No Load Fund/ETF Investing: Conquering 5 IRA Myths

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While IRAs are important financial instruments to save and invest on a tax-deferred basis in order to grow your retirement dollars, there are many intricacies that you may not be aware of.

While most of them may not be crucial to you at this time, there are 5 myths that might help you as you travel the road to retirement.

You can read the details at the Motley Fool at:

Good Economic News: Can They Be Bad For Your Portfolio?

Ulli Uncategorized 2 Comments

After the economy has been given the death sentence on several occasions, out come Friday’s jobs numbers. While they are only one set of figures in the big puzzle, they were strong nevertheless.

The Labor Department said that some 180,000 jobs were added in March (168,000 were expected) and the jobless rate fell from 4.5% to 4.4%.

The bad news is that Wall Street has been living the dream that interest rates should be lowered at anytime. Strong economic numbers like these certainly won’t support the wishes of the traders.

The final reaction as to the interpretation will come Monday morning when Wall Street’s button pushers return to their electronic trading desks ready to put their well rested thumbs to good use.

There’s no sense in trying to figure out whether they will favor the Buy or Sell buttons. My wild guess is that the bias will be towards the downside—at least temporarily.

No Load Fund/ETF Tracker updated through 4/6/2007

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

Upward momentum pushed all major market indexes higher.

Our Trend Tracking Index (TTI) for domestic funds moved higher as well and now sits +4.58% above its long-term trend line (red) as the chart below shows:

The international index rallied as well and has now moved to +9.10% 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 Many No Load Funds/ETFs Should You Have In Your Portfolio?

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Recently, I was asked by a reader of my newsletter about my opinion on a variety of no load funds and ETFs he was considering for his portfolio.

It turned out that, as a beginning investor, he had a fairly small IRA (around $20k). He had planned on investing this money in some 10-12 no load funds and ETFs.


In my advisor practice, I have the opportunity of reviewing a lot of existing portfolios of new clients as they come aboard. Over the years, I have noticed that many investors do a good job of selecting well performing funds, but they fail in two areas:

1. They fall in love with their investments and forget to sell (however, that’s another story) and

2. They buy too many funds/ETFs for the size of their portfolio.

While there is no ideal number as to how many funds/ETFs a portfolio should contain, it depends on the type of portfolio. The above investor, with his $20k IRA, should be in 1-2 funds/ETFs if he’s investing for growth. Given current market conditions, that would translate to 1 domestic fund/ETF and 1 international fund/ETF.

A typical growth portfolio of $100k in today’s market would have about 3-4 domestic funds/ETFs, 1-2 international funds/ETFs, about 2-4 sector ETFs and maybe 1-2 country ETFs, where sector and country allocations are about 5% each of portfolio value.

If I invest that same $100k for income only, I diversify more by selecting about 8 different income CEFs (Closed End Funds are my preference) since they each react differently to changes in interest rates.

How about a $500k growth portfolio? It’s not that much different from the $100k portfolio, only the holdings are larger. I may add 1 to 2 more funds, depending on market conditions, but it certainly would not contain 5 times as many holdings.

When you invest in no load funds and ETFs, select your holdings carefully, but don’t over-diversify, especially with a small account.

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

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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.