Volatility ETNs can serve as tools to protect assets that you already have in your portfolio. For example, 80% of the time over the last year, the iPath S&P 500 VIX Mid-Term ETN (VXZ) moved in the opposite direction of the S&P 500 itself. It follows that an active investor could purchase exchange-traded note protection if he/she is concerned about [...] Continue Reading...
The mainstream financial media may have caught a break in 2011. Neither the S&P 500 nor the Dow fell more than 20% from respective highs, meaning that nobody ran with the “Bear Is Back” headline. It follows that the 3/9/2009 lows still represent the start of a bull market uptrend. Not surprisingly, many have chosen to wistfully recollect the [...] Continue Reading...
In 2011, U.S. financial stocks collectively posted the worst performance of the 10 major economic segments. Not only did the SPDR Select Sector Financial Fund (XLF) decline 17%, but the P/E ratio for the sector contracted 22%. In 2012, the skies have been a little brighter for banks, insurers and property developers. The S&P 500 SPDR Trust (SPY) has [...] Continue Reading...
Morningstar used to be a one-trick pony. The company rated mutual funds… and they weren’t particularly good at it. For instance, in 1999, nearly every investment in the Janus stable held 4 or 5 stars. The primary reason? Janus products demonstrated superior performance on a relative basis in most stock categories over popular time frames (e.g., 1 year, 3 year, etc.). Did [...] Continue Reading...
With the S&P 500 garnering 4.6% in less than 3 weeks, are money managers becoming skittish? If hundreds of millions flowing out of a few select ETFs is any indication, then the answer is, “Yes.” On 1/19/2012, institutional advisers used their block accounts to dump roughly $120 million of iShares Russell Top 200 Growth (IWY) and $80 million of [...] Continue Reading...
In 2011, S&P 500 profits expanded 15%. And yet, the benchmark’s price finished in the very same place that it started the year. In essence, since prices flat-lined and earnings experienced double-digit growth, a fundamentally inexpensive stock market via the price-to-earnings ratio (P/E) became even cheaper. The most common reason cited for P/E contraction in 2011? The Euro Zone debt crisis. Obviously, sovereign [...] Continue Reading...
The headline unemployment number has fallen to 8.5% from a “Great Recession” high that is well north of 9%. Many say that the trend is heading in the right direction. And the media are beginning to tout the executive branch of government as having contributed to ”job creation.” Privately, many economists decry that systematic wealth redistribution is incapable of creating jobs — issues [...] Continue Reading...
How do “value” gurus determine worth? Bill Miller spent 30 years at the helm of Legg Mason Value (LMVTX), buying companies that he believed were deeply discounted. This often meant that he would purchase shares of a company where the market had priced the shares less than what was on the accounting books; sometimes, he might acquire shares for less [...] Continue Reading...
Buying-n-holding every investment asset is detrimental in secular bear markets. Granted, one can debate whether or not we’ve been witnessing a series of smaller bull markets within a grizzlier picture. However, there’s no denying the benefits of actively reducing downside risk prior to (and during) the 2000-2002 tech bubble or the 2008-2009 credit collapse. At the same time, investors are always searching [...] Continue Reading...
The S&P 500 SPDR Trust (SPY) began 2012 with a bang, collecting 1.6% in the initial session. Yet it was far from the most impressive showing on Tuesday, January 3. Consider the performance of some of the castaways from 2011. Market Vectors Nuclear Energy (NLR) rocketed 2.4%. PowerShares Global Water (PIO) swam upstream for a formidable 3.2%. And Market [...] Continue Reading...
