favorite. Still others simply invest in what continues to move higher.

Recently, silver has joined the precious metal party. Nevertheless, most commodity ETFs are still finding it hard to get out of the deflationary spiral that currently grips the globe. The Powershares Commodity Index Fund (DBC) still languishes in the doldrums.

Financial mags have been touting munis as beaten-down bargains since… well since forever. And for the most part, they've only been beaten down even more. Yet over the last 6 months, there's been a greater willingness to leave the "nowheresville" nature of 10-30 treasuries for the potentially greener pastures in tax-free muni-land.

Take, for example, the iShares S&P National Muni Bond Fund (MUB). Its 1.57% return appears rather paltry at first glance. Still, a 3.2% tax-free annual yield may actually represent 5% for the top tax bracket… and it starts to become a bit more appealing.

National munis may make the most sense because a fund is diversified across the U.S. Anyone in Cali can tell you that its state is rated as junk and that… while it has never failed on its general obligation bonds… the budget problems are legendary.

The most curious case may lie in the currency realm. It wasn't all that long ago, in fact, when investors worldwide seemed to be avoiding the dollar like the plague.

Yet safe haven buying hasn't gone to gold and silver alone… it's also gone to established currencies like the dollar and yen.  In fact, the PowerShares US Dollar Bullish Fund (UUP) has been a stellar growth prospect against most major currencies outside of the yen.

What about the yuan… a.k.a. Chinese dollar? The Chinese yuan does not float freely… and it is loosely pegged to the American currency. Don't expect much capital appreciation from the WisdomTree Chinese Yuan (CYB) in the short-term, as it maintains a U.S. dollar peg.

The downside risk of the yuan is likely to be small.  However, if the world gets back on track, and the U.S. dollar depreciates too quickly for comfort, you may see China let its yuan rise more rapidly.

If you'd like to learn more about ETF investing… then tune into "In the Money With Gary Gordon." You can listen to the show "live" or via podcast or on your iPod at this link.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, 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.