As you have seen in the last 2 weekly issues, the StatSheet has been expanded to contain more momentum data, which is now presented in PDF format. This allows me to more easily add new ETFs from the ever increasing menu of choices and enables you to better print out only those areas you’re interested in.

Here are some of the latest changes:

1. The New Venture funds have been included in the Sector ETF section, which now features 197 ETFs. You will note that many are fairly new and have not yet been around long enough to show momentum figures for all time periods. However, I think it’s worthwhile to have them included to see how they develop.

Additionally, many new health care ETFs have been added. It’s is amazing how much they have been sliced and diced into mini sectors. Same here; while they should not be used as an investment at this time due to lack of historical data, they will hopefully be of value in the future.

2. The bear market fund/ETF listings have been expanded to include 31 funds

3. The domestic ETF listings are now featuring 201 funds

4. In case you are interested in income ETFs, a new section called “Bond and Dividend ETFs” has been added.

5. If you like to get the big picture of the ETF world, the Master ETF list has now been increased to show 497 ETFs. That means our StatSheet currently features every worthwhile ETF available.

To keep the same consistency throughout, the sorting order for all tables remains at ‘4-wk.’ I am contemplating other changes as more investment products become available.

Selecting individual country funds for your portfolio can be a challenge due to the above average volatility. Additionally, you’ll never know when one country’s bull market run suddenly peters out while another one continues to scale to new highs.

A better and more conservative way is to use an ETF which covers an entire region such as emerging markets (EEM). While you’re spreading your dollars over a larger area and limiting your gains, you’re also reducing your risk considerably.

For example, everybody would have liked to be participating in the China bull market last year, but many missed that boat including me. Not that I didn’t see the strong momentum numbers develop, I just didn’t like the risk.

But there are still ways to participate more conservatively in regions with great current and future promise called the BRIC countries (Brazil, Russia, India and China). While you can buy an individual country ETF for each of those, you can also buy the entire BRIC community with one ETF called EEB.

Take a look at the following 6-months chart, which shows the EEB performance compared to all other BRIC members:



The advantage of using EEB vs. individual ETFs becomes clear as we’re dealing here with countries of extreme volatility. Leading the pack, you have Brazil (EWZ) as the top performer smoothing out a sub par performance by India (IFN) while Russia (RSX) and China (FXI) are sitting below EEB performance wise.

This is not meant to be a green light for you to jump in with your portfolio, it merely points out another investment option that you may not have been aware of.

I currently have no invested position in the BRIC region but that may change in the future.

Reader Nitin pointed to an article in the NYT called “The Crowd Is Restless, but Maybe That’s a Good Sign.”

It deals with contrarian analysis, which simply means that historically the tendency for investors is to be wrong at major turning points. Market tops are reached when there are very few bears left and therefore no money is available on the sidelines to push the market higher.

Conversely, the same happens at the bottom when every bull has thrown in the towel and there is not much selling pressure left. Contrarians follow this approach by focusing on sentiment among investment newsletter editors, who allegedly represent the mood of the average investor.

How can that be?

Very simple. The problem with most newsletter writers is that their views and recommendations are based on their personal “predictions” (some of them short-term) of where the market might be headed. They in essence react as a bunch emotionally no different than the individual investor. The Hulbert Financial Digest has found that the stock market performs better on average after periods when newsletters are bearish rather than when they were bullish.

He argues that currently, the average newsletter editor recommends only a 30.2% allocation to stocks and the balance in cash. This is in contrast to November last year when the Dow was 8% lower, but newsletter editors as groups were recommending an equity exposure of 70.8%. If the theory holds true, the current bull market.

While this maybe interesting, it is not a reliable indicator for use in making buy and sell decisions. Hulbert admits that much and cites several examples. Based on that, it becomes clear that most newsletter advice that is based on predictions is faulty when it counts most.

For example, in early February 2001, the record high bullish sentiment reading was 79.7% after about 1 year into the bear market. Contrarians, who took that as a sell point, were rewarded because the Dow ended up dropping another 33% before the bear ran out of breath. Of course, our Trend Tracking method had us on the sidelines as of October 13, 2000 without having to guess sentiment or making any predictions.

My point is that most newsletters that are based on anything other than tracking cold hard numbers may work well in bull markets, but they’re useless when the bear rears its ugly head.

A couple of days ago, I posted about a reader’s question regarding SMAs (Separately Managed Accounts).

You may recall that the reader also said that “Last time I had a SMA with that broker they made it so difficult to close it. I am now afraid of opening another one with them.”

Huh?

Unfortunately, this is nothing I haven’t heard before and it happens from time to time. There seems to be some confusion within some investment firms as to who owns the money that is under their trust. They treat the customer with utmost disrespect and use some intimidation by either making it difficult to close an account or delay transferring it to another custodian.

From my experience of having transferred assets over the past 20 years, firms with this uncooperative attitude are in a minority, however, they still exist. One of my clients had a recent experience with Genworth Insurance that, as he described, made it almost impossible to withdraw money from his account.

The final transfer of assets to my custodian took a long time in addition to my client having to call, sign and notarize documents (special seal was required). They finally found him worthy of receiving his own money and finalized the transfer.

If this has happened to you, don’t accept that type of harassment. It’s your money and you are in charge! Call them up, read them the riot act and threaten to contact the regulatory authorities. This industry is tightly regulated and no one wants to be another pot of gold in the hands of the Attorney General.

Today’s heading “Why Business People Speak Like Idiots” is actually the title of one of my favorite books written by authors Fugere, Hardaway and Warshawsky.

It’s a fabulous effort of unearthing the stupidity and ignorance that goes on in meetings, during Power Point presentations and general communications in corporate America. Bloated jargon and monotonous memos contribute to the official language of business: Epidemic bull.

I can promise you that reading this book will change you forever in that you will look at every meeting or deadly dull presentation in a different light. Here is one calorie of empty business communication you might have heard at your workplace:

“This is just the kind of synergistic, customer-centric, upsell-driven, churn-reducing, outside the box, customizable, strategically tactical, best-of-breed, seamlessly integrated, multi-channel thought leadership that will help our clients track true north. Let’s fly this up the flagpole and see where the pushback is.”

The author’s cite many examples of ignorant executives simply stringing together a bunch of big words to make small points or no points at all. Some have figured out that when they don’t have a strategy, just play the word game. Here’s an excerpt by a CEO of a Fortune 500 company who sent an internal memo to his employees:

“… Resources will be targeted at the areas of highest potential for our entire business. We will strip complexity from our operations and enhance efficiency. As we become faster, more innovative and more responsive, we will strengthen our relationship with our customers. You will, I am sure, appreciate how integration will enable us to create more growth in North America through a better go-to market strategy that will benefit our customers, employees and system. By simplifying our business structure and focusing on (selected) channels, we will make it easier for our customers to deal with us…”

Sometimes businesses have a hard time delivering a tough message for, say, global workforce reduction of 20%. Then you might find a memo by the CEO like this:

“We are announcing today a series of necessary restructuring steps that are critical to the future of Warner Music Group…All of these steps are based on a careful and thorough analysis of all aspects of WMG’s needs and operations, undertaken in close collaboration with the company’s senior management over the past few months. It is of utmost importance that we make the necessary changes as quickly as possible so that WMG can begin to move ahead with increased strength and confidence as a more competitive, agile and efficient organization.”

The book goes on citing one moronic story after another. The stuff they uncovered is simply hilarious and reading it is very enlightening to say the least. In all fairness to corporate tycoons, there some examples of great communications shown as well, unfortunately, they are in minority.

If you have encountered similar stories, feel free to share them with me.

The brokerage industry is always inventing new products and then touting the incredible benefits to you, the individual investor.

One such product has created some confusion for one of my readers, who wrote as follows:

“I thank you for your postings about how mutual funds will not protect us in bear markets. They will go with their mandate of sticking to their style and losing money.

This is a good insight for me— though it might look obvious to you.

I was recently persuaded by a brokerage firm to open Separately Managed Accounts – for large cap, small cap and international. The brokerage firm touted the advantages of SMAs.

It stuck me that SMAs fall into the same trap as the mutual funds in regards to bear market protection. Am I thinking right or not?

Last time I had a SMA with them, they made it so difficult to close it. I am now afraid of opening another one with them.

You should write a brief note about the perils of SMA. Though it may be obvious to you, it is not obvious to me.

Please do not use my name in case you choose to write an article about it.”

Okay, first things first. If you are afraid of opening another SMA, don’t! As I have always stated, the comfort level of the investor is most important. If there is not match with the intended investment or method, find a different one. After all, whichever you select, it should be for the long term and that will only work if you and your advisor’s philosophies are aligned.

Even though SMAs have been around for a long time, most people are not familiar with them. To get a better understanding, here’s one definition I read:

“When you invest in an SMA, you own individual securities (unlike a mutual fund investor, who owns shares of the entire fund). Though SMAs have set investment styles or strategies, you have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of separately managed accounts, your account is “separate” and distinct from all others.”

I really did not make this up; this is from a major firm promoting these products. This description tells you exactly what any fee based advisor (depending on his specialty) will do for you as well. There’s nothing new here; it’s the same pig, but with a different lipstick.

Of course, nowhere in the material does it state any real benefits to you as the investor, like what is the strategy during a bear market. How will the portfolio manager adjust? Or is it up to you to tell him you want out?

When a product like this is being touted because of the ‘incredible growth’ it has experienced, you can be sure that there is some benefit for the transaction hungry, commission motivated Wall Street crowd that most likely outweighs the benefits you are receiving. It’s the way the game is played.