ETF Opportunities Are in the Eyes of the Shareholder

It depends upon whom you ask.

Marty Whitman of previously-adored Third Avenue Value (TAVFX) describes the current environment for stock assets as a "once-in-a-lifetime" opportunity. Yet the value investing icon is down 50% YTD.

In contrast, Bill Gross doesn't believe stocks are "cheap." He believes that greater regulation, higher taxation and higher borrowing costs will hamper corporate earnings. Yet Bill Gross has a vested interest in bond market performance as the manager of the world's largest fund, Pimco Total Return (PTTDX).

Truth is, you can find bulls and bears galore; in fact, you can find bulls and bears about the economy in general.

Some economists believe that the unprecedented stimulus of more than $8.5 trillion dollars in the U.S. alone will revive the domestic front. Meanwhile, globally coordinated rate cuts and unprecedented stimulus packages around the world may fire up the international economies.

Others paint an apocalyptic scene; that is, the U.S. dollar becomes worthless, individuals wander from township to township in search of day labor and the once hegemonic reign of U.S. dominance crumples like an un-ironed dress shirt.

Of course, nobody really knows anything, do they? I received kudos from a reader who believes that I, Gary Gordon, correctly called the collapse in oil.I didn't realllllllly predict the collapse in oil... I simply gave plausible possibilities for why $50 per barrel was every bit as reasonable as $200 per barrel. And if people were so inclined, they could short oil with ProShares UltraShort Oil (DUG).

The point is this... value and investment opportunity are in the eye of the beholder. What's more, value/bargains/investment opportunity will be based on things like risk tolerance, world view, time horizon, luck and discipline.

Unfortunately for many, it will also be based on emotional attachment. And one's idea of bargain/opportunity should not be based on optimism, pessimism or any emotional element. That's why I use stop-losses on the investments that I make for clients. (I know that there are times when I will be wrong!!!)

Right or wrong, I believe the best value exists in the following ETF arenas:

1. Japan. It has the boomer purchasing power demographics for the next decade. Shares of companies on major indexes trade at or near book value. It'll emerge from its recession before other world economies. I like the iShares MSCI Japan Fund (EWJ) and the WisdomTree Small Cap Japan Fund (DFJ).

2. Preferred Stock. Bill Gross likes corporate bonds... and I do too. The iShares Investment Grade Bond Fund (LQD) is one of my largest holdings. But it's hard to ignore companies where the government is buying the debt... and it's hard to ignore the yield-to-calls on the hybrid preferred share. 10%+? And the potential for appreciation when the credit crisis is tamed? Powershares Preferred (PFF) is still on my value list.

3. Utilities. The government's planning on boosting the economy through infrastructure investment. SDPR Select Utilities (XLU) offers a 4% dividend and is a near-perfect proxy for SPDRMacquarie Global Infrastructure 100 (GII). See why I favor tried-and-true XLU.

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.