No Load Fund/ETF Investing: Can Major Market Turns be Predicted?

Ulli Uncategorized Contact

Using my Trend Tracking Indicators as a guide to determine market direction, any suggestion that deals with the word “prediction” is usually something I don’t pay much attention to.

Maybe I should—at least once in a while.

After the market meltdown on February 27, 2007, reader Ted kindly forwarded the name of a web site to me featuring Martin Armstrong’s Business cycle theories. Reading about his wave theories is not for the faint of heart, and you need to have considerable patience (or is it understanding) of what’s being discussed.

He identified his Economic Confidence Model in 2.15-year intervals and had posted the following critical dates:

The red arrow clearly identifies 2/27/07. A coincidence? Who knows; but I found it interesting that he has forecasted crucial dates up until 1932.

You can read the entire article at:

I’m not sure what to do with this information other than that I will be watching the next potential market turn around date, which is 4/23/09.

In the meantime, I think I’ll stick to using my Trend Tracking Indexes to stay on the right side of the market.

Mutual Fund Companies: Why go from No Load to Load?

Ulli Uncategorized 2 Comments

The recent Morningstar story, that American Century is planning to shake up its funds and increase their load fund lineup from 26 to 39, has been bugging me all weekend.

I simply don’t get it. Well known funds like TWEIX, BEQGX and TWCUX, among others, are set to transition from the no load share classes to the load lineup.

The reason given was that they would be primarily targeted towards fee-based advisors and retirement plans. Well, there is silent revolution going on among many advisors trying to find a way to go from commission based to fee-only.


Primarily, to escape the stigma that commission based advisors are only looking out for themselves and not for their clients. That would mean the use of no load products and ETFs. Of course, this transition may take years and, in the meantime, load funds will continue being sold to those investors who don’t know any better.

Back to American Century. Could it be that their funds lack performance and the company is looking for another way to market them? Maybe, but a quick check of my StatSheet, which features the American Fund family as well, shows that the performance of their funds, at least for the current Buy cycle, is in line with others.

If you have any thoughts as to why in today’s investment climate, with low cost ETFs taking the lunch bags from some mutual funds, a fund company would go the load route, please share them with me.

Smart ETF Investing: Which ETF Would You Have Picked?

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A couple of weeks ago, I was looking at utility ETFs to diversify some of my clients’ money into this well performing sector.

In my weekly StatSheet, I have been tracking four of them on a regular basis. If you look at the table below, you’ll notice that all have very similar momentum figures in the categories of 4Wk, 8Wk, 12Wk and YTD:

Given that fact, how would you decide which one to select? Are there some other criteria that could play an important role?


In this case, I was concerned about placing 2 good sized orders (over $500k each) over a couple of days at a limit price and without affecting the NAV adversely. To do that, you need to look at the net assets of the ETF along with the average daily trading volume. Here’s what I found:

UTH: Average Daily Volume: 219,000 shares, Net Assets: $433 million
VPU: Average Daily Volume: 24,000 shares, Net Assets: $194 million
XLU: Average Daily Volume: 3.9 million shares, Net Assets: $2.98 billion
IDU: Average Daily Volume: 76,000 shares, Net Assets: $820 million

For me, the decision was easy. Since I was about to trade almost 30,000 shares, XLU with its incredible volume was the clear winner. This is not to say that you could not have picked any of the others but, when dealing in large volume, you need to concern yourself with liquidity.

Sector ETFS, as well as sector mutual funds, are notoriously volatile and, when everybody heads for the exit door at the same time, liquidity can make all the difference in you selling your positions without too much slippage in price. And that can mean the difference between a profit and a loss.

No Load Fund/ETF Tracker updated through 3/30/2007

Ulli Uncategorized Contact

My latest No Load Fund/ETF Tracker has been posted at:

Sideways to downward bias had the markets in a retreating mode. Our Trend Tracking Index (TTI) for domestic funds moved lower but still sits +3.75% above its long-term trend line (red) as the chart below shows:

The international index eased up as well and currently sits +7.89% above its own trend line, as you can see below:

For more details, and the latest market commentary, as well as the updated No load Fund/ETF StatSheet, please see the above link.

How to Save on Investment Management Fees

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In my advisor practice, a client brought up the question as to whether he could save some money by referring a relative or friend and have that person’s assets to be considered when management fees are calculated.

Here’s how it works. All fee-based investment advisors have a sliding fee schedule for their clients. The higher your portfolio value, the smaller the management fee.

For example, let’s say your managed portfolio has a value of $80k and you are referring a family member with a portfolio value of $40k. In my practice, we have fee break points for accounts under $50k, under $100k, under $250k and so on.

In the above example, you, with the $80k portfolio, would benefit greatly by referring your friend with a $40k portfolio. You would both slide into the lower fee bracket between $100k and $250k, which would result in considerable savings.

It’s a win-win situation. Your cost has been reduced, your friend starts out at a much lower fee schedule and the advisor has gained a new client.

If you’re working with a fee-only advisor (and you should), be sure to ask the question about combining assets to reduce your investment management costs.

Stupid Investment of the Century: The IRA Annuity

Ulli Uncategorized 2 Comments

While on the subject of annuities this week, here’s another doozey I come across every so often: The IRA Annuity.

As you know, an IRA is a tax-deferred investment vehicle and so is an Annuity. In my advisor practice I find that, occasionally, a new client comes aboard and his portfolio contains one of those rarities.

If you ask your accountant or tax preparer, he will tell you that an IRA Annuity absolutely makes no sense (unless, he happens to be selling these) from a tax stand point.

If that’s the case, how do investors end up with them?

I got the answer many years ago when my wife (an accountant) was conducting an IRS audit for a client.

I was able to sit in for a portion of the audit dealing with investments, and I asked the auditor about IRA Annuities. He laughed and said that they were simply another tool for someone to generate an up front commission. Other than that, they made no sense at all.

So, if you’re being approached about moving your IRA into an Annuity, be warned that this may improve someone else’s financial condition, and not yours.

If you had such an experience, please share it with me.