What the Stimulus Plan Means for ETFs, Sector by Sector

The stimulus plan is out, signed and ready to go, and the money is accounted for. Billions are spread out across several sectors, and the new funds could soon impact exchange traded funds that target those sectors.

Total spending is $317.2 billion. Across the sectors, which are some of the ETFs that could be reaping some rewards as the money kicks in? Whatever happens with these ETFs in the coming months, be sure to follow the trends and have an entry (and exit) strategy. We don’t get in until a fund is above its long-term trend line (the 200-day moving average).

The following sector rundown includes spending provisions of the bill, not tax provisions, according to CNN Politics.

• Transportation, housing and urban development; $57.1 billion iShares Dow Jones U.S. Real Estate Index Fund (IYR): down 13.3% over three months; down 20.3% over one month.

• iShares Dow Jones Transportation (IYT): down 19.2% in the last three months, down 8% in the last week.

• Federal and State Government; $45.472 billion iShares S&P National Municipal Bond Fund (MUB): up 0.5% over three months; up 0.02% in one week.

• Commerce, Justice and Science; $17.842 billion Biotechnology HOLDRs (BBH): up 4.1% over three months; up 0.1% over the last 1 week.

• Defense and Security; $16.4 billion PowerShares Aerospace and Defense (PPA): up 5.6% over three months; down 3.0% over one week.

• Agriculture and Rural Development; $15,986 billion PowerShares DB Agriculture (DBA): down 5.2% over three months; down 6.3% over one week.

• Energy and Environment; $98,234 billion Market Vectors Global Alternative Energy (GEX): down 0.3% over three months; down 8% over one week.

• Labor, Health and Education; $66.15 billion Health Care Select Sector SPDR (XLV): up 4.2% over three months; down 2% over one week.

Comments

[Steven Hansen:]

i heard this joke:

Shortly after class, an economics student approaches his economics professor and says,

"I don't understand this stimulus bill. Can you explain it to me?"

The professor replied, "I don't have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I'll be glad to explain it to you." The student agreed.

At the agreed-upon time, the student showed up at the professor's house. The professor stated that the weekend project involved his backyard pool.

They both went out back to the pool, and the professor handed the student a bucket. Demonstrating with his own bucket, the professor said, "First, go over to the deep end, and fill your bucket with as much water as you can." The student did as he was instructed.

The professor then continued, "Follow me over to the shallow end, and then dump all the water from your bucket into it." The student was naturally confused, but did as he was told.

The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.

The confused student asked, "Excuse me, but why are we doing this?"

The professor matter-of-factly stated that he was trying to make the shallow end much deeper.

The student didn't think the economics professor was serious, but figured that he would find out the real story soon enough.

However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad. The student finally replied, "All we're doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you'll really have accomplished is the destruction of what could have been truly productive action!"

The professor put down his bucket and replied with a smile, "Congratulations. You now understand the stimulus bill."

Feb 19 11:37 PM

[Roger Schre...:]

Tom,

Very, very nice report. Useful.

Roger

Feb 20 09:40 AM