It's likely you've got at least a gift card or two in your possession you have no intention of using. I had read an article in Money Magazine highlighting that 49% of Americans have at least 1 unused gift card and the average number cards those people have is 3.7. Given that a typical card is generally denominated in at least $50 increments, .5*$50*3.7 = $93 per person in America with a useless card(s). At the bottom of the article, it highlighted a site whereby sellers and buyers can match up and for a small spread, you can sell your useless cards. Buyers can benefit by picking up the value of a vendor they'd like to shop at for a discount.

PlasticJungle.com - I previously had a $100 Dell gift card that came with my computer that I didn't intend on using. I was able to get $91 for it, which is better than the alternative of buying something from Dell I didn't need or letting the card sit around rotting (and perhaps get lost). In looking at what kind of savings I could get from other retailers from either trading my cards or just outright buying cards when I anticipate large purchases, it's evident I could easily get 5-15% from major retailers.

Check out this search for my favorite home stores Home Depot and Lowes. The site allows you to either check off retailers or sort by discount amount and it automatically sorts from best to worst discount. I'm actually thinking about picking up a few hundred in home store cards since we have a few projects coming up. Why pay full price when I know I'm going to be shopping at one of these stores anyway?



If you're worried about being ripped off, PJ guarantees the card purchases and sales and seeks to resolve all disputes within 2 weeks. Check out PlasticJungle.com for further information.





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Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs (and ETNs) out there (check out this ETF Ticker List full of ~800 - every exchange traded fund I could find) and give investors some new investing/diversification ideas. Last week, it was short emerging markets and natural gas taking the lionshare of gains. I made sure to include both conventional and leveraged ETFs in this week's hot list:

Hot List Leveraged ETFs

LHB - Latin America Bear 3X - Up 13% - With Latin American ETF so heavily vested in hard commodities and the weak dollar trend reversing so rapidly, it wasn't a good week for hard asset-related regions to say the least.

DRN - Direxion Daily Real Estate 3x - Up 5% - This 3X Return Real Estate Fund was up 5% last week, in a roughly flat week for US equities at large. DRN has been very strong since launch, up 120% since mid-July, but note that ETFs are often launched when the underlying sector is hot. Imagine how this one would have performed in 2008.

Hot List - Sector ETFs (no leverage)

UNG - US Natural Gas Fund - Up 11% - Aside from the fact that it was a cold week and the news was saturated with a large winter storm in the Northeast, there was a weekly drop in the inventory report which helped boost shares of this Natural Gas ETF. Note that this is a reversal from a long downward trend, whereby UNG is down over 50% YTD.

SGG - iPath DJ AIG Sugar TR Sub-Idx ETN - Up 8% - Trading in a sugar ETN (exchange traded note which has some different properties than ETFs that you'd want to research further) is probably best suited to those with industry knowledge, but there is such a niche ETN available to retail investors nonetheless. Sugar moves at the whims of India's production output, the indirect relationship with Brazil's sugarcane and weather all over the globe. Year to date, SGG has returned 81% vs. a 25% gain for the S&P500. For broader commodity representation, consider the the Greenhaven Continuous Commodity index ETF GCC, which holds sugar along with several other commodities. Note however, that SGG has routinely outperformed in recent history.

MES - Market Vectors Gulf States ETF - Up 8% - The gulf states fared well with an up week for oil (USO up 3.3% on the week). MES has suffered considerably recently given the economic malaise in Dubai which has implications for the entire region. While the ETF had kept up with US equities for most of the year, shares have declined considerably in the month, down 8% vs. a marginal gain of 1% on the S&P500.


MES Top 10 Holdings are:

Agility
Commercial Bank of Kuwait SAK
DP World Ltd
Emaar Properties PJSC
Kuwait Finance House KSC
Mobile Telecommunications Company KSC
National Bank of Abu Dhabi
National Bank of Kuwait
Natl Inds Grp Hldg
Qatar National Bank SAQ

So, What's Working?

While leveraged ETFs appear to work if you cherry-pick the right timeframe, they're not a "prudent" investment, but rather, a trade due to the loss of value over time from daily rebalancing. Of late, there are a few ETFs that are routinely exceeding returns of the S&P500 as outlined in this Niche ETF article outlining 5 such investments, as well as this Spinoff ETF that has completely trounced the indices.

Disclosure: No positions in any ETFs covered.

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I was doing some Christmas shopping for the wife this weekend (since she has no interest in my blog, I'm not worried about giving away any gift secrets) and stopped in a Borders to check out some books. In past years, the status quo would have been for me to identify some books I think she'd enjoy, check out and that would be that. This year, being the year of the smart phone - I have an iPhone with both a ShopSavvy App (free App that allows you to scan UPC bars and get an immediate price comparison on the web) and the Amazon App.

I was amazed to see the obnoxious premium that brick and mortars retailers carry on their books. Cooking books are quite expensive for instance. I was able to the same hardcover books at Amazon for 19 and 21 bucks vs. over 30 in the store. The store version even gave the "appearance" that the books were discounted by putting a new label on the back with a new price. Get real - this was over a 30% premium compared to online options. I identified a couple books for myself for vacation reading as well, and before I knew it, I would have been looking at a $120 bill plus tax. What I ended up doing was entering each of them into my Amazon App, quickly dropping them into the cart and just simply checked out - all in the matter of minutes. There wasn't a single book of the 6 that was even close in price. While I did pay shipping through Amazon, there was NO TAX! So, that piece was a wash - I traded shipping for Tax. I paid ~80 vs. ~120 in store. Not too bad.

While you can save money at Borders on a single trip when you sign up for the Borders Book club, you don't get a % discount for subsequent trips - they just send coupons in the mail for occasional use in the future.

So, that brings us back to the Question:

Why Would you EVER Buy a Book from a Bookstore for 30% Premium?

I believe the answer lies in one of the following 3 realities:

1) Lack of information - without a price comparison tool at your fingertips, many people (including myself during that shopping trip) impulse shop and don't know what competitors are charging at the time of purchase.

2) Lack of Preparation - Notice that I shopped well ahead of Christmas. The books I ordered from Amazon have already shipped and will arrive well ahead of schedule. When you delay, you pay. That's the truth. People pay for convenience all the time and end up paying substantially more as a result. If I had waited until Dec. 23 to shop, I would have had no choice but to buy the books at Borders and bring them home for a 30% premium.

3) Apathy - Many people just don't really care what they pay (within reason). Often times, people know they're paying more for something, but they're too lazy or apathetic to put forth the effort to do anything about it - they don't have good money habits. I'm sure there were dozens of people there that day that walked out of the store with books that had their smartphones on them. They just wanted to go home with a book that day and didn't want to be bothered. I'm guilty of this within reason (i.e. I won't drive across town to save 1 cent per gallon on cheaper gas), and everyone's got their threshold. For me, 40 bucks or so was well worth it.

If you already know what you want, you could always just go right to Amazon and pick up an awesome book like SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance instead and save yourself the trip. I don't know of another online retailer that can routinely beat their pricing and service for books.

Would You Still Buy In-Store After Reading This?


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With 2009 seeing a turbulent year from the continuation of a market selloff from 2008 to complete investor capitulation in March to an unprecedented 65% runup from the pivot low, you'd expect to see the leveraged ETFs on this list since volatility erodes their value considerably and to add insult to injury, there are 8 New Leverage ETFs on their way at this time. Therefore, I've included only a few from that genre, then included some conventional sector funds as well. If you held on to any of these dogs for the full year, it's time to ask yourself whether buy and hold is right for you and whether any of these were actually suitable "investments" (very few would agree that leveraged ETFs are anything more than a trade).

Worst of the Worst - The Worst 5 ETFs of the Year are all Leveraged:

Direxion Daily Financial Bear 3X Shares (FAZ) -94.33%
Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) -92.33%
Direxion Daily Technology Bear 3X Shares (TYP) -84.41%
UltraShort Real Estate ProShares (SRS) -83.81%
Rydex Inverse 2x S&P Select Sector Fincl (RFN) -81.89%

Worst Commodity ETF of 2009

United States Natural Gas (UNG) -60.21%

Worst Bond ETF of 2009

Vanguard Extended Dur Trs Idx ETF (EDV) -32.62%

Worst Sector Fund of 2009

SPDR KBW Regional Banking (KRE) -25.62%

*Wildcard - Worst ETF that Never Should Have Been Invented

AirShares EU Carbon Allowances (ASO) -14.89%

Worst Country ETF of 2009

iShares MSCI Japan Index (IJP) -1.67%

Conversely, make sure to also check out the Hottest ETFs of 2009 up over 100% on the year.

Disclosure: No positions in the aforementioned ETFs (thankfully).

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Since I missed my weekly Hottest ETFs post (here are 18 Hot ETFs up over 100% YTD to make up for it), I wanted to share some niche ETFs that you may not have heard of otherwise. Given a possible market top/correction in the works following the most dramatic uninterrupted rise in equities in decades, it's worth considering if your portfolio is adequately diversified, requires rebalancing and whether some of these niche ETFs may help to offset some volatility with lower correlation to US equities than a standard S&P500 or large cap ETF.

*For context, year to date, the S&P500 is up 22%.

Name: Claymore/BNY Mellon Frontier Markets
Ticker: FRN
Background: This ETF seeks to replicate the Bank of New York Mellon New Frontier DR Index. What makes this ETF especially unique is the country holdings. The top 5 Holdings are companies hailing from: Chile, Poland, Egypt, Colombia and Kazakhstan (Borat would be proud). Seriously though, with BRIC ETFs taking the lion share of emerging market dollars, as investors find the next frontier of emerging market economies to satiate appetite for high Beta returns, it may be worth hitching a ride on this Frontier Market ETF.
Performance YTD: 57%

Name: United States Gasoline
Ticker: UGA
Background: This ETF seeks to replicate the percent change in US gasoline prices. I've covered this one before and have personally sold puts against UGA as one of several ways to employ gas hedging for my family finances. There are few ETFs that provide retail investors with such a natural hedge for such strategies. If gasoline is a significant expense in your personal finances, perhaps it's worth buying UGA, selling puts or employing another similarly themed hedging strategy, especially in light of a weak dollar and increasing commodity prices.
Performance YTD: 80%

Name: Dollar Bear/Dollar Bull ETFs
Ticker: UDN/UUP
Background: Depending on whether you think the US Dollar is going to collapse or there's going to be a rush for the exits when the carry trade reverses, you may want to employ one of these ETFs which basically pits the strength of the American currency against a bucket of other major currencies. When the US Dollar strengthens, UUP gains in value; when the USD falls, UDN appreciates.
Performance YTD: UDN +8% UUP -9%


Name: Van Eck Gold Miners Juniors
Ticker: GDXJ
Background: If you're looking to jump on the gold bandwagon, given the speculative/hedging nature of such an investment, you might as well do it in grand style. This ETF is even more volatile than the price of gold itself given the nature of some of these "juniors: that explore for years with no finds and then spike massively upon a find announcement. Country representation: 63%, of the components are based in Canada, followed by the U.S. with 22%, Australia 11%, South Africa 2%, China 1% and the U.K. 1%
Performance Since Launch: The ETF just launched in Novemeber. Against Gold's 3.2% move in that period, GDXJ is up 4.8%.

Name: Claymore Beacon Global Timber Index
Ticker: CUT
Background: This ETF seeks to replicate the return of the Clear Global Timber index. What's especially attractive about this ETF is the lower correlation to US equities offered. Years back when the Harvard endowment was returning 25% a year plus in rocky markets, timber was one of the types of non-correlated investments that helped buoy the fund in turbulent times. This year, CUT has outperformed broader equities even given the recent run.
Performance YTD: 50%

See this full ETF List of over 800 listed ETFs, which may inspire you further to investigate new sector, country or leveraged ETFs.

Disclosure: Long GDXJ, Hedged Sold Put position on UGA.


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November was a great month from several aspects:

• Traffic at my new blog Darwin's Finance broke another record and exceeded 40,000 views for the month even with the slow holiday week. Considering the fact that it's less than a year old and is growing by 10-20% per month or more, I'm excited as ever about the long term prospects. That's not to say I'm not excited about Everyday Finance as well, but things are more steady here as opposed to exponential growth given the constraints of the .blogspot platform and whatnot.

• I had my first-ever triple digit day on Adsense. In effect, Google's Adsense is one of the ways bloggers earn income on the content which motivates us to create and disseminate the posts you've come to know and love. For whatever reason, everything just came together on the same day with respect to traffic, high income pages, etc. and resulted in a $127 day.

• I have to eat my hat because after trashing gold multiple times in my posts on gold hype, better ways to invest in weak dollar trends, and the carry trade, I ended up buying a speculative/volatile gold miner Juniors ETF (GDXJ) anyway. I did fully disclose immediately via twitter and admit my shame in doing so (see my Trades), but I couldn't ignore the trend, regardless of the lack of fundamentals in my view. Since entry last week, GDXJ is up 16%.

• The home finances are going well - continuing to invest in retirement plans and the kids' 529 plans and I put in place some home energy saving initiatives for the winter.
• I'm loving the several hundred dollars per month we saved on our refi into a 4.625% mortgage. But I was blown away when I saw that you can now get a 0% down loan AND enjoy the home-buyer tax credit compliments of the USDA rural loan program.
• The one caveat with my financial management is that I put aside a few hundred more than we spent in the Flex Spending Account this year. So, I've got to get creative and spend the remainder on these eligible FSA expenses by Dec. 31.
  

Aside from these tidbits, here are a few additional popular posts in Money and Investing from November I think you'll enjoy:


Investing:

$100 Signup Bonus at OptionsExpress Now!

787 ETFs Listed – Every Exchange Traded Fund Known to Man and Woman

Do You Invest in Companies You Find to be Morally Repugnant?

Advanta 11% Yield Investment Notes – Going, Going, Gone!

Time for High Yield Investments if Market has Peaked?


Money and Finance:

Today’s Financial Priority: Get a Free Credit Score from myFICO

Review: Flex CD Offers High Yield if the Dollar Tanks Against BRIC Currencies

Energy Saving Tips from the Dept of Energy – Pretty Darn Good!

Working Long Hours – Is it Worth it?

Cash for Caulkers – I’m Not Kidding. Latest Gov’t Giveaway Program

Abysmal Survey Results: Americans Don’t Understand Basic Financial Concepts

Why Do People Pay More Money for the Top of the Line Model? Incremental Value Analysis

Why do Pharmas Call Themselves Biotechs? You May be Surprised...And Annoyed


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RECORD LOWS on Mortgage/Refi Rates - Compare your Savings and get Free Quotes: Mortgage Calculator

While investors that hung in there during the tumultuous March lows and beyond are surely satisfied with their 60%+ returns in the S&P500 from the bottom, there are several factors that make one question whether this rally has more legs and whether it's reasonable to assume stocks will continue to outperform other asset classes in the intermediate term from here. What am I talking about? Well, there are a few things working against another 15% leg up in US equities:

• The intrayear runup we've seen is the most pronounced that we've seen in 75 years. It's unlikely it will continue unfettered by at least a single significant correction.
• The market is not being driven solely by fundamentals. Mutual fund managers are playing catch-up for their year-end holdings disclosure, money's coming off the sidelines from Treasuries and savings accounts back into risky assets, and the Fed's creating another bubble with cheap money which will snap back as soon as the market senses a rate hike. It's easy to show year over year employment with flat sales and 10% fewer employees due to layoffs.
  
• Unemployment is over 10% and rising. No government intervention seems capable of artificially turning it around. In fact, the constant government meddling and bailout philosophy may only result in prolonging the recovery since decision makers and managers simply cannot predict which tax law changes or bailouts are coming next.
• The weak dollar has been great for multinationals (many S&P500 stocks) since earnings overseas will translate into higher profits denominated in US Dollars. However, the dollar cannot drop forever and on a long term basis, a very depressed dollar is not good for the economy in terms of inflation, energy costs, cost of living depression and the reverse effect when the dollar recovers.
• Take a look at the chart from the March lows. While SPY (S&P500 ETF) barely broke past the prior October high of 111, it has dipped back below and hasn't been able to break out. We've been range bound for several sessions now and with so many emergent issues from Iran laughing in the face of international pressure to stop their nuke program to a prolonged stay in Afghanistan to potential passage of a massive health care bill that will burden the economy for generations with debt that will be difficult to repay.
  

If these factors give you pause but you have liquid cash to invest, there are several high yield options at your disposal, which in some cases, present a compelling bargain from historical prices even in light of the recent runup in equities and the current low interest rate environment.

• Highest Yielding Savings and CD Accounts - There are a few interesting CD alternatives out there. First, here's an Ally Bank review demonstrating what happens when a bank doesn't play nice with competitors. Apparently, their rates are "too high" compared to their peers, so they had to file a complaint to Sheila Bair, Chairman of the FDIC. That alone is an endorsement for above-market rates worth considering. Additionally, with the dollar continuing to slide against foreign currencies, there's an interesting currency flex CD that will return more when BRIC economies see their currency rise against the dollar. In the event the dollar rallies, you still get your principal back, with FDIC insurance to boot.
  
• Municipal Bonds - This article on high yield muni bonds and their various investment vehicles provides plenty of options to capture tax-free income with diversified risk in some top performing muni bond ETFs. While the yields are not what they used to be as markets recovered from the abyss, and you'll want to avoid focused muni ETFs for particular states like California, which adequate protection and research, good tax-free bargains can be had, which may see an additional boost in share price if taxes go up next year.
• High Yield Bonds - I reviewed the High Yield Bond ETF (HYG) that I favor and hold currently, which was yielding 12% upon entry, but still yields 10%. Now, these high yield ETFs are otherwise known as "junk bond" ETFs and we've seen historically that at the tail end of a recession, junk debt defaults do rise considerably, so the party may not last forever. For a more conservative approach to much larger names with BB ratings and above check out this list of high yield corporate bonds with payouts over 8%.
  
• High Yield Stocks - There are some great high yield stocks out there. Recently, I compiled this list of high yield large caps that with dividend yields over 5% and market caps over $25Billion - and they're not Financials for the most part, since most of them had to cut dividend payouts upon receipt of TARP funds.
  
• Stock Option Speculation Strategies - There are various means to derive income from selling options in a peaked market for the premium that come with varying degrees of risk. I've outlined some low cost option strategies that span the range of high risk to lower risk, all of which requiring very low initial cash outlays to open the position.
  

Disclosure: Long HYG (High Yield Corporate Bond ETF) and PMF (muni bond ETF); also a put ratio spread position on SPY.

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