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

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

Sharp downside action caused by a weak payroll report pulled all major indexes lower, but the current Buy signals were not affected.

Our Trend Tracking Index (TTI) for domestic funds/ETFs moved lower to +2.91% above its long-term trend line (red) as the chart below shows:



The international index also remained +0.60% above its own trend line, keeping us still on the positive side.

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

Tom Lydon from ETF Trends had a blurb about the increased usage of ETFs by RIAs (Registered Investment Advisors).

He says that the fastest growing advisor segment are those advisors with affiliations for providing fee-based advice. The trend towards independent fee advice continues to grow exponentially and RIAs are catching on to the ETF advantage.

I have written about the fee-based benefits as opposed to dealing with a sales person peddling preferred company products before, so this is no surprise. In my own practice, I have too increasingly used ETF products, but only when appropriate.

There are some advisors who have totally dropped no load mutual funds from their menu of investment choices, but I think that is a mistake. There are times when no load funds are better performers, and there are investment areas where you are better of using ETFs. Of course, you can only evaluate that if you actually rank both to see which performs better in a given environment.

After all, it’s nothing but performance that will get us to our financial goals and not the vehicle.

Continued bad housing news, and lingering credit problems along with dimmed hopes for an interest rate cut, pulled the major market indexes lower. Our Trend Tracking Indexes (TTIs) retreated as well but are remaining above their respective trend lines as follows:

Domestic TTI: +3.34%
International TTI: +1.59%

Today, I ventured back into broadly diversified international funds, as announced yesterday. Because of the proximity of the International TTI to its trend line, I will use the 7% sell stop point of my new fund holding as my exit strategy. This will allow me to give the market some room to move and will hopefully avoid a whip-saw signal in case the International TTI heads south again.

I will keep you posted as to any changes.

With Wall Street’s big guns having returned from their summer vacations, it was time again to push the buy and sell buttons. Today, despite low volume and short covering, the sentiment was bullish.

Our Trend Tracking Indexes (TTIs) are now positioned in regards to their long term trend lines as follows:

Domestic TTI: +3.65%
International TTI: +2.51%

I can no longer ignore the fact that the international TTI has now moved solidly above the line so, effective tomorrow, Wednesday, I will move back into that market. Depending on portfolio size, I will use an allocation to broadly diversified international funds/ETFs of anywhere from 15% to 30%.

As always, I will set my trailing sell stop at 7%.

You may think that investing in the wide variety of ETFs available like iShares, HOLDRs, SPDRs and others is all the same, but there are differences which can affect you long term.

It may not matter to you if you manage your own money, because you will find out any limitations as you place your order. For example, you can buy any odd number of shares when investing in iShares or SPDRs, but you can’t purchase odd lot shares (less than 100) when using HOLDRs. It has to be a minimum of 100 shares or a multiple thereof.

A problem can occur when you are using an investment manager. How?

He will usually purchase shares based on a percentage allocation of your portfolio. To start, he will place a block trade to purchase a total number of shares for all of his clients that he wants to be invested in a particular HOLDR ETF. He then allocates as per percentages. For example, from the block trade he decides to allocate 10% of portfolio value to your account. Let’s say that represents 187 shares. No problem there.

Let’s assume that you leave this investment manager to continue handling your own investments. One day you decide to sell the 187 shares of the HOLDR ETF. Unfortunately, you will find out that you can’t. To be clear, you can sell 100 shares, but since odd lots are not allowed you will be stuck with the remaining 87 shares.

How do you get around this? Be sure to have your investment manager liquidate any HOLDR ETFs in your portfolio before you depart. He will want to do that anyway, because otherwise, he will be stuck with an odd number.

It pays to know the rules to avoid any unpleasant surprises.

Recently, MarketWatch featured a story titled “Muni bond funds hit by perfect storm.” There is no better way to describe that during August’s credit crisis all income investments along with tax free muni funds were affected.

The sudden rise in yields caused many large and well known muni bond funds (and CEFs) to drop in price and become another fallout victim of the subprime debacle. Contributing to that down turn was the fact that some Hedge funds engaged in a strategy called muni arbitrage during which the traders try to take advantage of price differences between muni bonds and other type of debt such as Treasuries and corporate bonds.

While that in itself may not have created too much of a problem as prices went against the traders, using leverage was again the culprit that magnified the negative outcome. It’s too early to tell if there is more bad news to hit this sector.

While income investments are designed to be held long-term, there is a point when action needs to be taken if prices slip too much. Why? Because you simply don’t know if a turn around is on the immediate horizon or if prices will continue to deteriorate.

For my clients (and for myself), I liquidated those positions that had performed the worst and kept those that had held up reasonably well. While this puts us in larger cash position than I would like, I feel that prudence is more important than feeling like you’re living on the edge. We may jump back in if those markets calm down.

My point is that market volatility has now also spread to conservative income investments. This means that there is virtually no investment orientation, other than cash, that is immune from sharp price changes caused by unpredictable and uncontrollable factors.

I think Al Thomas was the one who recently said that “sometimes it is better to be out of the market wishing you were in than being in the market wishing you were out.” Truly words of wisdom.