Tag: ETF Investing Strategy

Now May Be The Best Time To Invest In China

Posted on by Matt Thalman

The current COVID-19 pandemic that has halted world economic activity began back in December of 2019 in the country of China. For weeks the world watched as the Chinese government dealt with the viral outbreak. Some called the Chinese government's decision to 'lock-down' the city of Wuhan in the Hubei province and other major cities that were experiencing growing COVID-19 case rates as 'draconian.'

The spread of the virus slowed in China due to the 'extreme' measures they took, but pandora's box had been opened, and the virus had spread throughout the world. At this time, most of China is back to normal in terms of businesses being open, workers returning to factories, and most of the country no longer being in a lock-down situation. However, the lock-downs in China started on January 23rd, and Wuhan, for example, is still under strict movement rules.

In comparison, most European countries, the U.S., and other developed nations just went into 'restricted movement orders' in the last week of March. So, in those terms, China is two months ahead of the rest of the world in terms of fighting this disease and slowing economic activity as a form of fighting the spread of the disease. That also means they are likely two months ahead of the world in terms of when it comes to 'getting back to normal' or getting the economy back up and running.

So, since China is 'ahead' of everyone else, we could induce that some Chinese companies, mainly those who serve the Chinese people, will start to perform better financially, sooner than other companies around the world. This leads to the potential investment opportunity that is currently presenting itself in China, while the rest of the world is in a holding pattern waiting for the second shoe to fall before, they put more money to work in the markets.

So, let's take a look at a few ETFs that you can invest in today, which will give you exposure to the Chinese economy, and potentially a Continue reading "Now May Be The Best Time To Invest In China" →

Oil Just Posted Its Worst Monthly/Quarterly Loss Ever!

Posted on by Matt Thalman

Over the last month, we have seen the price of Crude oil benchmarks in the U.S. and Brent futures get destroyed. Both benchmarks lost right around two-thirds of their value during the first quarter and roughly 55% of their value during March alone.

The massive price destruction occurred because of many reasons. The first and foremost is the Coronavirus pandemic and how the world is fighting the spread of the virus. Shutting borders to foreign nationals, implementing 'Stay at home Orders,' and recommending 'social distancing' is all leading to a massive reduction in the demand for oil on a worldwide scale. Cruise ships aren't leaving ports, airlines have slashed their number of flights, both public busses and school busses are not operating, and the average person isn't driving their vehicles. We have already begun to see reports from around the world how pollution levels are declining due to these modes of transportation, essentially stopping.

The second reason the price of oil crumbled was because of the "price war' that is currently ragging between Russia and Saudi Arabia. The two countries were the main reasons the Organization of the Petroleum Exporting Countries (OPEC) couldn't agree on production cuts following the softening demand after the Coronavirus began spreading on a massive scale. Russia and OPEC's de facto leader, Saudi Arabia, disagreed on how much each country would reduce production in order to help stabilize the price of oil around the world.

The price war has caused the Saudi's to increase production from 9.7 million barrels a day in February to a targeted more than 12 million barrels a day in April. Thus far, they have held up their threats. As of early April, the first wave of crude was already heading toward Europe, and the U.S. Saudi Arabia hired extra supertankers in March. Those ships are positioned near oil terminals preparing to be filled. Continue reading "Oil Just Posted Its Worst Monthly/Quarterly Loss Ever!" →

How To Play This Volatile Market

Posted on by Matt Thalman

Over the past few weeks, I have been on the phone with tons of different market participants. Some are professional investors, people investing a little of their own money, financial advisors who manage a few million and others who manage hundreds of millions, and to first-time investors in their 20's, 30's, and 40's and even one as young as 17 years old.

While everyone wants to talk about what is going on or wants to know what to do or has a strong opinion on what to do within the market, only one thing holds true of every person I have spoken to; no one truly knows what is going to happen next.

Let me emphasize that, "No one truly knows what is going to happen next."

This is true for the people I have been speaking with, investors who managed billions in hedge funds or retirement funds. The Jim Cramer's or other talking heads on CNBC, the President of the United States, nor Congress, nor the Pope himself, knows what is going to happen next.

Although some people may tell you they do or just be very convincing that they do, let me assure you, they don't know what the market is going to do tomorrow, next week, next month, or the rest of the year.

And let's be clear, this would all be true whether or not we're in the midst of a pandemic or not.

However, you can't blame people for making predictions or looking at the past performance of stocks following significant economic turmoil. Comparing the past and trying to find similarities to help us make 'predictions' is very common and can be useful at times, but that doesn't mean we should blindly follow those predictions. (This is even true for my suggestions.)

So, if no one knows what's going to happen, then what should we do? Continue reading "How To Play This Volatile Market" →

9 ETFs To Consider As Coronavirus Takes Hold

Posted on by Matt Thalman

In this three-part series, I first discussed why the Coronavirus is important to investors and what the Health Care officials who have been tasked with working on controlling the situation have said in terms of where we are and how people should not panic, but be prepared.

With that thought in mind, I recently wrote about the types of stocks and ETFs investors should consider avoiding if this virus outbreak does get worse and turns into a real pandemic. Now I would like to discuss the types of stocks and Exchange Traded Funds that investors should consider owning if the virus continues to spread uncontrollably and the situation worsens. (Again, though, fear and panic don't help anything, so most of the stocks and ETFs I will be discussing are good options to own regardless of what happens with the Coronavirus outbreak.)

When the major markets turn negative and investors pull out of 'growth' stocks, the first 'safe haven' they run to are bonds. However, we have already seen bond prices jump and interest rates plummet as this trade has become very crowded. One reason they do this is that they are looking to 'protect' their investable capital but also still wanting some sort of yield, even if it's minimal. Even a 1.2% Treasury yield is better than a savings account or, worse, losing 5% in stocks.

So, once the bond trade gets warn out, investors then move into dividend-paying stocks. Ideally, dividend-paying stocks that have a proven track record of paying their dividends even when economic times get tough. This elite group of stocks is called the Dividend Aristocrats and they have not only been paying a dividend for long periods of time but they have consistently increased their dividend amount each and every year for a very long time, at least 25 years to be exact. These stocks are such companies as AT&T, Exxon Mobile, Walgreens, and Coca-Cola, to name a few of the currently 64 companies that hold that title. Continue reading "9 ETFs To Consider As Coronavirus Takes Hold" →

5 ETFs To Avoid Because Of The Coronavirus

Posted on by Matt Thalman

With the Coronavirus spreading around the world, the major US and world markets have moved lower in a big way. I recently noted why these moves lowered occurred. While I don't believe at this time, we have enough information to accurately determine if this new virus is going to be a Black Swan and crash the world economies. I do believe we should all start thinking about what we are going to do if the situation does get worse.

With that in mind, let's take a look at a few industries and ETFs that you may want to avoid investing in if the Coronavirus situation does continue to get worse.

The travel industry would be high on my list of businesses to avoid right now. The US airlines have already stopped flying to China and have announced plans to cut flights to other profoundly affected countries around the world. Hotels also are seeing lower fewer guests as tourism and business travel have rapidly declined as travel restrictions have been put in place by both governments and corporations. Think Marriott, Southwest Airlines, Delta, even Boeing.

And of course, we shouldn't forget about the gaming and casino industry. While these stocks could be lumped in with the Hotels, most people consider this industry to be separate from the rest of the leisure industry. Think MGM Resorts, Wynn Resorts, and Las Vegas Sands.

The next types of business we should be looking at are those that operate in very public events. Continue reading "5 ETFs To Avoid Because Of The Coronavirus" →