Long-time readers and listeners know that I am an active manager of passive “Index ETFs.” I favor exchange-traded index vehicles because the diversification comes with low expenses, exceptional tax-efficiency and intra-day liquidity. The media have regularly inquired why I rarely endorse the use of “Active ETFs.” Â For one thing, these funds involve more frequent trading, creating [...] Continue Reading...
Over the course of the 4-year bull market, I’ve kept an eye on the percentage of S&P 100 stocks that reside above a long-term 200-day trendline. Market pressures always seemed to develop when the level approached 86%-90%. Similarly, when the 50-day moving average for the S&P 100 reached 85%, you could pretty much count on [...] Continue Reading...
What exactly makes an exchange-traded fund in a given economic segment “cheap?” I am beginning to think that the concept is as arbitrary and as disobliging as the automatic spending cuts in Washington D.C. For example, Russ Koesterich is the Chief Investment Strategist for Blackrock. I genuinely enjoy reading his perspectives on “everything iShares.” Indeed, every [...] Continue Reading...
Over the last 3 months, U.S. small cap stocks as well as foreign and emerging market small caps logged spectacular profits. Moreover, they beat the pants off of larger-cap competition. Consider the recent highs in various price ratios. For instance, SPDR S&P Emerging Market Small Cap (EWX):iShares MSCI Emerging Markets (EEM) demonstrates increasing relative strength for [...] Continue Reading...
If you look hard enough, you can find a whole lot of things that are wrong with the “B” in BRIC. The country’s GDP growth is virtually non-existent. Government regulatory intervention in both the energy sector as well as the financials segment has been increasing. And Brazil’s currency lost approximately 7% against the dollar on [...] Continue Reading...
According to EPFR Global, money poured into stock funds at a faster pace over the last week than at any time since September of 2007. For those who may not immediately recognize the date as particularly significant, October 2007 kicked off one of the most volatile and bone-jarring bear markets in U.S. history. By no means [...] Continue Reading...
Ten short weeks ago, financial journalists celebrated a growth stock renaissance in 2012, applauding the super-sized gains for growth funds and downplaying the performance of value-oriented counterparts. Year-to-date (through 10/1), large-company growth mutual funds had amassed 17.1% whereas large-cap value mutual funds had picked up 14.3%. John Wagoner of USA Today explained that the lag had to [...] Continue Reading...
Mom-n-pop investors may not be taking on more risk, but institutional investors are. Perhaps the best example came in a Wall Street Journal article today by Kirsten Grind. Specifically, fund managers are investing in riskier high yield bonds, yet those funds still compare their “benchmark-beating” returns against benchmarks with safer assets (e.g., investment grade bonds). The [...] Continue Reading...
Last week, U.S. equities rocketed more than 2 percentage points on an enthusiastic embrace of potential progress in alleviating Europe’s debt woes. Nevertheless, money managers and “mom-n-poppers” yanked $4.6 billion dollars from U.S. Stock ETFs. Fund flows may provide insight into what institutional investors are thinking. In this instance, some may be thinking about locking in a portion of their gains for 2012. On [...] Continue Reading...
The CBOE S&P 500 VIX Volatility (VIX) is screaming that stock market participants have become too complacent. Specifically, the current price (14.29) is well below 15 — the level at which market-watchers insist that investors are failing to appreciate equity risk. Do stocks have to sell off because of limited daily trading ranges and ultra-low VIX volatility? Only if you have a vested [...] Continue Reading...
