ETF/No Load Fund Tracker Update: StatSheet Changes Ahead

Ulli Uncategorized 2 Comments

With the constantly expanding offerings of ETFs, I have been planning on improving the weekly StatSheet. While this is a work in progress, you will see come changes already in this Friday’s issue and from hereon forward.

In its current format, the StatSheet contains some 30 pages of graphs and no load mutual fund/ETF data. One of the major planned changes is the presentation of the momentum tables. They will be expanded where appropriate and posted as a link to a downloadable PDF file.

This will allow you to better print out only that information which is of interest to you. Due to the reference to the tables as a link, the overall size of the StatSheet will be reduced, which will allow for faster loading when accessing.

As mentioned above, new ETFs are being added rapidly, and currently there are almost 450 being offered with more in the works. I believe that ETFs should be an important component of everybody’s portfolio, and I will set up tracking for all of them as time goes on. In this week’s StatSheet, you will notice how the ETF Master list already has grown to some 250 funds.

While ETFs originally started out covering the most well known indexes, they are now being sliced and diced and are representing many micro sectors. While not everyone of them may be a good investment choice, our momentum figures will weed out the weak ones and show those worthy of your attention.

More importantly, having all of these choices will put us in a position to improve selections by (hopefully) having some “zig” in our portfolios when the markets “zag.”

ETF Investing: Should You Borrow To Invest More?

Ulli Uncategorized 3 Comments

The short answer is no. I am not an economist, but I have always believed that having little or no debt as an individual (or as a country for that matter) is certainly more desirable than drowning in payments. While there is a period in everyone’s life where debt is necessary, the ultimate goal for most investors is to eventually become debt free.

Apparently not everyone agrees. Much to my surprise I found Ken Fisher, CEO of Fisher Investments, heavily promoting the use of debt as a good thing in his article titled “Learning to love debt.”

While it makes for interesting reading, there isn’t much I can agree with, especially since he makes no distinction between debt for investment (growth of business) and consumer debt (reckless spending). Some of his comments about the economic benefits when a heroin addict borrows money might even make your hair stand up.

I far more enjoyed the article analysis/rebuttal by Michael Shedlock, who writes on global economic trends. His points are succinct and well thought out. He even went through the trouble of calling Fisher Investments to find out how Ken uses debt and leverage himself. Turns out he doesn’t use it at all!


Apparently, Ken doesn’t eat what he cooks. There goes the credibility. Oh well…

Investment Methodologies: Market Timing vs. Trend Tracking

Ulli Uncategorized Contact

Most of the time, any attempt of investing in the market other than via Buy & Hold (Asset Allocation) is immediately labeled with the by now dirty word “timing.” MSN had an article about that called “Does market timing ever work?”

The story starts with the fact that “rapid, short-term trading drives up costs” for other mutual fund investors. If that’s what timing is, I can agree with that. It goes on to state that that most investors lose money and buy closer to the top than at the bottom. I’ve heard that too.

From the experience in my advisor practice, I have found that most investors’ problem is not the rapid in and out trading as this article describes. Far from it. When I look at portfolios from prospective clients, I am amazed (more often than not) of how well they have selected their mutual funds and ETFs.

However, I’ve always found the same problem.

While the investor may have made great fund selections, he never sold and held them through bull and bear markets alike. The end result was that his returns were mediocre at best. If that has happened to you, trend tracking can help you alleviate that problem.


By having a definite plan in place the moment you purchase your investments. If you do nothing else but employ a trailing stop loss method, you will avoid giving back most of your unrealized gains in the event of a trend reversal or worse, a slide into bear market territory. Yesterday’s post on EUROX clearly demonstrates that a fund, which had provided superior profit opportunities over a 2-year period, turned in a far lesser performance that it could have.

Trend Tracking as opposed to market timing attempts to be a conservative long-term approach with its main goal being the avoidance of a bear market. It has nothing to do with rapid trading but everything with using some common sense to better deal with the irrationalities of the market place.

Global Investing: Eastern Europe – Part II

Ulli Uncategorized Contact

A couple of days ago, I posted about investments in Eastern Europe and especially focused on EUROX, which had performed extremely well in the past.

In reviewing the chart again, I need to point out that there is another important lesson to be learned when looking at the comparison with FEZ and EFA. Here’s the graph again:

As you can see, during the market meltdown of May/June 2006, EUROX pulled back sharply, recovered, dropped again and is now just about on even par in regards to performance (for this 2-year period) with FEZ and EFA.

If you had applied a trailing sell stop, as I recommend, you would have been stopped out at a great profit somewhere in the area of the arrow (May 06), which was the time when we liquidated most of our positions. It is important to take profits from a fund that has had a great upside but is also subject to heart stopping drops.

As the market recovered further, EUROX has remained fairly flat since September 06 and has bounced around the unchanged line without offering further upside momentum.

Sunday Musings: How (Not) To Read An Investment Book

Ulli Uncategorized 1 Comment

I used to feel guilty. There I had bought this new business/investment book I was looking forward to reading when, somewhere half way through, my fascination waned. I then either forced myself to finish it (with regret and lack of interest) or I shelved it and never picked it up again.

I believe it was one of my favorite authors, Robert Ringer, who said that, if a book can’t hold your fascination, it’s not your fault, but the author’s. Whoa! That opened my eyes, and I realized that in today’s world of instant do-it-yourself publishing, many books come on the market that may have material for a chapter but not enough to fill some 200 pages.

Looking at any book from this kind of viewpoint, I have read a number of them where the author totally strayed from his theme and went off on some tangent that really had nothing to do with my reasons for buying the book in the first place.

For a couple of years now, I have read a new book every week (which is my goal). Most of them are business and marketing related and some deal with investments. For all of them, I now apply a strict rule. I bought the book, because I am interested in the subject based on the reviews I’ve read. If the author can’t hold my interest and “loses” me along the way, I have no problem putting the book down and going on to the next one. No more guilt feelings!

There is so much to be gained by reading good content that is of interest and value. It has greatly broadened my horizon but I refuse to waste my time and be stuck with books that either don’t fulfill their promise or could have been written in a couple of chapters.

I’m trying to improve my reading skills to work my way faster through more material. If you have had any experience with speed reading courses, good or bad, please share them with me.

Eastern Europe: A Rising Star?

Ulli Uncategorized Contact

I’ve come across several articles with somewhat different views about the Eastern European emerging markets and how to invest in them. Some of the countries I am talking about are Russia, Poland, Czech Republic, Hungary, Turkey and others.

Random Roger, in a recent post, had a cautious warning about a possible crisis in Hungary, Kazakhstan, Russia, Ukraine and Estonia because of how they borrowed money while Morningstar’s piece is more focused on the best way to invest in Europe.

There is no denying that one of the top funds over the past few years in this emerging arena has been EUROX.

However, it hasn’t always been a smooth ride and the sharp up and down moves can certainly cause you some sleepless nights. To demonstrate, I have plotted EUROX vs. FEZ (DJ Euro Stoxx 50) and EFA (MSCI EAFE) Index in the chart below:

It clearly shows the tremendous difference in volatility, especially when you look at a period of a severe market pullback, which we witnessed during May/June 2006. Obviously, with the subsequent rebound, this fund recovered almost with the same speed as it went down. My point is that EUROX is not for the faint of heart and an exit strategy is an absolute must.

My preference is to use a more conservative approach by being exposed to Europe in general via FEZ (and others) and in larger sense EFA (we have small positions in both, but none in EUROX). While at times it has been profitable to invest in single “Western” European Country funds, I have not done so on the “Eastern” side.

For one, I believe they are too risky at this time and more prone to a severe fall should the overall markets decline. I’m sure there will be more opportunities in the future as ETFS for Eastern Europe are being developed with Russia (RSX) being the new kid on the block.

As always, once they are available, I will track prices first so that I can establish a trend before committing actual dollars.