Indexor

ETF Market Trends: Just Another 'Debase' Party on Wall Street

Happy B-Day Clinton. Hope you enjoy Thanksgiving as well.

Good article. I always enjoy both your perspective as well as the data you present.

ETF Trends: New Reality Weighs on Investors and Stocks

Excellent article. I appreciate the sharing of your trend work on such a broad array of asset classes, especially Bonds and Sectors, which are often overlooked. Your Momentum and Market Diary numbers are also routinely ignored by many but actually can provide very good tells. Thank you.

Tuesday Outlook: Commodities, Global Markets

Dave:

I always appreciate your work. In your chart of WIP you noted: "Are WIPs better than TIPs? Some must think so." There is a big tax difference between the two. Phantom income.

The drawback to holding TIPs in a taxable account is that they generate "phanton income." The principal value is adjusted annually to reflect inflation, and you're forced to pay taxes on the increase - even though you don't actually receive the money until you sell the bond or it matures. iShares will send you a 1099 that calculates your phantom income each year but TIP remains best for QUALIFIED ACCOUNTS only.

WIPs are somewhat different. The monthly distributions made by WIP include the coupon interest accrual and the CPI adjustment on the principal. The fund is able to pay this out by selling a very small
portion of the portfolio every month that there is a positive CPI
adjustment. Since the CPI adjustment is paid out every month, from a tax standpoint, there is no "phantom income" realized by the shareholder.

Hope this helps.

Analyzing Grantham’s Asset Class Outlooks

auto44:

You're missing the point of the article. If you just want Grantham's projections, go to the link provided. If you would like to compare a software program that produces very similar outcomes, "...THE QPP JIBERISH THAT CONFUSES SIMPLE SOULS LIKE ME..." might be worth investigating more fully.

On the Dollar and Commodities: Currencies Move Because We Let Them

Excellent work. I appreciate your use of numerous Stockcharts to assit in making your points. In this article I especially enjoyed the final data on the importance of cutting losses. Cutting losses short is a practice I have utilized for years, even though it flies in the face of all the buy-and-hold, invest for the long run, Warren Buffett fundamental types. Technical analysis protected my clients money by exiting US stocks in October of 2000 and staying out until March of 2003. Our US stock allocations were sold again this past January.

I am curious about your use of a 325-Day moving average. It is not a fibonacci number and I have never seen it used before by Murphy or any of the other technicians. Does it have any significant characteristics that caused you to choose it?

Thank you for sharing your thoughtful insights.

Checking In on the All-ETF Portfolio

Geoff:

You're web site is not working.

Do Emerging Market ETFs Really Help You Diversify?

(Note: During a raging bull, as long as you've got stocks, you're making money. It hardly matters that all of your stocks overlap because you're experiencing gains. Yet in a bear, low-correlating/non-co... correlating assets buffer the adverse effect of stock depreciation. And that's the real reason we "diversify.")

Note: During a raging Bear, as long as you've got stocks, you're losing money. It hardly matters that all of your stocks have low correlation values because they can't buffer the adverse effect of stock depreciation. And that's the real reason we sell all stocks.

The iPath Dow Jones-AIG Commodity Total Return ETF (DJP) is not a stock fund. Neither is the SPDR Lehman International Treasury Bond ETF (BWX). That is why diversifying among different ASSET CLASSES as opposed to diversifying among different STOCKS can provide profits. Your continual pitch for the WisdomTree Emerging Market High Yield ETF (DEM), with inaccurate yield assumptions, is disturbing as it is still a STOCK fund and has lost money in this Bear market.

The only place for STOCK allocations (outside of the safety of cash) if you must be fully invested at all times is inverse stock funds, which take the opposite side of the trade for the specific sub-asset class you wish to own. As an example, rather than the WisdomTree Emerging Market High Yield ETF (DEM) which has lost money, compare that ETF to the ProShares Short MSCI Emerging Markets ETF (EUM), which does not apply leverage. Which would you have rather owned?

Disclosure: Writer has previously owned DJP and currently owns BWX.

Risk Management in Trending Markets

Exceptional article! Thank you for sharing your work. I look forward to reading your articles in the future.

700 ETFs and Counting: A Bird's-eye View

As someone who began using iShare ETFs back in 1996 when they were known as WEBS, and was finally able to drop all open-end mutual funds and closed-end funds last year in order to build 100% ETF portfolios, I applaud your article for providing a good macro view of the landscape.

After BGI rebranded WEBS to iShares with a focus on US stock ETFs in 2000, it wasn't very long ago that it seemed to take absolutely forever to get SHY, ICF and EFA through the approval process of the SEC in 2001. More government bonds appeared in 2002 followed by EEM, TIP and AGG in '03, GLD in '04, MicroCap and EAFE Growth and Value in '05, Commodities and Short/Leveraged ETFs in '06 and finally Currencies and the missing bond categories of High Yield, Muni and Internationals in '07.

As Actively Managed ETFs hit the market in '08, it is logical to believe that many more open-end mutual fund companies will stop feeling threatened and join the movement as Vanguard and Van Eck have already done. Lower expense ratios (look at the market share Vanguard is taking), real transparency (as opposed to quarterly window dressing), intra-day trading (no more bashing of market timing or additional fees for selling whenever you want) and better tax treatment which can be managed as opposed to the ridiculous IRS-forced capital gain distributions at year end.

Good article.

Thursday Outlook: Commodities, Emerging Markets

David:
As they say "A picture is worth a thoasand words" and your posts always prove this point in spades. In my opinion, you provide the most entertaining views on this site. Thank you.

Foreign and Domestic Stocks: Evolving Correlations and Portfolio Management

There is a growing amount of "junk" investment advice being published every day on the web, cloaked in the respectability of a known or respected web site. The result only serves to tarnish the reputation of sites such as Seeking Alpha. Obviously nobody is editing or even reading these articles before they appear.

5 Golden Rules for the ETF Industry to Live By

Good article Matt. Unfortunately, iShares problems with last year's EEM performance and their refusal to lower expense ratios are only two visable signs of troubling developments within the company in the past year. Their leadership within the ETF industry seems to be rapidly declining.

Barclay's great care and feeding that was showered upon advisors even three years ago has abruptly ended. Even their web site, which was the envy of the industry has turned sterile. Their telephone support now appears staffed by rookies who aren't even able to determine how many issues are included in the indices that their ETFs are tracking. It appears they are now cashing in on the success they have built up over the last five years.

So maybe a new fund family like SSgA's SPDRs, Vanguard or PowerShares will take the lead and keep their expense ratios low, offer responsible ETFs without the advertising hype that sullied the mutual fund industry, and do the extra work required to follow a replication approach for true "indexing."

I would add one more "Golden Rule." Pay the additional money to staff excellent telephone support staff for both advisors and the public. They are the only contact most have with these ETF providers and are able to leave an indelible mark - positive or negative - concerning the professionalism and perceived capability of that particular firm.

Keep up the good work Matt.