One of the terms you hear frequently when reading about commodity ETFs, is the word “contango.”
To enhance your understanding of what it means and how it affects ETFs, here are some highlights from “Contango and ETFs: What It Is, What You Can Do About It:”
Investors love commodity exchange traded funds (ETFs), and with good reason. Aside from the usual benefits that ETFs offer, commodity funds deliver
While I don’t agree very often with Paul Farrell, he did have some interesting thoughts in “Market Crash 2011: It will hit by Christmas.” Here are a few highlights:
Our brains never learned 2008’s lessons, will fail again in 2011
Remember, we can’t help it. Our brains are defective, biased, manipulated by unseen forces 93% of the time. So blame all the lies, lying and liars on our brain wiring. A perfect excuse. Sure, political dogma and insatiable greed factor into our bizarre mental equations. But your brain is as susceptible to the “great con” as Ben Bernanke, Henry Paulson, Bernie Madoff.
Several readers have emailed wanting me to talk about bond funds/ETFs in this current market environment. Here’s one request:
Would you please share your thoughts on investing in bond funds/ETFs? Several articles talk about the possibility of raising interest rates resulting in a drop in bond prices.
Would you recommend keeping the bond portion of the portfolio in money market or CDs?
I realize that you do not talk about bonds much. So, I will not be surprised if you do not want to respond to this.
My latest No Load Fund/ETF Tracker has been posted at:
http://www.successful-investment.com/newsletter-archive.php
The unrest in Libya took a toll on the markets with major indexes declining 2% for the week.
Our Trend Tracking Index (TTI) for domestic funds/ETFs has moved above its trend line (red) by +5.58% (last week +6.01%) and remains in bullish mode.
As was to be expected, the markets continued to face some headwinds yesterday in the form of HP’s poor quarterly results and continuing civil unrest in Libya.
The day could have been a lot worse, but the S&P; 500 found support mid-day at the psychologically important 1,300 level, rebounded and managed to cut into its losses.
Crude oil was the big story of the day as it touched $100/barrel before settling at $98.10. Gold headed higher as well joined by the energy complex and commodities.
The turmoil in Libya continued as the country’s oil production was shut down and exports were halted. Speculation grew that crude could hit $220/barrel, which would cause economic turmoil around the globe.
The fallout from Libya was great for the oil and energy sector, but there is certainly more to come that will affect global stock markets. Whether this will be the beginning of the end of the current bull cycle is anyone’s guess at this point.
So far, with the S&P; 500 having lost 2.7% over the past 2 days, this correction can only be considered modest. Time will tell if this pullback will serve as a new springboard for higher prices, or if we’ve seen the highs for some time to come.
All weekend long, the Libyan uprising had been gaining steam and made front page news, especially after the turmoil turned bloody, which spread concerns of this becoming an all-out civil war.
The futures pointed to a lower opening Monday night, and the markets obliged by heading south during yesterday’s session with the S&P; 500 losing over 2%.
The markets were ripe and overdue for some kind of correction so these events were just as good of a reason as any to push some sell buttons. The question remains if this will be an isolated event or the beginning of more downside action.
Chaos and concerns increased as dictator Gadhafi talked about “rivers of blood flowing” while deploying tanks, helicopters and jet fighters to combat protesters.
As is to be expected, oil rallied, as did gold and silver, while interest rates headed lower as investors were looking for safety.
On the earnings front, Wal-Mart and B&N; disappointed, while HP offered lower than expected guidance after the close, which may affect the markets today.
Technically speaking, the S&P;’s 1,316 level, its 20-day moving average, had been closely watched to see if it would hold. Any close below might invite more selling. At the end of trading yesterday, this index ended up at 1,315.
Until the situation in Libya calms down, or a peaceful resolution is found, you can expect more volatility in the world markets.
These events are some of the unknown uncertainties I have been talking about. There is nothing you can do; you need to let the markets dictate your next move. If the break is further to the downside, make sure you know where your sell stops should be and execute them as necessary.