ETFs have been one of the great additions to the investment arena over the past few years. In my advisor practice, I use them along with no load mutual funds to construct our trend tracking portfolios.

However, new ETFs are being introduced at an alarming rate. This year, almost 100 new ones have been brought to the market. It’s getting to a point where every sector gets sliced and diced into more micro sectors.

Some of these new micro ETFs are small, have low volume and are extremely volatile. In other words, investing in some of them will be no different than you placing bets in Las Vegas, except you are saving on the travel costs.

Morningstar just came out with an article on the subject called “Fund Frenzy: ETFs Out Of Control.” You can read the entire story at:

http://articles.moneycentral.msn.com/Investing/Morningstar/FundFrenzyETFsOutOfControl.aspx

Just because there are hundreds of ETFs available, which are all competing for your investment dollars, doesn’t mean they are right for you. Use common sense and the same guidelines you would when selecting a no load mutual fund.

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:

http://www.fool.com/personal-finance/general/2007/04/07/5-ira-myths.aspx

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.

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

http://www.successful-investment.com/newsletter-archive.php

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:

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.

Whoa!

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.

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: