Blogger had a scheduled outage today and it seems as though they over promised and under delivered on how long it would take.
The folks at ETFTrends.com have a top ten list of trends they see for 2007 and asked for my two cents on any of them. So #2 yes, #5 no and #7 maybe. Humor attempt.
Their number one is that foreign will continue to beat domestic. I'm not so sure that will be the case or more specifically I tend to think it will be a shades of gray difference not favoring either one very much. I expressed some concern in my 2007 prediction video that emerging markets might not have such a great year. I have no concern about the long term but it has had a great run over the last few years.
Their number 3 was that the ranks of ETFs will continue to explode. Based on what is in registration this is already true. I also hope some of the me too funds with no assets close. The funds in registration offer a lot of new things but we have a lot of mid cap value ETFs these days.
Their number eight is about narrow commodity funds. Seven just listed and I hope more come. Unfortunately many folks will use these to speculate with, the possibility that the next year won't be so hot seems reasonable and they may get a bad rap. If you read this site, chances are you are stock investor, I know I am. I am not a commodities investor. I am a commodity diversifier and there is a difference. I have 3% in GLD for clients, I disclosed the possibility of adding DBA (personal holding) at a 2% weight in a couple of months once I get a feel for how it trades day to day. That would total 5%. This is an effort to capture low correlation. It is not a complex commodity strategy. I have in the past and continue to now urge moderation in commodity ETF use.
Here is one of my own. I think the fixed income market is ripe for better ETF products to come. I do not think more treasury ETFs are the thing that would make this happen. Indexes already exist for many foreign bond markets along with other fixed income products. This seems so obvious that I am surprised more has not been done so far. Maybe I should broaden this to be 2007 and 2008 though.
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6 comments:
I was curious if you have ever run across articles by Paul Merriman. He has an article entitled "The Ultimate Buy and hold Strategy". It is located at sinletter.com/articles/Ultimate Buy and Hold.html I would be interesterd in your commments thanks .
Sorry make that: http://sinletter.com/articles/UltimateBuyandHold.html
I actually created a buy-and-hold portfolio last year based on Merriman's article - a few mods though. I plan to add 5% REITs in the future and will gradually add to the fixed income side as time goes by. I'll also gradually shift more equity weight large. Here's my live portfolio with actual allocations:
Vanguard Growth Index VIGRX 7.9%
iShares Russell 1000 Value Index IWD 8.1%
iShares Russell 2000 Growth Index IWO 7.7%
iShares Russell 2000 Value Index IWN 7.8%
iShares Russell Microcap Index Fund IWC 8.1%
Vanguard Developed Markets Index VDMIX 7.9%
WisdomTree International LargeCap Dividend Fund DOL 8.5%
Forward International Small Co Inv PISRX 8.4%
WisdomTree International SmallCap Dividend Fund DLS 8.7%
Vanguard Emerging Mkts Stock Index VEIEX 8.2%
Vanguard Short-Term Investment Grade VFSTX 7.2%
Vanguard Total Bond Index VBMFX 7.2%
Vanguard Inflation-Protected Secs VIPSX 4.2%
Here's an updated version of the article:
http://www.fundadvice.com/fehtml/bhstrategies/0108/0108a.html
One cannot state often enough that the investor needs to look at the ETF holdings before deciding to add it to a portfolio. Funds with practically identical names have completely different holdings with significant differences in quality, scope and quantity. As more ETFs are added, size will matter, both in assets and trading volume. As to a strategy, I use Investment Rule #1:"When in doubt about an investment decision, it is always better to err on the side of caution". The quantity of new and forthcoming ETFs begs this approach.
Hi Roger... this came up on the USO topic a few days back. What's your view of the impact of negative roll yields for commodity ETFs, which are mostly based on futures rather than physical and where most markets are sharply in contango.
The diversification argument in favour of commodities makes a lot of sense: but at times liek this one's surely got to question whether the cost of maintaining exposure outweighs the likely benefit.
The sad fact is that in all the talk about the commodity super-cycle and how/why investors should get a piece of it, one hears little or nothing about the mechanics of getting exposure and the potentially substantial negative cost of carry from ETFs/indices that are rolling futures in a market in contango. How many buyers of existing broad commodity products - and the new ranges of narrower products alraedy listed in London and coming soon, I hear, in the US - really understand what they are buying?
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