Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs out there and give investors some new ideas. For this week, real estate and the reign of the months-long Short Treasury play reversed for big gains in leveraged long Treasury Bond ETFs. China and sugar (there's an ETN for that!) performed well also. Here are 4 top performing ETFs from last week:
PSR - Up 11% Powershares Active US Real Estate - This is an "actively managed ETF" which may sound like a bit of a misnomer. The fund will invest at least 80% of assets in securities of companies that are principally engaged in the U.S. real estate industry and included within the FTSE NAREIT Equity REITs Index. It is free to utilize the balance of the assets for additional exposure to other real estate or alter the weighting of its holdings. With a higher expense ratio of .8% than its passively managed brother VNQ at .1%, it will be interesting to see if the ability to add some actively managed positions to the ETF outweigh the .7% difference in expense ratios. What is somewhat deceiving as well though, is that the instrument doesn't seem to have much trading volume at all and last week may have actually been an anomaly, since it didn't track VNQ closely at all. I'd watch PSR with suspicion near term if you see it showing up on ETF hot lists and perhaps think about VNQ if you're itching to get into real estate until there's more volume and the spreads are smaller.
TMF - Up 11% -Direxion 3X Long 30 year Treasury - A few months back, shorting Treasuries seemed like surefire way to capture the optimal risk-adjusted return - since Treasuries really couldn't run much higher with yields approaching zero - and some short dated maturities actually fetching negative yields! Well, that strategy has sputtered out and is reversing near term. From here, it's like volatility both ways and the easy money appears to have been made. Recall that leveraged ETFs pose risks that aren't immediately intuitive due to daily rebalancing - see this article on Leveraged ETF Risks to understand why these are only suitable for a near term trade (sometimes!) and never suitable for a long term hold.
TAO - Up 9% - Claymore/AlphaShares China Real Estate - Virtually anything China has been hot during the recovery and for the prior week, this niche China Real Estate ETF has turned in stellar performance, with a 3 month return of 60% vs. 10% for the S&P500. While many US Real Estate ETFs and Real Estate Investment Trusts offer higher yields, TAO comes in with a once per year dividend, averaging around 2% based on December's payment, so don't plan on buying this one for income.
SGG - Up 9% - Barclays iPath Sugar ETN - 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 30% vs. a roughly flat 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.
Miss the Boat on Corporate Bonds and Bond ETF?
Investors may well want to keep an eye on high yield corporate bonds as well, since returns are trending virtually in lock-step with equities, yet the yields on the bonds are often significantly higher than the dividend payouts (which are cut well ahead of a bankruptcy declaration that would chop the bond return by more than 75%). For simplicity, a lower barrier to entry and diversification of risk, this High Yield Bond ETF HYG is still sporting a double digit yield - just note that there will likely be some defaults in the underlying holdings as the economy stagnates in the next year or so, which may adversely impact share price and yield.
Disclosure - The only active position at this time is HYG. The author closed a 2X Short Treasuries position last week.
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As I had posted in my more detailed article on how to hedge energy prices for everyday consumers, today I finally got around to personally hedging my gas price expenditures. While I had listed 8 different ways you could do this, I took the simple income approach, which was to sell puts against the gas ETF UGA. I sold two puts with an October expiry for .95 each = $190, or ~$180 after commission. With UGA trading over $32 per share, gas prices will need to drop 15% in order for the UGA shares to even approach breakeven. If they drop below, I would have to pay the difference to close out the position or take custody of the shares at expiry if still in the money. This is fine, because with our family's expenditures on gas, and summer vacations on the way, I'm taking $180 now, spending more if prices rise with $180 to offset it or spending less on gas if prices drop. And sweetspot - if prices stay about where they are or drop less than 15%, I get to keep the full $180 and pay less for gas as well! It's a natural hedge that I outlined further in my gas hedging article. I plan on rolling over this hedge or one of the other ones I outlined for the foreseeable future. Why now?
Just thought I'd pass on my personal plan on lessening the pain of rising gas prices this summer; I would love to hear about yours.
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It was divulged today that Citigroup, a zombie bank that required massive government bailouts to stay afloat, will be increasing the salaries of select employees by as much as 50% to circumvent the bonus restrictions placed on it when TARP funds were disbursed. What Citi is looking to do is essentially keep their employees at the same pay level as prior years while still adhering to the government's restrictions.
I'm more annoyed at the pols than Citi to be honest. If you're Citi and you're trying to stay afloat and retain employees that are jetting for the "good" houses like Goldman, who can repay TARP funds or hedge funds - both of which pay their employees the going market rate (much higher), wouldn't you do everything within your power to retain them? Since what they're doing is legal, can you blame them?
What I find to be especially outrageous and annoying, is our politicians. First, there were the AIG bonuses and the feigned outrage (like nobody saw that coming). Now, there's Citi. No doubt, by the time you read this, there will be editorials gallore and the blogosphere aflame over bigger salaries to the guys at Citi that "wrecked the country". To that, I say, you're right to be annoyed - in my company, if we have a lousy year and don't meet our company objectives - no bonus. However,
What the heck was the government thinking when they imposed these restrictions?!?
Couldn't they have predicted this would happen? If yes, they're disingenuous liars. If no, they're inept. Neither is particular appealing. Neither would surprise me. Are these the same geniuses approving trade deals with other countries and legislation that impacts everyday Americans? These are our best and brightest officials overseeing what kind of obligations the Fed and Treasury are placing on various entities involved in the bailouts? I recall that the day I heard about the bonus restrictions, I joked to myself, "they'll just increase the salaries to maintain par with the market". Any novice saw this coming and yet, today, we have politicians already taking to the pulpit with "outrage".
As time goes on, people will continue to look back with dismay at our inept politicians with their focus on sound bites and questioning over whether executives fly a jet or drove a plane to a big auto hearing (with continued bailouts down a rathole for GM that I called months ago) instead of taking an introspective look at THEIR role in the loosening of lending standards, lack of oversight, market collapse and then, the generational debt they've burdened our children with. This Citi issue shouldn't even get much press - but I know it will so I figured I'd get a contrarian view out there before the pundits and pols jump all over those greedy capitalist pigs.
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The following is a republication of my favorite weekly reads and updates that I publish on weekends at my other blog Darwin's Finance.
These are entries from blogs I frequent, and I hope you will too (just come back!). This week, Iran’s historic election and subsequent outrage from a population seeking change is the prominent news item. Not only does the outcome of the current movement have implications for the balance of the entire region, but there are financial implications as well; namely energy prices. Here’s a culmination of several shocking videos from Iran demonstrating the bravery and determination of a generation that has said no to propaganda, censorship and brutal military force at demonstrations.
My Favorite Investing Reads
Nice Dividend Investing Roundup
Buying Commercial Real Estate (UK, but relevant everywhere)
Four Divvy Stocks Raising Dividends
Gold Buying Insurance Company
The Best Indicator of the Economy
My Favorite Personal Finance Reads
Hyperinflation and Deflation described
Do It Yourself Funeral
Maintaining an Empty House if Your Neighborhood
Home Buyer Tax Credit Extending to 15K?
Mortgage Accelerator UFirst Financial apparently not honoring refunds - (my initial background and negative review of UFirst MMA here)
The Economics of Saving by not having a car
Within my network at Darwin’s Finance and Everyday Finance:
15 High Yield Corporate Bonds Raising EyebrowsStructured Notes Review: How they deliver guaranteed returns in any market
How FSA Plan Account Contributions Can Save You Thousands
Hedge Your Own Gas Prices this summer!
Vanguard Founder Bogle Says Buying Stocks individually is like Gambling
Natural Gas ETF Anomaly - Ripe for Exploitation?
Oil’s on a Roll - Let’s Blame the Oil Speculators!
Comcast - Surprise Massive Bill, Then Saving Money Again
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I read with interest this article from CNBC citing a study indicating that 1 in 4 U.S. companies either plan to cut or flat-out eliminate 401K matching contributions due to the current economic conditions. This is an unprecedented move, especially in such large numbers, for U.S. companies. Cutting out the bottled water and jaunts to Hawaii for the sales force is one thing (as a manufacturing/supply chain guy constantly seeing the shenanigans on the other side of the fence, always have to throw a jab in there :>), but cutting out the thousands of dollars per year in matching 401K contributions to employees is essentially an across the board salary reduction for people who took a role partially predicated on this benefit.
Apparently, most of the companies cited see this as a temporary step, but what is temporary? 1 Year, 5 Years, or more? Companies think strategically, and if preservation of cash over a brief period of time is this critical, perhaps there's more going on beneath the surface.
If Your Company Cut your 401K Matching Contributions, is it Time to Leave?
At face value, a 3-6% (typical range of value of the matching contributions) pay cut isn't cause to switch companies given the transition costs, risks incurred by moving to a new employer, hassle, loss of reputation from old employer, possible relocation from a comfortable life, etc. However, if your employer is resorting to such drastic measures as cutting one of the most important employee perks, is this just the surface? Have your company's shares declined more than the peer group in which you compete? Has the credit rating been lowered recently? Have other cost-reductions like job cuts and outsourcing already been enacted and are viewed as insufficient to remain solvent? Are analysts citing the need to generate cash?
These are some questions I'd be asking myself and when combined with the typical bump you could get by going to another firm, + 3-6% since they likely ARE retaining their 401K matching contributions (or else it's unlikely they'd be recruiting right now, right?), plus they may have a better financial outlook. Perhaps the 401K cut to matching contributions was just the tip of the iceberg and there's more pain ahead if you stick around. A move like this within your company should at least warrant further consideration.
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Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs out there and give investors some new ideas. For this week, short leveraged ETFs were extremely hot in the energy and emerging markets sectors especially. I always caution that the leveraged ETFs carry substantial risks that aren't intuitive to prospective investors that haven't researched them fully due to daily rebalancing among other things. With the market volatility continuing to ensue and geopolitics heating up, cautious investors may also want to consider more stable, predictable returns in Structured Notes Products or other alternative investments to account for at least part of their portfolios. But, rounding out the top of the list are:
ERY - Up 23% - Energy Bear 3X Shares Russell 1000 Energy - While the 3X long ERX had been a stalwart performer in the prior several weeks, energy stocks took a breather this week. It's worth noting that even though oil is up 15% YTD, both the long and the short ETFs are down over 20%, hence, why I refer to the 3X leveraged ETFs as the riskiest ETFs on earth for their long term depreciation behavior. Remember, these are for day-week trades, not for holds. If you want to capture a secular move in an index or commodity, I recommend just going with the 1 underlying instrument.
EDZ - Up 20% - Emerging Markets Bear 3X - While up 20% for the week, betting against emerging markets has not been a sound strategy during the prior 3 months, with EDZ losing 70% of its value.
SMN - Up 16% -Proshares Ultra Short 2X Base Metals - With the dollar showing some strength during the prior week, metals and commodities in general showed a loss. I don't view this as a long-term trend, but perhaps commodities were getting ahead of themselves on fears of a more precipitous fall in the dollar and inflationary expectations.
DUG - Up 15% -Proshares Ultra Short 2X Oil and Gas - This is a bet against future rising oil and gas prices. While it worked out last week, I wouldn't bet against the recent trend, especially in light of the recent events in Iran. As a long term hedge against rising energy prices, this isn't an ideal ETF given its leveraged nature and short term utilization. Check out this article if interested learning how to hedge gas prices or whatever your primary energy expenditures are this summer.
Newly Launched ETFs
Since the leveraged ETFs were the only ones that made the list this week, it's worth mentioning that some new leveraged ETFs were launched by Proshares earlier in the month:
Ultra Long 2X
Ultra MSCI EAFE | EFO | MSCI EAFE Index | 200% |
| Ultra MSCI Emerging Markets | EET | MSCI Emerging Markets Index | 200% |
| Ultra FTSE/Xinhua China 25 | XPP | FTSE/Xinhua China 25 Index | 200% |
| Ultra MSCI Japan | EZJ | MSCI Japan Index | 200% |
Ultra Short 2X
| UltraShort MSCI Europe | EPV | MSCI Europe Index | -200% |
| UltraShort MSCI Pacific ex-Japan | JPX | MSCI Pacific ex-Japan Index | -200% |
| UltraShort MSCI Brazil | BZQ | MSCI Brazil Index | -200% |
| UltraShort MSCI Mexico Market | SMK | MSCI Mexico Investable Market | -200% |
Disclosure: No position in the aforementioned ETFs.
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Fortunately, my patience and approach paid off and they agreed to discount my Comcast bill again. The rep said that she could only do it for 6 months at a time like last time, so every 6 months, I'll have to spend 10 minutes or so (the wait actually wasn't that bad this time) and revisit the same scenario with the rep again. The price she quoted me for this month's bill was actually LOWER than I had been paying! Presumably, there are different promotions they can pick from each time and she hooked me up this month with a better one than I had previously.
For anyone out there that isn't stuck with a pure monopoly phone, cable or internet service, I highly recommend pitting your existing company against the competition in order to enjoy substantial savings annually. It might be satellite vs. cable, cell service vs. landline -
you can employ the same approach no matter what and given the high acquisition cost of a customer and low variable costs, most of the time, these companies will relent and grant you a discount rather than letting you walk.
What are your success stories in this regard?
Read about More Money-Savings Tips:
Savings Tips Consumer Reports Style
How to Save Money with a Contractor - Patio Example
Net Present Value: Why you should use it in Everyday Life
Buying a New Car - Strategies and Findings
Stepping Outside Your Comfort Zone to Save Money Daily
Save Hundreds per Year with Cash Back Credit Cards
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After briefly catching Cramer's rant tonight against the Natural Gas ETF UNG and its potential to manipulate the true price of natural gas upwards given unplanned investor inflows, I figured I'd investigate a bit further to see if he was on to something. While he was railing against the existence of the ETF and was calling for the SEC to shut it down, I figured, "hey, sounds like a possible investment opportunity to me". If anything, I'm seeking to hedge energy prices on a personal basis, and there are some other factors at play here above and beyond pure speculation. Not only does this other article from the Wall Street Journal make the case for a potential divergence from the underlying value of the natural gas assets, but this situation opened my eyes to the massive divergence between the trend in natural gas (plummeting) concurrent with oil's ascension. I realize there's never a perfect correlation here given different markets, supply/demand dynamics, etc., but historically, there isn't normally a virtual zero correlation like this.
Check out what the natural gas ETF UNG has down over the 3 month period ended Jun12 compared to oil - Oil up 50% vs. a LOSS for natural gas:
Now, look at UNG shares compared to USO in just the past week. Natural Gas is up 13% vs. a flat oil return. Looks like investors have caught on to the potential gravy train here.
Here are some excerpts from the Wall Street Journal article:
"With investors betting on rising gas prices, assets in U.S. Natural Gas Fund recently swelled to almost $3.7 billion from about $670 million in February, even sparking fears it could be disrupting the futures market."... "Securities and Exchange Commission filings show managers want to increase the number of shares available nearly tenfold. But such requests can take weeks and there isn't any telling when the SEC will act.If the fund can't issue enough shares to meet investor demand, its shares could begin trading at prices higher than the underlying value of their holdings, breaking a key promise ETFs make to investors and possibly influencing prices in the natural-gas futures markets."...
In anticipation of an expansion of shares, there may actually be near term shareholder dilution; but that may be offset by the increased price in the underlying natural gas futures, as well as the fundamentals and reversion to the mean -with the economy starting to recover, the US Dollar unlikely to rebound, future inflation expectations and this regulatory anomaly, UNG and your personal expenditures for natural gas alike could soar.
Related:Dow 3700 - $3,500 Gold - $300 Oil...Oh My!
Gold ETN up 421% in 1 Month - What Gives?
New Hedge Fund ETF - Hype or Sound Investment?
How to Hedge your Energy Costs
Disclosure: No position in UNG at this time; long position in USO options (see this article on How Options Work: Puts and Calls).
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I read with skepticism an editorial in a prominent paper today entitled Stop the Speculators about how we should blame "Big Wall Street Banks" (a direct quote, as juvenile as it sounds) for the price of rising oil. This is essentially a reprint of every populist gripe about the high price of oil (and hence, gasoline) that Americans experienced last year. Here are some quotes from the editor that essentially sounds like a politician looking to curry favor with ill-informed constituents prior to an election to rile them up and put an evil face on traders, energy companies and well, anyone but 1) the US population, 2) a complete lack of a comprehensive energy policy and 3) a Fed that's printing money like it's goin' outta style. Rather than giving a page to consumers on say, how to hedge fuel prices as an individual consumer, instead they printed this dribble. I could nitpick this thing apart line by line, but I'm just going to try to stick to a few key paragraphs:
"One of the most basic concepts of economics is the law of supply and demand, which helps determine the price of goods, services, and commodities. Unless, of course, that commodity is crude oil.
Just ask the motorists getting gouged at the pump by soaring gas prices what happened to basic economics."
OK, so first of all, this editorial starts off like my 8th grade term paper...um, so, word X is defined in Webster's as... but I digress. Oil is arguably the most efficiently traded commodity on the planet. To claim that the law of supply and demand breaks down for oil more than any other traded instrument (like swine flu stocks jumping 100% in a day was based on rationale supply OR demand of anything other than hype?) is misguided. Oil trades on perceptions of everything from future supply and demand, interruptions to supply, growing demand in emerging markets that previously did not consume oil to the degree they will in the future and so many other factors that the actual price movement of oil simply cannot be predicted with any degree of certainty. Current supply and demand is an afterthought. I mean, look at the macro view of the market now. Is it logical that with unemployment hitting 10% soon, the market has rallied 40% since March? Does this make sense in the author's model of "supply and demand" for beginners?
Consumers getting gouged at the pumps? Is that what you call it when the country hasn't built a new refinery in how many years? NewsFlash! Oil and Gasoline don't have a perfect 1.0 correlation. Take a look at this chart comparing the price of oil with gasoline via their respective ETFs. Gasoline has its own capacity constraints, crack spreads, and oh yeah - those evil speculators as well! They are each their own beast and let's see, now perhaps we can blame two evil sets of speculators. And really, is gouging such a bad thing? As controversial as it may sound, if it did occur, it actually might help temporarily restrain demand, hence lowering prices for those who really need it. I mean, how did those gas lines work out for everyone in the 70s with price caps on gas and the subsequent rationing that occurred? It's as simple as letting the free market dictate the prices - if one gas station tried to gouge, there's one up the road looking to take away those customers with lower prices.
"Then, there are the Wall Street speculators.Big Wall Street banks, like Goldman Sachs and Morgan Stanley, as well as pension funds and hedge funds, are helping to drive up prices. These firms are buying up oil futures contracts as a hedge against inflation.
Aren't these some of the same investment firms that drove the economy over the cliff, and then needed a taxpayer bailout?
Now they are back in action."
Those evil speculators. They're "helping to drive up prices". Are they? I started posting in 2008 about the oil contango which ended up resolving itself with higher prices, but this was seen from a mile away from a part time blogger. Was this me "driving up the prices"? The last time I checked, there were no pension funds or hedge funds participating in a taxpayer bailout, just the big Wall Street Firms with the real lobbying dollars and ex-CEOs in cabinet positions. But really, what does a bailout have to do with their ability to trade oil? Shouldn't they be TRYING to turn a profit so they can actually PAY BACK the bailout money to begin with? I'm not sure what the author's getting at. If their energy analysts predict a rally in oil, shouldn't they trade on that advice? Oh, let's see, if you took bailout money, you shouldn't try and execute a profitable trading policy to fulfill your fiduciary responsibility to shareholders (including the government). I just don't see the connection and it's just more juvenile fodder for the gullible reader. Oh, and why do we have inflation on the horizon? Hmmm. no mention of our government's monopoly money game or perhaps the prospect that our currency won't buy what it used to in the future.
The article then goes on to cite some government-sponsored reports blaming speculators for part of the oil runup last year, which I'm sure won some praise from angry consumers. This article, and others like it fail to recognize the reality of complex, volatile markets such as this:
- Speculators have always been able to speculate on the price of oil - they've been doing it for over a hundred years and they'll continue to do so into the future. Investors can speculate now on 3X Leveraged ETFs with no collateral!
- Why is it that 2008, and again in 2009 - these are the only times that the evil speculators chose to wreak havoc on oil prices? Why weren't they doing this in 2006 or earlier this year as oil prices sank? Oh, and how were those speculators doing when oil dropped from $140 to $30 a barrel? They got slaughtered. There IS risk to speculating and the speculators aren't getting a free ride since prices can decline precipitously as was evidenced recently. In short, if it were this easy and the "evil speculators" could manipulate prices upward at will, wouldn't oil be on a continuous upward slope to infinity? Well, perhaps they all conspire together in the "evil speculators' fraternity" as they conjure up a cartel-like manipulation of the oil markets.
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Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs out there and give investors some new ideas. For this week, B2B Internet continued to be hot, energy ETFs continued their streak, and various metals ETFs were strong. But, rounding out the top of the list are:
BHH - Up 15% B2B Internet Holders - This internet ETF is actually up over 60% vs. a marginal gain for the S&P500 YTD. In prior downturns, we saw tech get hammered, but surprisingly, this time around, tech had no direct role in the market euphoria and these companies seemed to have learned a thing or two about living without excessive costs and holding cash. Tech may very well continue to outperform if we're looking at a slow recovery in financials and housing.
JJT - Up 11% - Barclays iPath Tin - This one's actually an ETN which carries ETN-specific risks to consider that ETFs don't - like counterparty risk, and usually a much lower trading volume which leads to higher spreads, but as far as I've seen, it's the only pure play on Tin, which rallied significantly last week - again. JJT is now up 50% YTD.
UCO - Up 11% - ProShares Ultra DJ-UBS Crude Oil - Oil continued its rally last week and this ETF seeks to return twice the daily performance of the Dow Jones AIG Crude Oil Sub-Index. A nice theme when considering a possible return to triple digit oil again this summer is to learn how to hedge fuel prices as a retail consumer/investor: airlines, transports and other businesses do it, why shouldn't we?
ERX - Up 8% - Direxion Daily Energy Bull 3X - This ETF seeks to return 300% of the daily performance of the Russell 1000 Energy Index. This ETF is a routine placement on the weekly list. As long as the trend continues upward, outsized returns will outpace the spot price of oil. However, note that with these daily resetting ETFs as noted above, volatility eats into returns if the trend breaks as outlined here in this explanation of the degradation of value on both sides of the 3X ETF Long/Short play. In other words, if you hang on to these too long, you can lose money on either side of the fence, regardless of what happens to the underlying index.
Disclosure: No positions in the specific ETFs covered. However, Long Jan 40 USO Call, which is a bullish play on oil (1X no leverage).
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Here's a reprint of the initial favorite links and weekly reads from Darwin's Finance for those of you that don't already subscribe to RSS there:
Another week of great reads during week. These are entries from blogs I frequent, and I hope you will too (just come back!). I’ve also included various finance/investing carnivals that published my material this week as well as my posts within my network since the last weekly links. This week, I was stuck by the incredibly rebound of several emerging market ETFs exceeding 50% returns YTD.
My Favorite Investing Reads
Think Diversification. Think Simplicity. Think.
FDIC limits, facts and changes
Cash and Bonds are not the same thing.
Nucor stock analysis (I like this company, especially with the recent Buy America provisions wrt steel imports)
Some potentially alarming info about Interoil claims from one of my favorite Fraud Fighters
See how FIFO vs LIFO can change a company’s prospects
Dividends and buybacks in the news
Which index to choose
Questioning current valuations following recent runup
My Favorite Personal Finance Reads
Setting a teen straight with “A Credit Card is NOT your ticket to financial freedom“
How to Avoid Foreclosure
Obama’s uncertainty is killing us and the economy
Opinion on how politicians vilify the rich in order to rally support for tax increases
Multiple Loans? Which order to pay them in
Universal Health Care Pros and Cons
Sunk Cost Fallacy
A First Budget from an anti-budgeter
Kids and Money: Lemonade Stand
Stop enying millionaires
Worth trying to reduce your rent?
10 Ways your Lifestyle can save you money
Within my network at Darwin’s Finance and Everyday Finance
40 Year Mortgages and 50&60. What’s next, 99 year leases?
The next massive blockbuster mimicking the fountain of youth?
All World Market ETF Returns 2009 YTD
Beware those “going out of business” signs and sales
Google stock price manipulation
FREE Sick Days! Says Government - on the back of business dollars
Haverhill Home Staging Complaints - the infomercial may not be all it’s cracked up to be
The week’s hottest double digit ETFs
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Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs out there and give investors some new ideas. For this week, the triple leveraged ETFs for Tech and Shorting Treasuries continued to be hot. Additionally, some Emerging Market ETFs showed up (see full list of 2009 market returns YTD by country and emerging market region via various ETFs and ETNs).
TNA - Direxion 3X Small Cap - Up 18% - This best-performing ETF of the week is a triple leveraged play on the Russell 2000 Small Cap index. Since this is the first 3X leveraged ETF that appears in the list, I always caveat by sharing that while the near term return can be 3X long or short, over time, daily rebalancing and fees eat away dramatically at the returns - to the point that you can actually lose money on both the long and short ETF regardless of what the underlying sector does - check out 3X ETF risks for more details.
IDX - Market Vectors Indonesia Index - Up 15% - This ETF is up over 120% in the prior 3 month period as Indonesia racks up the gains on a non-leveraged basis. As virtually every emerging market ETF was battered more badly than US shares during the economic downturn, on the rebound, emerging markets have catapulted back. Indonesia in particular has been hot. In May, JPMorgan advised clients to increase their exposure to Indonesia. A key development to watch would be the country's elections on July 8 where a pro-business government win could spell another big jump like we saw a few week's back when the India ETF took off 22% in a week following a pro-business election outcome.
TMV - Direxion 3X Short 30 year Treasury - Up 15% - A few months back, shorting Treasuries seemed like surefire way to capture the optimal risk-adjusted return - since Treasuries really couldn't run much higher with yields approaching zero - and some short dated maturities actually fetching negative yields! Well, the strategy has paid off with another up 15% week and up 50% over the prior 3 months. (See full rationale and other ways to Short Treasuries).
TYH - Direxion Daily Technology Bull 3X Shares - Up 13% - This 3X Tech ETF was on last week's Hottest ETF list as well with a 14% gain for the week. The top 3 underlying holdings are Apple, Cisco and Google. TYH is now up over 150% over the prior 3 month period vs. a 37% return for the S&P500 (not too shabby either, but with higher Beta Tech shares leverage at 3X, well, this is what you get).
Disclosure: While the author does not hold any of the aforementioned ETFs specifically, there is a position in TBT, which is the 2X Short Treasury ETF.
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I was forwarded these stories on Haverhill Home Staging and thought some of you may find it to be interesting. Honestly, I didn't even know such an industry existed, but apparently there's a market for it. This blogger at the prominent blog WalletPop did some impressive detective work and wrote this negative review of the company and its management, which apparently has frequent spots on HGTV making claims of jobs promising $24-$31/hr after taking its $997 course. Here's a followup post from Tracy at Fraud Files (she frequently covers scams, fraud and writes some pretty good articles on such topics) with her opinion and some excerpts of common complaints posted by anonymous posters, which allegedly, are now under attack by Haverhill for their "libelous claims".
Why do bloggers do articles like this?
Generally, negative posts don't really result in anything positive for the blogger. I usually end up with tons of comments attacking my critique of say, a $3000 mortgage payment system that accomplishes nothing you can't do yourself or a cease and desist notice here and there. But I think there are some people out there that do appreciate the effort and subsequent pain that bloggers endure by sharing warnings, critiques or just points to ponder on companies in the effort of saving a few readers from making a regrettable investment or mistake.
Is Haverhill a Scam?
I don't know, I haven't investigated the company individually and I don't intend to; I'll leave it to the folks already on the case. In this case, I am told that the originator was issued a cease and desist notice. If that is correct (which I have not independently verified), that is unfortunate. I don't get why companies can't just communicate any errors or omissions in and article and demand a correction, or just take the criticism if it's true. Cease and desist letters are in my opinion, a form of bullying and also...a red flag. If someone posts something that is clearly untrue and damaging, then by all means, they should retract it immediately. If someone posts something that is factually correct, yet simply espouses a negative opinion, is that grounds for a cease and desist notice?
My request - Please show your support for bloggers' freedom of speech and continued articles of this nature by visiting their blogs, reviewing the stories, forming your own opinion after performing your own analysis, and of course, sharing the article!Nothing in the aforementioned article is stated as fact, but rather references existing articles from other bloggers and espouses my opinion.
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RECORD LOWS on Mortgage/Refi Rates - Compare your Savings and get Free Quotes: Mortgage Calculator
An amazing runup in mortgage rates in recent weeks from an average of 4.75% to over 5.25% has many prospective refinancers scratching their heads asking themselves what happened? It also has many refinancers-in-progress wielding pitchforks and hurling stones at the mortgage companies who are allegedly letting their locks expire since the rates have jumped substantially and they no longer want to honor the initial commitments. There are two sides to this coin though; consider the notion of breaking your mortgage lock when rates drop post-lock, right? As aggravating as it must be when a customer breaks a lock, can you imagine how angry you'd be if you locked in a 4.x rate only to have it expire while the mortgage company dilly-dallied with your appraisal and underwriting and said, "Oh well, you'll have to go with today's rate at 5.5% now"?
This rise in rates shouldn't be a complete surprise, given the substantial rise in Treasury yields (the easiest money I've made this year was a 2x Short Treasury ETF) as investors depart the safe haven of Treasuries at the expense of negative to very low yields for stocks and bonds.
Is it Too Late?
I'm no better at predicting mortgage rate trends than the next guy, but why wait any longer? People that held out for rates going to 4% (see the only way I've heard of to get a 3.99% rate) are now faced with "mortgage envy". At this point, the best you can do is comparison shop using the methods I've outlined here and make sure to construct a Net Present Value model to compare your various mortgage options. You can get several quotes in your area and get free quotes: Mortgage Calculator.
How Did I Do?
In my Mortgage NPV article, I outlined how I got the following deal recently.
- 4.625%
-30 year conventional
-no points
-reasonable fees (actually, the lowest fees of all the options I considered as well).
I realize that was at an optimal trough in the rate trend, but if you're looking to refi now and realize by waiting any longer, your opportunity to lock in an attractive spread in current vs. new rates is slipping away, you can easily apply the same principles for an optimal outcome.If you enjoyed this article, make sure to Subscribe to this feed .
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There's a move afoot by US lawmakers to make it mandatory that employers provide employees with at least 7 paid sick days per year. The legislation called the Healthy Families Act, which would enable certain workers to earn one hour of paid sick time for every 30 hours worked, for up to seven days a year. Workers could use this time to care for themselves or family members. With a catchy and fuzzy name like that, who could debate it, right? I understand the rationale for the push and I realize there are lousy employers out there who don't take care of employees who are in a time of need, but I thought that was what FMLA was for. The examples of justification for the proposal I've seen in the media reports reflect the hardships that employees have been enduring when their budgets don't allow for the time off unpaid. Not that they're being fired for being sick, but that they don't have it in their budget. If what equates to say, a 3% pay cut (7 days unpaid) in a given year pushes your family over the edge, perhaps Congress should be focusing more on a family budgeting and personal responsibility act over this "Healthy Families" Act which actually does nothing for keep families healthier, yet saps business further in the middle of an economic downturn.
I don't understand why an employer now has to be responsible for an employee's lack of ability to budget. Look, if someone has a serious illness and they need some time off, I get that. I'd hope my employer would give me some support if I or one of my family members had a debilitating disease that required some time off to recover. I just wouldn't anticipate that on an annual basis, I now essentially get an extra 7 vacation days each year. Let's face it, that's what this is going to turn into.
I've seen the FMLA abuses first hand by people who take advantage of the system (i.e. the same people tend to require extended FMLA absences once per year, [often around summer time!]) and the doctors that write some of the bogus justifications are no better. What's in it for them? Just the continued visits and reputation for other would-be FMLA abusers to visit for some easy documentation. If Dr. X doesn't write up that note for my "asthma condition" that allows me to take off whenever I want, I'll go to a doctor who will. Now, this sick day allowance - it's essentially a government-mandated additional 7 vacation days. Sick Days = Free Vacation Days. Yaaah!
The reality from the people I know that get "sick days" that accrue each year, is they don't actually use them when they're sick. They use them for vacation, for running errands or they are compensated for not using them at the end of the year. I don't begrudge them per se, because everyone else in their company (or government job) is doing the same thing and it's the norm rather than the exception. I don't know, maybe if I were a government worker now, I'd do the same thing and I'm just cranky. In my company, we have unlimited sick days, but I've never used a sick day in my career. Nor have I ever missed a day since I was working as a teenager. I guess I've been lucky, or I stay healthy or whatever and I realize it's not the same for everyone. However, what will really end up happening here is that people will take these 7 days, use them for different purposes as I stated above and when they actually ARE sick - they come to work anyway!!! Why? Because they feel like they're wasting a vacation day or money they could bundle up later. This ill concieved law will not actually help people, but rather, just continue the abuses by a sizeable portion of employees that continually look to get one over on their employers any chance they get.
This is another one of the laws of unintended consequences in my opinion - not to mention government meddling. You're going to increase employer costs, which in turn doesn't help profitability or job creation, while you reward the abusers and punish the people who play by the rules - all while not even addressing the underlying issue - which is the fact that some people can't keep a 7 day emergency fund on hand for unintended expenses. Your Thoughts?
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RECORD LOWS on Mortgage/Refi Rates - Compare your Savings and get Free Quotes: Mortgage Calculator
