Tag: ETF Investing

An Industry That Could Be A "Savior"

Posted on by Matt Thalman

A few years ago, the investing world was enthralled with the idea that the marijuana industry was going to be the ‘next big investing trend.’ Unfortunately, for most who bought into the hype, the investments in the industry have not lived up to their promises. However, that may soon be changing.

The big marijuana players and their investors have all suffered over the years for several reasons. First, the industry is simply too fragmented for a single or handful of players to dominate the landscape. This is an issue because while competition is good, too much competition doesn’t allow individual companies in the industry to experience the power of ‘scale.’

What that means is, let’s say a marijuana company opens a farm. The farm may be large enough to produce 100 pounds, which is enough to cover the costs of the farm and the farmer. However, that 100 pounds aren’t enough to cover the cost of the transportation of the product from the farm, the distribution center, the security for the farm and distribution center, or the research and development so that the farmer can become more efficient and offer different strains. The fragmentation of the industry also hurts pricing power. The more competition means people trying to push product, perhaps simply to cover costs, means prices hit near rock bottom.

Another reason the industry has suffered is the very slow progress of legalizing marijuana both in most US States and the vast majority of countries around the world. With only a handful of states in the US having legalized the plant and the Federal Government still considering it a controlled substance, adoption rates around the country have been sluggish. When the industry was expecting to grow due to increasing numbers of legalized States rapidly, investors were pouring money into them. However, that money has begun drying up, which is now causing problems on balance sheets and debt levels. Continue reading "An Industry That Could Be A "Savior"" →

The Fed Is Buying These ETFs - Part 2

Posted on by Matt Thalman

In part one of this piece, I pointed out what ETFs the Federal Reserve had purchased as of May 19th. Since then, the Fed has purchased more of these ETFs and began buying corporate bonds directly, not through an ETF.

In this piece, we will look at whether or not you should follow the Fed's footsteps and buy these funds or other bond ETFs, or whether you should find your own path and buy non-bond ETFs in the days, weeks, and months to come.

The first issue with the Fed buying bond ETFs is that the demand for said ETFs likely rose when the Fed was buying. This is simply a supply and demand issue, especially when the bond ETFs wasn't able to issue new shares. Issuing new shares can only be done when the fund was able to purchase more bonds to bundle into its ETF. And since the Fed was dumping large amounts of money into the market in a rather short period of time, the likelihood that these funds where all able to increase their asset bases are not high.

So, the Fed has probably already pushed the price of these ETFs higher than where they would typically be trading. This is not good for new investors. Continue reading "The Fed Is Buying These ETFs - Part 2" →

Financial Sector ETF May Break Below Price Gap

Posted on by Chris Vermeulen

Our research team warned of a peak in the Financial Sector ETF on June 10, 2020, with this article.

It was important to understand the technical setup that existed at that time and what the Fibonacci Price Modeling system was showing then. There was very clear support near $23 that was highlighted by the Fibonacci Price Modeling System, and we were very clear in our future price predictions within that article.

"The $27 price peak sets up directly between our two Fibonacci Daily upside price target (Peak) levels. We believe this setup is a very strong indication that a move to below $23 may be setting up over the next 30+ days. The Q2 data may very well push investors to re-evaluate the potential for the Financial sector if delinquencies and at-risk borrowers continue to default in greater numbers."

The timing of our original article could not have been better for skilled technical traders. Since that June 10, 2020 article posted, the XLF price has fallen almost exactly to $23 (-10.15%).

Currently, the FLX price is recovering just above the price gap that will act as the next "window" for the price to attempt to fill. Skilled technical traders should watch Continue reading "Financial Sector ETF May Break Below Price Gap" →

The Fed Is Buying These ETFs And Why It Matters (Part 1)

Posted on by Matt Thalman

The Federal Reserve is doing everything it can right now to help prop up the US economy and minimize the impact of the Covid-19 pandemic has on the economy, including purchasing ETFs.. The Fed has, by almost all market participants' views, acted very quickly, very aggressively, and rather decisively in their attempt to limit both the short and long-term effects this pandemic has on the US economy, despite the country permanently shutting down for nearly two months.

The first move by the Fed was to reduce interest rates by lowering the Federal Funds rate. Then, they began buying Treasury Bonds and mortgage-backed securities, (they have of course performed a number of other 'lending' type activities that have lower rates for lending and made it easier for more money to flow into the system, but for the average person knowing that the Fed lowered interest rates and started buying Treasury bonds and mortgage-backed securities, that is really the gist of it. To read more about the exact things they have done, check this article out.) Both these moves the Fed has done in the past, so no surprise there when they announced their plans.

However, in an attempt to pump liquidity back into the market, maintain low-interest rates, give business leaders and consumers the confidence they need to continue spending the Fed is now also buying Exchange Traded Funds.

Why are they buying ETFs and not something else? Continue reading "The Fed Is Buying These ETFs And Why It Matters (Part 1)" →

BNY Mellon With Truly Fee-Free ETF

Posted on by Matt Thalman

BNY Mellon has been a player in the ETF industry for years, however until just recently, it was always a 'behind the scenes' player. In early April, the Bank of New York Mellon changed that in a big way by not only introducing three brand new ETFs but offering one of them to clients for free.

Yes, you read that correctly, the BNY Mellon US Large Cap Core Equity ETF (BKLC) has an expense ratio of zero. The fund doesn't charge you anything to own it. Furthermore, the Bank's two other ETFs come with extremely low fees, 0.04% for each of them.

The BNY Mellon US Mid Cap Core Equity ETF (BKMC) and the BNY Mellon US Small Cap Core Equity ETF (BKSE). Both fall in the top 1% of lowest funds when based on expense ratio, and that's while the BNY Mellon US Large Cap Core Equity ETF was technically the first ETF to offer a zero-expense ratio. Since the launch of these three funds on April 9th, BNY Mello has also launched a few other ETFs, all of which have low fees but one other that doesn't have any, the BNY Mello Core Bond ETF (BKAG).

You may be wondering about another ETF that has been touted as a zero-fee ETF or the first free ETF, it's the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX) however while they don't currently have an expense ratio, they could in the future. The reason for that is because the SoFi products have a fee reducing waiver, which would need to be renewed for the fund to maintain its zero-fee long term. Continue reading "BNY Mellon With Truly Fee-Free ETF" →