Tag: ETF Investing Strategy

Treat Yourself To An Early Christmas Gift

Posted on by Matt Thalman

The Christmas season can be a time that makes or breaks a retailer's entire year. With that being said, most investors already know this information. It's not typical for a retailer's stock to experience a major pop or drop around the holiday season just because of revenue and earnings were three times that of the previous quarter.

But most reports currently indicate the American Consumer is healthy and feeling good. Which would indicate this holiday shopping season could be a record-setting year regarding the amount of money spent buying holiday presents. And a record-setting year is the type of event that would make a retailer’s stock pop. A large year-over-year revenue and earnings beat is the type of performance that Wall Street likes and rewards with a higher share price.

One report, in particular, the University of Michigan Consumer Sentiment Index was unchanged in November and remained higher thus far in 2018, at a 98.4, then in any prior year since 2000. Furthermore, the report indicates "income expectations have improved, and consumers anticipate continued robust growth in employment." "The renewed strength in nominal income expectations is critical to overall spending prospects. Among the working age population, those between the ages of 25 and 54, the anticipated annual gain in nominal household income was 3.6% in November, the best in the past decade" per the November report.

If the University of Michigan Consumer Sentiment Index is correct, we could be in for some really big number this holiday season. That being said, to fully realize the share price increase, it is best to buy the retailers before early holiday shopping reports are released. Obviously, by doing so, you take the risk of this year being an average or poor shopping season, but if you’re willing to take that risk, it could pay off nicely this year.

So, let's take a look at a few of the Exchange Traded Funds that you could purchase if you want to attempt to ride the retail waved this holiday season. Continue reading "Treat Yourself To An Early Christmas Gift" →

It's Still Not Time To Buy A Marijuana ETF

Posted on by Matt Thalman

The month of October was terrible for the marijuana Exchange Traded Fund MG Alternative Harvest ETF (MJ). After some months in which we witnessed the share price of the marijuana ETF climb higher, we saw it drop like a rock following the October 17 date for the legalization of marijuana in Canada. For October, MJ was down just slightly more than 27%.

MJ rose and fell due to some big winners followed by big losers in the marijuana industry. But the problem is, the moves we have seen by these stocks have for the most part been based solely on speculation and rumors. We have not received an earnings report indicating profits from Canada were going through the roof; we receive any real meaningful information from the companies themselves that would have indicated now was the time to buy because the stock prices were just going to run higher. It was all just speculation and hype that was causing stock prices to move higher. I recently warned investors that now was not the time to jump on the MJ train, back when the ETF was at loftier levels, but now that is has fallen, you should remain on the sidelines and see how things play out in the industry.

The first reason of why is because of the recent decline the industry has gone through. The majority of the drop has been due to nothing more than profit-taking after the boom, ‘hype cycle’ played out leading up to the October 17 legalization of marijuana in Canada. Common sense would say the marijuana stocks would climb higher after the law went into effect. But all too often, the opposite happens because the ‘hype’ over the recent change dies off after the actual event takes place, and no new information comes available to keep the ‘hype train’ rolling. Savvy investors bought shares of the marijuana stocks ahead of the legalization date, road those stocks higher due to the “hype” and then sold them after the October 17th date when the catalyst for the move higher played out.

Which leads us to reason two of why you should stay on the sidelines. Continue reading "It's Still Not Time To Buy A Marijuana ETF" →

Amazon's October Drop Hurting ETFs

Posted on by Matt Thalman

Most recent data shows 246 different Exchange Traded Fund’s owned more than 24.7 million shares of Amazon.com (AMZN). But, the companies recent 20.9% decline in the month of October alone, (Amazon opened October trading at $2,021 per share and closed the month trading at $1,598 per share, or a 20.9% decline) has certainly had an effect on not only those 246 different ETFs and their investors, but also those investors whom may have directly purchased shares of the company. Furthermore, due to its market capitalization, it was a very heavily weighted stock in some large ETFs, which makes its recent decline even more painful.

Some of the hardest hit ETFs over the last month was the SPDR S&P 500 ETF Trust (SPY) because Amazon was its second, now third, largest holding and SPY was the single largest owner of Amazon stock. ProShares Online Retail ETF (ONLN) had 22% of its assets in Amazon as of late, while the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR Fund (XLY) both had more than 20% of their assets in Amazon.

Throughout the ETF world, there where eight different ETFs which had more than 10% of their assets in Amazon in recent weeks. Most were in the consumer discretionary sector, but a few internet focused ETFs such as the Invesco QQQ ETF (QQQ), and the First Trust Dow Jones Internet Index ETF (FDN) had more than 9% of their assets in Amazon. Continue reading "Amazon's October Drop Hurting ETFs" →

Natural Gas ETFs Took A Wild Swing In September

Posted on by Matt Thalman

In September, the price of natural gas fluctuated more than we had seen since February of this year and it's likely that while some investors made vast sums of money, others lost just as much, if not more. But what made September so crazy was that natural gas made a significant reversal right in the middle of the month.

The price of the United State Natural Gas ETF (UNG) ended the month of August at $23.95 and closed at $24.83 on the last trading day of September. That move represents a 3.6% increase, not an insignificant amount but also not making anyone piles of money. But, while the price of natural gas started the month at $23.95, its lowest closing price for the month came on September 14, where it bottomed out at $22.69. Had you been watching the price, recognized this was the bottom and bought on September 14 or 15, you could have made yourself a nice 9.4% gain (the gain would be higher if you continued to hold for a few days at the beginning of October).

Again though, a 9% gain is a good return, but not necessarily what I would call “rolling in the dough.”

In order to make that kind of money, you would have had to use leverage. If you had purchased shares of the VelocityShares 3X Long Natural Gas ETN (UGAZ) at the close of September 14 and sold them at the close on September 28, you would have made a sweet profit of 30%. (Again, this would have been even larger, upwards of 50% if you held onto your UGAZ the first few days of October.)

Why did UGAZ perform so much better than UNG? Well, that is because UGAZ is three times leveraged natural gas fund, meaning it gives your three times the return of natural gas if the commodity moves higher. The flip side of that is you can lose three times the amount of money if natural gas prices fall while you hold the shares. Continue reading "Natural Gas ETFs Took A Wild Swing In September" →

Emerging Market ETFs Could Offer Great Opportunities

Posted on by Matt Thalman

Recent studies of emerging markets show their investment opportunities may be greater than most investors realize. One study believes that by 2020 the aggregate GDP of emerging markets will overtake that of developed economies around the world. Another one has the number of global consumers hitting 1.8 billion by 2025, with the majority of them living in emerging markets. Lastly, it is believed consumer spending in emerging markets will grow three times faster than that of developed markets in the coming years.

All three of these stats indicate there could soon be a huge growth opportunity in developing markets around the world. But there are a lot of emerging market ETFs that are down more than 9% year-to-date while the SPDR S&P 500 ETF (SPY) is up more than 10% and hitting new all-time highs. With that being said, many experts are beginning to grow weary of U.S. equities as we have now set a new record regarding the length of our current bull-market and valuations appear to be stretched.

When we take all of this into consideration, moving money to emerging market funds now may turn out to be a good long-term asset allocation play. So, let's take a look at a few funds which look appealing due to their rough 2018.

The first two are the Vanguard FTSE Emerging Markets ETF (VWO) and its direct competitor the Schwab Emerging Markets Equity ETF (SCHE). Both of these funds are large, liquid and have low fee’s; 0.14% and 0.13% respectively. They also both don’t consider South Korea an emerging market but hold positions based in Hong Kong, Taiwan, India, China, South Africa, Brazil, Russia, and Mexico to name the top 8 countries based on holdings. Both have an index weighting based on market cap and have a weighted market cap of around $80 billion, meaning you’re getting great foreign large-cap exposure. Continue reading "Emerging Market ETFs Could Offer Great Opportunities" →