Not too long ago, I read Brian Tracy’s book “Something for Nothing,” which deals with an emotional, economic and sociological epidemic which is sweeping across America and the world today.

Tracy argues that this phenomenon destroys individuals, undermines societies while at the same time threatens the future of civilization. The epidemic he refers to is rooted in the out-of-control and insatiable demands of thousands and millions of people trying to get “something for nothing.”

His main argument is that our country’s greatness is based on honesty, integrity and fair dealing. However, today these principals are undermined by people attempting to take rewards they have not earned and riches they do not deserve from other people.

Tracy proves that this is not, nor has it ever been, the American way. While he zeros in on the problem, he helps the reader set a personal and culture-wide agenda for change in our nation.

It’s a well written book and, while you may not agree with every assessment, I found myself stimulated to think about the problems he addresses, which made it a worthwhile read for me.

MarketWatch had an interesting story called “Sell All Your Mutual Funds!” It featured one of America’s biggest financial advisors telling his clients about “the lies that are placing your financial security in jeopardy.”

Apparently his new book uncovers some of the ways investors are being taken advantage of, and he uses no uncertain terms. While I have not read the book, I have for years fought with a variety of mutual fund companies about stupid policies designed to protect the firm but leave the investor holding the empty bag.

But should you really sell all of your mutual funds? To me, it’s a “depends” kind of question. If you are a Buy & Hope investor, then you should not pay year after year the fund expenses and remain in an underperforming fund, just because “you have been with them such a long time.” Unfortunately, that’s what many people do, which is one of the reasons for the above book promoting the sale of all mutual funds.

However, in my advisor practice, I still use both, no load funds and ETFs. To me it’s a performance issue and nothing else. When using our trend tracking approach, we try to be in the top performers according to a client’s risk tolerance. That means that we will not be in the same fund or ETF for many years, but only during those periods when the markets are in an up trend.

So, who cares if a fund has higher expense ratio as long as it performs well. Are there funds right now that are performing better than ETFs? Sure, my data base shows that, as of yesterday, the highest M-Index ranking for domestic ETFs was 14, while there were 9 no load funds that ranked higher.

For example, the top no load fund (in the domestic arena), according to my ranking, is WLGYX, in which we have a large position. There currently is no ETF that even comes close.

I am sure that the annual expense ratio is probably twice that of the nearest ETF. So what? I am in this fund for as long as the cycle lasts, the performance remains, and then I will get out. Viewing expenses in direct relationship to performance over a limited time will give you the best of both worlds.

There is no need to clutter your mind deliberating whether ETFs are better than mutual funds; use the tool that’s most appropriate at that point in time you are planning to invest.

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

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

A good rebound based on selective good earnings and anticipation of another interest rate cut next week had the major indexes gaining solidly.

Our Trend Tracking Index (TTI) for domestic funds/ETFs has moved to +6.73% above its long-term trend line (red) as the chart below shows:



The international index followed the market higher and remains +4.28% above its own trend line, keeping us on the buy side.



For more details, and the latest market commentary, as well as the updated No load Fund/ETF StatSheet, please see the above link.

How much more leverage do you need? Apparently more than you have now. At least ProFunds seems to think so according to a MarketWatch article called “Over the Borderline.”

A few days ago, ProFund introduced 2 new funds, UBPIX and UFPIX. The first one, UBPIX, is an UltraLatin America fund designed to earn twice the upside of the New York Latin America 35 ARD Index. If you’ve held regular funds/ETfs with Latin American exposure, you know how fast these can move to the upside or downside. Adding 200% leverage, will add some volatility that should make any gambler jump with joy.

While this will work for some, I don’t think it will be a good idea for the faint of heart. It’s a new twist to supercharge returns in that area but, eventually, when these markets come back to reality, your portfolio will go down faster than free beer. Even using a trailing sell stop might not help since the leveraged move to then downside can be so fast and furious that your 10% stop might turn into a 20% one, or worse.

If this is too much action for you, then you might look at ProFunds’ other new offering, UFPIX, which is designed to reflect twice the downside movement of the Latin America 35 ARD Index. In other words it’s just the opposite. However, since markets tend to go down faster than they go up, this one maybe the tamer of the two.

In my advisor practice, I prefer not using any leverage, which is why I currently have no exposure to either of the above funds.

Two days of rebounding action pushed the major indexes higher and instilled some confidence that maybe some support can be found at these levels. Of course, it’s still anybody’s guess if this is just a dead cat bounce.

Below please find the link to the most recent ETF Master list, which has been updated with yesterday’s closing prices. This will enable you to work with more recent data. You can download the file at:

http://www.successful-investment.com/SSTables/ETFMaster102307.pdf

Our Trend Tracking Indexes (TTIs) recovered from last week’s drubbing and still remain in bullish territory with the domestic and international TTI having moved above their long term trend lines by +6.13% and +3.17% respectively.

In view of last week’s market decline, reader Govind pointed to an article reviewing some of the historical market corrections.

Ranging from the precious metals crash in 1980, the emerging markets debt crisis in 1998 to the dot-com bust and currently the subprime mortgage and housing debacle, the underlying theme seems to be the same: Crashes and bear markets are part of history and will be with us in the future. This is not a prediction on my part; it’s pretty much a built-in economic mechanism which rears its ugly head every so often. As the article correctly stated “Rotating bubbles are the nature of capitalism.”

In other words, you need to come to grips with the fact that these events occur randomly and those who aim to predict are more likely to be wrong than right as I posted about on Saturday.

Since these bubbles, or the deflation of them, can’t be anticipated, having an alternative plan to deal with them is paramount. The only way I have found over the past 25 years is use a combination of trend tracking and trailing stop losses to protect your capital during times of uncertainty. While this approach is not designed to avoid any 3% hiccup in the market, it will keep you away from the devastating blows that have pushed portfolios to 50% and 60% losses.

If you heard me say this before, you are right; it’s the most crucial part of an investment strategy and far more important than being exposed to the latest and greatest fund or ETF.

The events of last week have shown again that we are playing global game and that there are no safe havens. In view of that fact, you can do the next best thing: Give your portfolio a little room to move within a certain range; if that range is violated on the downside, get out!