Market-Sector Spotlight: Energy

Oil prices are down about 20% from their highs, and so are natural gas prices and energy stocks.

There are some dividends in energy stocks, but for the most part, capital appreciation is the goal of energy investing. This sector has fallen significantly and re-priced to reflect the new low oil prices, but higher oil prices might be coming soon, particularly if Japan’s “big bet” pays off.

There are many ways to invest in energy using ETFs (more than 100 available). Here are a few examples:

  • XLE and others (large-cap energy, Chevron, Exxon, etc.)
  • Small-cap energy
  • MLPs (Master Limited Partnerships)
  • International energy
  • Natural gas

We really like natural gas and international energy for investment portfolios, and we think that some buying opportunities are setting up for you in this sector.

Please remember that this is not specific investing advice, but rather general observations – and please consult your wealth management professional before making any changes to your portfolio. If you have questions or concerns and would like a personal consultation with Doug, please call our offices at 800-391-1118 and we’re happy to help.

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Japan’s Big Bet

In Japan, we recently saw some interesting economic activity. The Japanese central bank made the decision to expand quantitative easing by about 15%, buying Japanese government stocks and bonds.

They are expanding QE because of a weak economy and low inflation there, and they are hoping to stimulate their economy and their stock market with this move. THe real loser here is any Japanese citizen who is not invested in stocks, because they will just see prices going up on basic commodities without the bonus of a strong investing environment. This is the largest and most aggressive QE program ever attempted, and no one knows what the long-term results will really be.

Japan’s big bet has set the markets on fire, and it will interesting to see how this plays out, particularly because the United States Federal Reserve has announced a pull-back in Quantitative Easing and stimulation.

Don’t forget about Doug’s special post-election teleconference for podcast listeners only! If you aren’t signed up to receive the podcast and be in Doug’s “inner circle”, you can do so here.

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Federal Reserve Policy: Quantitative Easing

Quantitative easing is going to be ending soon, and many investors and others are nervous about this and its affect on the markets. The U.S. economy has improved significantly, and interest rates and oil prices have both fallen, and that’s good news for the Federal Reserve.

It will be interesting to watch stocks and bonds as QE3 comes to a close, and we think that investors should stay aware of buying opportunities and potential set-ups in the markets. There’s a difference between short-term and long-term interest rates, and it’s wise to stay aware of those differences and their affect on your portfolio.

Central bank policies, attempting to stimulate growth, seems to us to be unwise meddling of governments. It remains to be seen if these quantitative easing policies really help world economies, and the Fed meeting will be the big market mover this week no matter what.

We see the immediate future as an unstable environment going forward, and we think that investors should stay informed, alert and aware as you manage your money and your risk.

If you have specific questions about your portfolio, please call our offices at 800-391-1118 and we’d be happy to chat about your goals and your money.

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ETF Strategy: High-Yield

This recent market correction has hit high-yield offerings quite hard lately, but we think that a high-yield ETF strategy is still a good one to look into. There was mass liquidation in some ETFs because of these corrections, and that can set up some really interesting buying opportunities for savvy investors.

Multi-asset funds and MLPs (Master Limited Partnerships) are both good options for investors to look at. Head over to our Special Reports page and download our complete ETF report and check out some of these ticker symbols for yourself. We think that some great buying opportunities might be coming soon and we advise you to be watching for these kinds of ETF options for your portfolio.

As always, please call our offices if you want precise, personalized investment advice, and keep a close eye on your investment goals as you look into these strategies. Our office can be reached at 800-391-1118, and please call us today with questions or concerns about your portfolio or our educational resources.

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Upcoming Market-Moving Events

Please remember that Doug Fabian’s educational resources (the podcast, blog, special reports, teleseminars, etc.) should not be considered personal investment advice. We are passionate about investor education and that is why we produce this educational content. If you need personal advice, please call our offices at 800-391-1118.

We see the upcoming Federal Reserve meeting and the mid-term elections as major market moving events, coming up over the next couple of weeks. It is our opinion that the correction we’ve been seeing in the market has not quite run its course, so be on the lookout for more volatility out there.

When we look at 200-day averages around the world, we see the major indices around the world were above their 200-day average in the summertime (with the exception of Japan), and are now below it (with the exception of China). Slower global growth and weak oil prices are contributing to fluctuation in the international markets right now, and is something for investors to keep an eye on. This might be a good opportunity to consider repositioning your portfolio to eliminate or at least reduce the risk in your investments. Do your research, look for specific areas to manage your risk and be prepared for continued volatility. If you’d like help with specific investments or a portfolio review, you may call our offices at 800-391-1118 or email general questions to askdoug(at)dougfabian(dot)com.

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Protecting Yourself from the Incompetence of Government

There is government incompetence on many levels – state, local and of course federal – and these bad policies and poor reasoning in government are a risk to high-net-worth individuals. Poorly thought-out policies, bureaucratic incompetence and the overarching unwillingness of government officials to rein in spending and enforce common-sense laws are putting your money and investments at risk.

We can see that, after the financial crisis of 2008, no one from Wall Street went to jail. That’s an example to us of government incompetence that really affects your money in real ways. The Federal Reserve’s actions, deficit spending and debt problems from President Obama and Congress, and countless other bad ideas from the Federal government are real risks to your wealth and lifestyle.

Entitlement benefits will have to change, taxes are going up, and we believe that the next financial crisis is likely coming in the future because of bad government policies. Our goal is to help you protect your wealth and prepare for the risks that are coming.

Make sure to sign up to receive the podcast in your email every week, here, and that will give you information about our post-election teleconference coming up, that is EXCLUSIVELY for our podcast listeners. We will talk about what happened in the midterm elections and what that means for the future of your money and your portfolio, so be sure to sign up and stay tuned for more information on that.

Sign up for the weekly email and podcast here, and you can also subscribe at iTunes, here.

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ETF Strategy: Use of Inverse ETFs

When it is appropriate to use inverse ETFs and how do they work? Inverse ETFs are positioned to go up when the market goes down. There are more than 100 options for inverse Exchange Traded Funds, and varying levels of risk involved in using them for investment. They are based on an index like the S&P 500, and can give investors a way to amplify movement in the markets.

There are non-leveraged, double-leveraged and triple-leveraged inverse ETFs through the use of futures and options. These vehicles are very volatile and for most people reading this blog they are not appropriate for portfolios. There’s simply too much risk and should be used for very short-term trades. The market has a tendency to go down and then reverse quickly, and those abrupt movements can wreak havoc on an inverse ETF portfolio. People tend to invest in inverse ETFs when emotional or scared, and that is never a good time to invest.

For most people, these are not a good investment vehicle, and not the kind of strategy that we think most investors can implement with consistent success. They are simply too volatile and too short-term for most investors to use well – however there may be times in the future when we think inverse ETFs are a good option for short-term gains, so stay tuned to our blog and podcast if you’re interested in that course of action.

As always, please email any further questions to askdoug(at)dougfabian(dot)com or call our offices at 800-391-1118 for more information and personalized advice.

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Market Volatility and Risk

When we blog and podcast the news and views in the financial markets, our goal is education, information and motivation (not, of course, personal financial advice). We want to help you stay informed and aware of what’s going on out there and how you can protect your investments and meet your financial goals. If anything we talk about on the podcast or blog piques your interest, please don’t hesitate to call our offices at 800-391-1118 for a complimentary consultation and portfolio review.

There’s a lot of market volatility out there right now, and we know you’re aware of that. The domestic economy (particularly retail sales), Europe’s horrible economic data and down stocks, the scare of Ebola (which has hit airlines and tourism particularly badly), interest rates falling rapidly, and the collapse of oil prices have all lead to some uncertain territory for investors. Remember that we live in a global economy, and that there is concern out there about global growth.

Many people have asked us if it’s time to sell right now. We do not think that you need to sell everything, but you do need to look at your risk exposure at this time. It’s important to know what your goals are and how the current market action affects those goals. Doug does not believe that the market is done correcting at this point, and we think all investors should take careful inventory of what they own and why at this point. If you have any questions about risk or what you should do in your specific portfolio, please email askdoug(at)dougfabian(dot)com and we’ll do our best to answer those questions directly or address them on the podcast.

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October ETF Snapshot: The Top 20 ETFs by AUM

As of September 30, the top 20 ETFs as measured by assets under management (AUM) account for almost 40% of all assets invested in exchange-traded funds. Be sure to check out Doug Fabian’s Special Report for October, which details this information here. Here are a couple of his thoughts about the data in October’s ETF Snapshot:

  • The top 20 ETFs are dominated by US Equity indexed products. This shows a lack of diversification outside of the U.S. by investors.
  • Cost seems to be playing a major factor in ETF selection. The cost per year to own 17 of the 20 ETFs is 20 basis points or less.
  • While iShares remains the largest provider of ETFs, Vanguard has steadily amassed assets.  Leveraging their background in mutual funds, Vanguard is vying to become the index champion with their wide variety of low-cost ETF offerings.
  • ETFs are no longer just a hedge fund or day-trading tool, but rather sound long-term investment products for any and all investors.

For the complete special report, click here. Also, don’t forget that today, Friday, Doug records a new Weekly ETF Report podcast. If you’d like to listen or subscribe to that broadcast, click here.

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The 5 Investments You Might Have

Many people have gotten very complacent about a stock market crash or downturn, and this is a good opportunity to take a look at your portfolio and what positions you own and your allocations to those positions.

Look at your big positions, and make sure that those large positions are well-thought-out and carefully examined. There are five kinds of investments you might own in your portfolio, which are:

  • Individual stocks
  • Bonds
  • Mutual funds
  • Cash
  • ETFs

So far, bonds have been a safe haven for investors. This year, the U.S. markets have been pretty resilient, but we are starting to see some corrections and trend-breaking. There is a lot of news out there – sanctions against Russia and slowing of global growth, interest rates and gas prices staying low, and a strong dollar – all of which potentially matter to your portfolio.

We believe that there’s opportunity coming for smart investors and we want to help you be prepared. If you want a one-on-one consultation with Doug and his team of advisors, please call our offices at 800-391-1118 for a personalized consultation about your specific investing goals and portfolio needs. You can also email questions to askdoug(at)dougfabian(dot)com.

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