DRH

Barron's Calls a Bottom

I really have no idea why people insist on going out on a limb trying to call bottoms.

I've heard lots of great arguments for why stocks can't get much lower. The points made in this article are, for the most part, reasonable. However, when people are behaving irrationally there's just no limit to what might happen.

An ETF Package That Outperforms the S&P 500: Update

Sorry Gary, my mistake, got the symbols confused.

If you wouldn't mind continuing the discussion...I have analyzed your HMF, and had a few other comments. You have chosen sector based ETFs representing all the major sectors. Between all your ETFs you basically have every stock in the S&P and then some. However, the return seems to outpace the S&P (at least for the years you were able to track). I believe the key difference is that you are equal weighting each sector. If we look at the S&P it is usually not close to being equal weighted between sectors. At present, SPY has about 15% financial services and less than 4% utilities. Your HMF has 11% everywhere (I'm assuming you would rebalance once every year or two). I would suggest that your HMF is doing better because the sectors where the S&P is weighted over 11% have recently been performing worse than sectors where the S&P is weighted less than 11%. In a nutshell, the equal sector weighting provided a little less exposure to underperforming sectors and more exposure to the better performing sectors.

Don't get me wrong, I think this is still a better approach than just simply putting everthing into SPY or RSP. It certainly results in a more diversified portfolio.

Any thoughts?


On Jan 05 10:53 AM Gary Hickman wrote:

> Thanks for your comments. Actually, there is only one financial ETF
> in the portfolio- IYG. XLV is health care.

An ETF Package That Outperforms the S&P 500: Update

Thankyou for the portfolio idea. It seems reasonable except that the holdings include the financial services ishares AND the financial services SPDR. Why two ETFs in the financial services space, while everything else seems very balanced? Is this an intentional attempt to overweight one sector. It would seem to me that there will end up being a disproportionate amount of money going into companies like JP Morgan, Bank of America, and Wells Fargo. Would it be wise to swap out either xlv or iyg for something else? Regards, Dave