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  • Why Utilities May Be Worthy
    By Kevin Grewal, Editorial Director at www.SmartStops.net
     As the energy sector remains attractive, many investors have rushed towards energy equities and energy ETFs, but the utility sector could be just as a good of a play for various reasons.
     First, the vast majority of major utilities use coal and natural gas to generate power.  In fact, electricity prices are caluclated by using the price of coal and natural gas as a base and then adding addditional charges based on the influences of supply and demand forces; therefore, making the correlation between the energy and utility sectors high.
    More »
    Tags: VPU, IDU, Utility ETFs, Utilities, Commodities, Natural Gas, Coal
    Nov 23 04:57 pm | Link | Comment!
  • China Not In A Bubble
    Earlier in the year, many investors thought that speculation was the main driving force behind the uptrend in China and that Chinese real estate and its stock markets may in a bubble, but it appears that they are wrong. 

    China's stock market is up by over 60% since last November with a P/E ratio of 24.  This may seem high, but it is a far cry from the eye popping price/earnings ratio of 70 seen during China's previous bubble in 2006-2007 and much lower than the nation's long-term average of 37.
     
    In regards to real estate, volume of property sales has surged by 85% over the past year and prices of new apartments in Shanghai have risen by nearly 30%.   Additionally, average Chinese home prices are nine times average annual household income.  Some believe that prices have been pumped up due to imprudent bank lending which is a red flag.  However, when one looks at the sector in more detail, average nationwide house prices have risen by 2% over the past year and in relation to income, average house prices in China have fallen slightly over the past decade.  As for prices, they are rising nowhere near as fast as they did during the previous boom in 2004-07.

    In the short-term, it appears that China is safe from bubble territory.  To make the Asian nation even more attractive, its growth seems to be driven by a rebound in construction and private-sector investment, as opposed to state spending funded by the government.

    To gain access to China, take a look at the following ETFs:
    • The iShares FTSE/Xinhua China 25 Index (FXI) which is up 99% from its March low of $22.80 to close at $45.46 on Wednesday.
    • The SPDR S&P China (GXC), which has more than doubled from its March low of $36.21 to close at $74.56 on Wednesday.

    To help mitigate the inherent risks involved with investing in equities, it is important to utilize an exit strategy.  According to the latest data from www.SmartStops.net, an upward trend in the mentioned ETFs could come to an end at the following price points: FXI at $41.99 and GXC at $69.26.  Keep in mind that these price points change on a daily basis and updated data can be accessed at www.SmartStops.net.

    Disclosure: At the time of the article, no positions were held.
    Tags: FXI, GXC, China, Asia, Emerging Markets, Global ETFs
    Nov 12 09:23 am | Link | Comment!
  • Healthcare Remains Healthy
    President Obama is putting pressure on Congress to finalize everything on the health care reform before the year’s end which will likely makes the healthcare and medical sectors even that much more attractive.
    The sector has been attractive due to the growth in elderly population, an increase in diseases and cancer rates and the desire to live longer and healthier lives. Additionally, the sector is favorable due to its continuous year-over-year revenue growth. The proposed reform is expected to further accentuate the sector’s appeal by increasing accessibility to prescription drugs and adding tens of millions of customers to health care companies.
    Although it appears that those affiliated with the health care industry should be smiling from ear to ear, they aren’t.   Opponents of the reform are against the idea of a government-run insurance program and drug makers are upset over the billions of dollars in rebates they will have to fork over to the government over the next 10 years. Additionally, medical device providers are upset because they will be forced to pay a 2.5% tax to the government on all of their products. 
    More »
    Tags: VHT, IHI, IHF, Healthcare, Obama, Sector ETFs
    Nov 11 03:01 pm | Link | Comment!
  • Why Gold Can’t Be Stopped
    By Kevin Grewal, Editorial Director at www.SmartStops.net
    Yesterday, gold surged to an all-time high of $1,079.70 per ounce and there are plenty of signs which suggest that the precious metal will be able to sustain its levels.
    As the U.S. government has opted to print massive amounts of money to revamp an economy severely impacted by the global recession, the result has been a falling dollar and fears of inflation. Both of these results don’t seem to be going away anytime soon and will likely to loom over investor’s in the near future. 
    More »
    Tags: GLD, IAU, GDX, Precious Metals, Gold, Metals Mining, China, India, Dollar, Asia
    Nov 04 12:36 pm | Link | Comment!
  • 3 Reasons To Be Cautios On Real Estate
     By Kevin Grewal, Editorial Director at www.SmartStops.net
    Although existing homes sales rose by an unexpected 9.4% in September, to an annual rate of 5.57 million units, three factors suggest that these levels are unsustainable.
    First, the $8,000 first time home buyer credit has made purchasing a home a bit more affordable and a lot more attractive. This tax credit is set to expire and will likely deter many from purchasing their new first home. Some suggest that Congress will extend the tax credit, however this will be difficult after a recent IRS audit of the program unveiled various fraudulent claims including some trying to claim the credit for homes that were not purchased and some claiming to fit the description of a first-time home buyer. 
    More »
    Tags: XHB, IYR, Real Estate, Sector ETFs
    Nov 03 09:27 am | Link | Comment!
  • Put Protection for a Dow 10,000
    By Kevin Grewal, Editorial Director at www.SmartStops.net
    The Dow Jones Industrial Average finally crossed the 10,000 mark for the first time this year marking a milestone indicating that investors see signs of an economic recovery. 
    Some driving forces behind this uptrend in the most well renowned index included a boost in retail sales, a positive trend in unemployment and upbeat earnings reports. September retail sales shocked analysts by rising 0.6% giving a sector that has been hurt by the consumer’s desire to penny pinch. In regards to unemployment, the number of newly laid-off workers has dropped to the lowest level since the beginning of the year indicating that companies are starting to ease up on handing out pink slips.
    More »
    Tags: DIA, AA, JPM, INTC
    Oct 14 06:18 pm | Link | Comment!
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