Tag: matt thalman

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" →

Marijuana ETF On Wild Ride in September, Will It Continue?

Posted on by Matt Thalman

As we close in on October 17th, the official day that Canada legalizes marijuana, potential investment opportunities in the industry continue to attract new money, and share prices have ballooned. But the real question is whether or not the boat has left you at the dock or if there is still time to get in on this party.

Anyone that follows the stock market has undoubtedly heard of the top few marijuana stocks by now. Companies like Tilray (TLRY), Canopy Growth (CGC), or Aurora Cannabis (ACBFF), just to name a few have been highly reported on over the last few weeks, increasing interest and moving their share prices. These companies have seen outside investments from alcohol companies, and interest in their business’s increase as both investors and other industries try to position themselves for what some believe will be the ‘next’ great investment frontier.

Tilray, which just went public in July, has seen its share price go from below $30 to as high as $250 in mid-September. That jump, in particular, sent the price of the only U.S. listed marijuana ETF, ETFMG Alternative Harvest ETF (MJ) to its highest level ever on September 20th at $43.01. After closing August at just $33.48, on September 20th MJ was up 28% for the month but ended up closing the month down just slightly from that level at $40.05, which by the way was still a 19.6% gain in September.

It should also be noted that MJ was a top ETF performer in August, rising 27.7%. In August MJ got a boost from the alcohol companies, Constellation Brands (STZ) announcing it was increasing its stock in Canopy. Molson Coors Brewing (TAP) reporting it had entered into a partnership with Hydropothecary Corp to create a cannabis-infused beverage, and Diageo (DEO) apparently being in talks with a few different Canadian based marijuana companies about either partnering or buying stakes in their businesses.

MJ’s performance in August continued in September, but are we going to see the same trend in October or even further out in 2019? Continue reading "Marijuana ETF On Wild Ride in September, Will It Continue?" →

Maybe FAANG Isn't For You, But BAT May Be

Posted on by Matt Thalman

Long before the trade war started, investors have been arguing over whether it’s better to invest in an established market like the US or growing, larger population market like China. This debate has stretched for years, well before the terms FAANG (Facebook (FB), Apple (AAPL), Amazon.com (AMZN),Netflix (NFLX), and Alphabet (GOOG)(GOOGL)) or BAT (Baidu (BIDU), Alibaba (BABA), and Tencent (TCEHY)) were coined.

But now, as the trade war between China and the US continues to heat up, investors have been battling over another China Vs. US technology investments. Perhaps because these stocks have been monster winners and some believe that since these companies are mainly technology stocks, they will be exempt from the pain that could come from the trade war. However, while it is unknown how much the trade war will affect these big technology companies, it should be noted that if each country’s economy suffers from the new tariffs, that the FAANG and BAT stocks could feel some adverse effects.

But in the meantime, if you are still interested in finding some Exchange Traded Funds which will give you exposure to FAANG and BAT stocks, you are in luck. I recently highlighted a few FAANG related ETFs which you can read about here, or continue below for some BAT related ETFs. Continue reading "Maybe FAANG Isn't For You, But BAT May Be" →

A Few Bond ETFs That Have Performed Well, Despite Rising Interest Rates

Posted on by Matt Thalman

Investors who buy bonds or bond funds are doing so because they want to reduce their risk and preserve their capital. Bonds work very well at doing this when the stock market or economy is declining, but not when economic conditions are strong.

Currently, the US economy is strong with 4% GDP growth, the S&P 500 coming close to setting a new all-time high, the unemployment rate at the lowest level its been in years. All of these indicators point towards the opposite of what bond investors want, especially the need for higher interest rates as inflation continues to creep higher.

Recently JP Morgan Chase’s CEO, Jamie Dimon, said he thought the 10-year Treasury yield should be at 4%, not where it currently sits at the below 3%. He went further and said that 5% interest rates are coming and that investors need to start preparing. Some have argued that interest rates should already be in the 4% to 5% range.

If, Dimon and others are correct in their prediction that higher interest rates are coming than current bond holdings need to “Get out of Dodge” before they get burnt. We have already seen bond funds take a hit in 2018, but if rates do climb as high as 5%, the losses we have seen thus far may dwarf what is to come.

Not surprisingly the best Bond Exchange Traded Funds over the past year are the 3X leveraged short funds. Continue reading "A Few Bond ETFs That Have Performed Well, Despite Rising Interest Rates" →