Subprime loan jitters is about the only thing we hear these days. These loans… will they derail the economy? What will the Fed do with interest rates to respond?
The worst performing exchange-traded funds have been those with the greatest exposure to the housing market and lending practices, namely homebuilders and financial stocks. Nick Perry notes that the SPDR Homebuilding Index XHB and the Spider Select Financial Index XLF show the weakest relative strength in the market at the moment. (One might also choose to note, that both have been trading below thir respective 50-day moving averages.)
Yet here is something that continues to get overlooked. The 3rd weakest sector in the week has little or no tie to lending or housing. It was the WilderHill CleanEnergy Index PBW.
I have discussed the volatility and the unproven sustainability of the clean energy index PBW in previous posts. It’s not that we don’t like the concept of going green with alt energy companies… it’s the fact that the investments are riskier.
Proven companies, on the other hand, remain in the global water arena. An exchange traded fund that tackles the most basic of human needs, PHO has more in its hip pocket from my vantage point.
Disclosure statement: Some of Pacific Park’s investment clients may hold positions in any of the investments mentioned above.