General Overview (Non-Technical)
1.) What is ETF Risk Alert All About?
We designed ETF Risk Alert to address the concerns that investors, financal planners and risk managers have about the exchange-traded funds in their portfolios. It follows that we created a color-coded advisory system that would give viewers immediate insight into the uncertainties and threats to their financial well-being. The color-coded advisor system has 5 Risk Levels that range from a relatively low level of risk up through an extremely high level of risk.
2.) What are Risk Levels?
Risk Levels represent individual components of the ETF Risk Alert Service. The 5 colors — green, blue, yellow, orange and red — offer visual representation of potential dangers associated with particular investments. The color coding is as follows:
Green: Low Risk of Investment Calamity
Blue: Medium Risk of Investment Calamity
Yellow: Elevated Risk of Investment Calamity
Orange: Significant Risk of Investment Calamity
Red: Extreme Risk of Investment Calamity
3.) How Do Risk Levels Relate To Different Investment Categories Like Bond ETFs, Stock ETFs and Leveraged ETFs?
Along the risk continuum, different asset classes have their own, inherent volatility. Bond ETFs and Currency ETFs are among the more tame possibilities. U.S. Stock ETFs typically have greater potential for loss than Bond ETFs, but they have less downside risk than Global Stock ETFs and International Stock ETFs. Leveraged ETFs that seek 2x or 3x a particular index are naturally the most prone to negative outcomes.
It is for this reason that the above-described Risk Levels are specific to the assigned category. A Yellow Risk Level for a Bond ETF is NOT the same as a Yellow Risk Level for a Stock ETF. A Red Risk Level for a U.S. Stock ETF is NOT the same as a Red Risk Level for an International ETF.
4.) What are the Assigned Cateogries?
We have created 5 categories where each category represents a class, or asset class, with a sufficient degree of historical correlation. From left to right on the tabs in the ETF Risk Alert Service, the categories are as follows:
Bond and Currency ETFs
U.S. Stock ETFs
Global/International ETFs
Other ETFs (e.g., Commodity ETFs, Active ETFs, Strategy ETFs)
Leveraged ETFs
5.) Should I Sell When A Risk Level Turns Red?
Selling is entirely a personal decision based on one’s own tolerance for the risk of loss. Moreover, the color “red” DOES NOT imply that something bad will happen. The color “red” lets you know that, in this specific category, the ETF in question has reached an extreme level whereby the risk of loss has increased substantially.
6.) What About the Color “Green?” Should I Buy?
Buying an ETF is also a personal decision based on one’s own tolerance for the risk of loss. Moreover, the color “green” DOES NOT imply that something good will happen. The color “green” lets you know that, in this specific category, the ETF in question has a relatively low level of risk for the income or captial appreciation you may seek.
7.) Do Risk Levels Change?
Absolutely, they change! Whereas the “mind” of ETF Risk Alert Service may be in the commentary via the “Weekly Write-Up,” whereas the “body” may be in the current color coding and corresponding comment, the “soul” of ETF Risk Alert is in the ever-changing environment.
Risk Levels can change at any time to reflect dynamic market conditions. You will want to pay attention to the directional change of an ETF over time. Is it becoming more risky within its category? Less risky within its category? Risk Levels may change slowly and… at other times… they may change more dramatically. Regularly logging into ETF Risk Alert will help you ascertain changing advisories to the positions that matter to you.
8.) How Are Risk Levels Determined?
The ETF Risk Alert Service uses a proprietary method that combines technical, fundamental, socio-political, economic and historical data to identify circumstances where adverse investing conditions may exist. For example, when the current price of an ETF falls below a 50-day moving average, this may indicate an increased risk of adversity. Similarly, a priced-to-earnings ratio for an ETF that exceeds a 5-year average may signify over-valuation. Or, a decrease in demand for debt eminating from a particular economic sector may increase the risk of loss for stock ETFs in the economic segment.
Indeed, Risk Levels are subjective. Yet they incorporate a number of objective measures including standardized volatility, beta and worst shortfall. We also factor in seasonal patterns and shifts from reliable sources like the Stock Trader’s Almanac.
How-To-Use Questions (Non Technical)
1.) What Should I Do First?
As tempting as it may be to go straight for the Risk Levels, you should always begin with the latest “Weekly Write-Up.” Here is where you will get Gary Gordon’s overall perspective on the markets at large — bond, currency, U.S. stock, international stock, real estate, commodities and so forth. In this manner, you will gain the most insight before you drill down into specific ETF holdings.
2.) Why Don’t I See Any Buy/Sell Recommendations in the “Weekly Write-Up” Section?
The ETF Risk Alert Service DOES NOT provide any personalized or generalized buy or sell recommendations. ETF Risk Alert is solely designed to alert investors, financial professionals, planners and risk managers to the heightened possibility of loss.
Here, again, is a more specific disclaimer about ETF Risk Alert: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. At any time that the company receives compensation from fund providers mentioned in this service, the company will disclose it. The company does not currently receive compensation from any of the fund providers covered in this service. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.
3.) What Types of Risk Are You Looking At When You Write About Them In The “Weekly-Write Up” Or You Set A Risk Level?
In essence, I am looking at 10 types of risk. They include: (A) Inflation Risk, (B) Credit Risk, (C) Market Risk, (D) Liquidity Risk, (E) Interest Rate Risk, (F) Business/Industry Risk, (G) Currency Risk, (H) Valuation Risk, (I) Economic Risk and (J) Trend Change Risk. Yet, believe it or not, there other dangers to investment outcomes, including political risk in a country as well as systemic risk for the entire financial system.
There’s no perfect formula for mixing and mashing these components together. That said, i have my own proprietary method of combining specific dangers to forulate the Risk Levels that you view on your screen.
4.) What Criteria Do You Use For Including ETFs in Your Database?
Each ETF must have roughly $100M or more assets under management. Of the roughly 800 ETFs in existence, half (400) are large enough for inclusion. Those that are not large enough trade on exceptionally thin volume, causing unnecessary liquidity risk and greater expense to a prospective purchaser/seller in the bid-ask spread.
5.) How Often Do you Change a Risk Level? How Often Do You Change the Comments?
Think briefly about the Christmas Day attempted attack on a Detroit-bound plane. Thankfully, the threat of catastrophe was averted by courageous passengers. Yet there was no pre-determined time for changing Homeland Security Threat Levels. They were raised due to changing circumstances, and they were lowered due to changing circumstances.
Simply stated, there is no specific timeline for when I might raise or lower or Risk Level. For that matter, there may or may not be a comment attached to a Risk Level change. The way to determine when a change has been made is by looking at the “Date” column.
6.) What Does It Mean If The Risk Level Of My ETF Moved Higher? What Does It Mean If It Moved Lower?
Risk Levels can change at any time to reflect dynamic market conditions. You will want to pay attention to the directional change of an ETF over time. If it has moved higher within its category, it is becoming more risky. If it has moved lower since you last checked, it is becoming less risky.
Some Risk Levels may change slowly and… at other times… they may change rather quickly. Regularly logging into ETF Risk Alert will help you ascertain changing advisories to the positions that matter to you. We’d recommend at least a weekly check to review the “Weekly Write-Up” and ther status of various ETF Risk Levels.
Keep in mind, when we talk about an ETF becoming less risky or more risky, we are talking about our opinion on the investment itself. We arwe not talking about you or your personal tolerance for potential losses. Regardless of our endeavor to rate the Risk Level of an ETF, you alone are responsible for determinnig if the asset is appropriate for your portoflio.
7.) Will ETF Risk Alert tell me which ETFs to buy and sell?
Never.
Once again, we’re providing you with an informed opinion on the Risk Level for a wide variety of ETFs. If we believe there’s a relatively low risk of investment calamity for a particular ETF’s use in a diversified portfolio, we issue a green coding. This is not a mandate to buy, sell or hold… only an opinion on risk.
Similarly, if we think the possibility of a calamitous investment outcome is extreme, we issue a red coding. Again, this is NOT a mandate to buy, sell or hold… only an opinion on risk.
User Questions (Technical)
1.) Where Do I Click To Get Buy And Sell Signals?
ETF Risk Alert does NOT advise users on what or when to buy, nor what or when to sell. Moreover, ETF Risk Alert does NOT predict the price movement of any Exchange-Traded Fund (ETF). Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
You can click on various categories to see a wide vareity of ETFs and their corresponding Risk Levels. Risk Levels represent individual components of the ETF Risk Alert Service. The 5 colors — green, blue, yellow, orange and red — offer visual representation of potential dangers associated with particular investments. You can also click on the “Weekly Write-Up” to get Friday commentary on “big picture” risks for the markets at large.
2.) I clicked on the U.S. Stock category. Two ETFs have the same Risk Level. Does this mean they have the same risk?
If ETFs from the same category (e.g., U.S. Stock) have the same Risk Level (e.g., Yellow), they have similar risk of an adverse investing outcome. Nothing has the same exact risk, as each investment is different. The same Risk Levels indicates a similar amount of danger is present.
Conversely, two ETFs from different categories that have the same Risk Level DO NOT have this relationship. Risk Levels were designed specifically for the assigned categories. For example, risk between an ETF with a Risk Level of “Blue” in the Global/International ETF category does not have any relationship to an ETF with a Risk Level of “Blue” in the Bond and Currency ETF category. (For more on this topic, see Question #3 in the General Overview above.)
3.) How Do I Search For An ETF?
In the “Symbol Field” at the top of each ETF Category, you may enter the specific ETF symbol to find it within the database. You may also type a keyword or name into “Name Field” to locate the ETF or ETFs of interest.
4.) What If I Can’t Find An ETF?
If you can not find a specific ETF, you may not have the correct symbol. Try searching by “keyword” or try searching by the appropriate category.
If you didn’t locate the ETF within one of the 5 ETF Categories, the ETF may not have $100 million in assets. The ETF Risk Alert Database monitors the 400 ETFs with enough trading volume for investors. (See Question #4 in the Non-Technical How-To-Use section above).
5.) How Do I Sort ETFs?
Users can sort a field by clicking on the word, “Symbol,” “ETF” or “Risk Level” in the above boxes of the 5 ETF Categories.
6.) Can An ETF Be On Two Different Tabs/Categories
No. ETFs are specific to a singular category/tab.
7.) Can You E-Mail Me the Weekly Write-Up? What About Changes to ETF Risk Levels?
No. Users access the “Weekly Write-Up” by logging into ETF Risk Alert and clicking the “Weekly Write-Up” tab. In addition, with 400+ ETF Risk Levels changing with some degree of frequency, we do not send e-messages. That is why we recommend logging into ETF Risk Alert at least once a week.
More Technical Questions
1. How Do I Access My Account Settings?
Once logged in, click the “My Profile” link in the top right hand corner of the site.
2.) How Do I Change My Password?
In the “My Profile” section, enter your new password and click “Update Profile” at the bottom of the page.
3.) How Do I Change My Address?
In the “My Profile” section, enter your new address and click “Update Profile” at the bottom of the page.
4.) What Do I Do if I Have Forgotten My Password?
Click the “Forgot Password” link beneath the Sign-In box on the ETF Risk Alert home page.
5.) How Do I Change My Credit Card?
If you would like to change your credit card for recurring billing purposses, you will need to cancel your current memebership. Note: You will have access to the site through the end of your contract period. Upon expiration, you will simply need to sign up again using your new credit card.
6.) How Do I Change My Membership Type?
If you would like to change your membership type, you will need to cancel your current memebership. Note: You will have access to the site through the end of your contract period. Upon expiration, you will simply need to sign up again by selecting the appropriate membership type.
7.) How Do I Cancel My Account?
In the “My Profile” section, click the “Cancel My Account” link at the bottom of the page. Note: You will have access to the site through the end of your contract period.
8.) If I Cancel My Account, Am I Eligible for a Refund?
No. Per the User Agreement, refunds are not provided to those cancelling their account. Users will be allowed to access the ETF Risk Alert service through the contractually agreed upon date when the user signed up.
9.) What if I Have Billing Questions?
Please click this link, then fill out the appropriate fields related to your billing question. Somebody from our ETF Risk Alert team will get back to you within one business day.
10.) Who Do I Contact If I Have Questions About My Account?
ETF Risk Alert is an internet-only service. All questions should be answered in this FAQ section. Users are highly encouraged to look for the answer to their question here.
Questions regarding ETF Risk Alert will not be answered over the phone. If you feel your question is not answered on this list then please click this link and follow the submission process. Someone from the ETF Risk Alert service will contact you within 1 business day.
