The popularity of income streams at the recent Las Vegas Money show was unbelievable. Most people are interested in income strategies, and there are a lot of questions about how to achieve income through investments.
We’d like to let you know about a new investment idea to think about – these are floating rate senior loan ETFs. They are paying about 5-6% in yield, and we think they could be a good tool for your portfolio. The ticker symbols to watch are:
These ETFs invest in credit from the banking industry and are tied to variable rates, so they’re not tied to the interest rate cycle. The income is paid monthly. However, remember that higher yield investments need to be watched on a daily basis, because risk is higher in these kinds of investment vehicles. Income is important, but so is protecting your portfolio.
We use a combination of mutual funds and ETFs for many of our income clients – there are so many great innovative ideas out there and it’s an exciting place to be investing right now. We love ETFs, but there’s nothing wrong with mutual funds; we like ETFs because they are lower in cost and very transparent, but sometimes mutual funds are the best way to move your portfolio forward. If you have any questions, are concerned about the risk in your portfolio or just want a second opinion on your investing strategy, please don’t hesitate to call us at 800-391-1118.
A lot of people are rushing into stocks right now, but patience is the ultimate virtue. We think that this unusual market will still pull back eventually, so don’t be fooled by the rush higher.
New bull markets are good markets to invest in right now, such as Japan, clean energy and natural gas. Getting into a new bull market is a much better place to enter the market than an old bull market (such as the U.S. right now).
We also want to encourage you to sign up for the Making Money Alert as you think about investing, and check out our five ETFs for income here.
We like to pick growth Exchange Traded Funds that are tied to some long-term cyclical positives around the world. We think that the following ETFs are either good investments or good ticker symbols to put on your watch list as you manage your portfolio.
Here are our five favorite ETFs for growth:
FRAK – small, focused on natural gas infrastructure
PBW – clean energy
VEGI – global food companies
DXJ – Japanese stocks
EEMV – conservative stocks in the emerging markets
As always, if you have questions about the state of your portfolio, how to use ETFs or market action, email questions or concerns to askdoug(at)dougfabian(dot)com.
This is a podcast summary. For more information, please listen to the entire broadcast here.
ETFs globally hold about 1.7 Trillion dollars in assets.
Over 1400 ETFs available for U.S. investors
Pros of ETFs: low cost, low trading fees, liquidity and transparency
Most ETfs are index-based
We believe that ETFs are excellent vehicles and we use them for the majority of our client portfolios.
However, there are some very good mutual funds out there, as well, and we encourage you to not get locked into only one investment style. If there’s a mutual fund that manages risk and implements a strategy that cant be duplicated with an ETF, we will definitely use it if it’s reasonably priced.
So, don’t get sucked into a ETF vs. Mutual Fund debate. Both can be used effectively with the right education, goals and portfolio outlook.
This is a podcast summary. For more information, please listen to the entire broadcast here.
The stock market is soaring, and there’s what we call a “feeding frenzy” – an emotional free-for-all amongst investors in the market this week. Just remember that markets are emotional, and you are much better off investing when everyone is in a panic than when everyone is feeling good. Don’t worry about being left behind, better opportunities for your money are still to come.
Tuesday was the 20th anniversary of the Exchange Traded Fund! Now it is an institution on Wall Street, and we encourage you to check out our full ETF report.
This is a recap of our recent (Tuesday, January 15, 2013) teleconference titled: Opportunities and Risks for Investors in 2013. If you missed the presentation, we encourage you to listen to the audio recording and download the handout, as well as read this blog for more information.
The purpose of this teleseminar is to help you with a thoughtful investment process. This is for general information and education, not personal investment advice.
Investor psychology – setting up for success in 2013
Don’t let news and fear dictate your investments. When opportunities come, be prepared to act, don’t wait. Many people are worried about their money, and they delay investment decisions because of this. There are trillions of dollars sitting on the sideline because of this. Worry is a negative emotion – nothing positive comes from it. Worry can cause bad decisions.
These are our four themes for 2013 (and the charts for them, below):
Global economy (agricultural commodities will be important because of an increasingly global economy and rising international middle class)
Precious metals. Money printing by central banks is a reason to own gold. Gold doesn’t need inflation to move higher, and will present opportunities.
(Click on any chart to enlarge)
Opportunities for growth
Download our ETF report here. See all of our available ETFs, categorized by type and themes. We think that ETFs are the easiest way to invest in these sectors.
Asia: China and Japan have both been under performing for many years, but may be emerging into a new bull market soon. Japan has significantly lowered their currency value via their central bank, which is good for their exports and equities. We believe that Asia will present some very nice opportunities in the year to come. Ticker symbols to watch: FXI, HAO, FCA, EWJ, SJC
Agriculture: If you were looking for a country that has the best, most productive agriculture abilities, you would look at the U.S. The U.S. has abundant farmland, water, and technology. Businesses are way ahead of commodities, so commodities are a better short-term opportunity, but businesses could be a great opportunity later in the year as well. Ticker symbols to watch: DBA, RJA, CORN, SOYB, CANE, WHET, MOO, PAGG, CROP
Precious Metals: We know that there is strong support for gold, because every time it gets down to $1500, people buy it. It can certainly fall below that, but it wouldn’t surprise us if it did test that support by falling briefly below $1500, then shooting straight up. Central bank and money printing make gold attractive for many people. Ticker symbols to watch: GLD, IAU, SLV, GDX, GDXJ, SIL
Energy: There are huge natural gas reserves here in the U.S., which is a good thing. Energy companies and master limited partnerships are not currently at a good price point, but this is a great sector to be watching for corrections and opportunities. Ticker symbols to watch: AMLP, IEZ, XOP, FRAK
Dividend Equities: Companies that are paying dividends are on very solid footing, have been around a long time, which makes them a good investment. Dividends are still taxed at a favorable rate for most Americans. We think it needs a sharp correction to really be a good value for investors, but keep an eye on it. Ticker symbols to watch: DDY, SPLV, XLU, IYR, DEM
(Click on any chart to enlarge)
Opportunities for income
We think that there are still a lot of reasons to own bonds around the world. We think that bonds are still a good investment and we are not concerned about a bond bubble right now.
Star Bond Fund Managers: Such as Vanguard, PIMCO, Double Line Funds, Really like using these top fund managers. They know what they’re doing and are performing very well for investors. Ticker symbols to watch: DLTNX, BOND
Short Term Bonds: Don’t have huge yields, but can be a good solution. These are easy to use and great for high-cash or income portfolios. Great for holding money short-term while you wait for opportunities.
Municipal Bonds: Cuts or shutdowns with debt ceiling could give buying opportunity for municipal bonds. If you have a lot of income right now and want good tax-free income, this is especially good to keep on your watch list.
Emerging Markets: Bonds of emerging market countries and companies are great opportunities for this next year. Remember that this is not necessarily an option today, because we’d like to see correction before buying, but a great sector to watch.
Dividend Equities: Telecommunications, utilities, etc. Nice yields right now, and might present us with opportunities as the year continues, but again, not today. Good to watch and on your buy list when you see weakness in the market.
Risks for investors in 2013
Today, we purposefully decided to talk about risks after we discussed opportunities. You need to stay positive and think opportunity first, so that you are ready for it. Manage risk, but don’t be a slave to it. Don’t obsess about politics and their outcomes, we aren’t in charge and we’re just going to have to watch and see what happens. Remember that the following risks are not predictions, just possibilities.
U.S. – higher taxes, slowing economy, recession
European sovereign debt crisis
Strategies to manage risk:
Asset allocation – know where your investments are and how much risk you have
Sell discipline – have a goal and a designated sell point
Entry point – buy wisely and watch for opportunities, not worry
Put volatility to work for you!
Vigilance in monitoring – know what you have and why, and have a watch list
Finally, let’s make an action plan:
Have a written goal for your investments – income or growth – whatever you decide on is valid, but you have to write it down and create a plan to make it happen
Invest based on what you and your family needs
Take inventory of your allocations and overall portfolio – decide what to do about risk and how to plan for this year.
Reallocate – look at some starter positions and some new ideas – maybe some of the ideas we discussed today.
Prepare for corrections, opportunities and sell points
As a thank you for participating in our seminar we would like to offer you a free consultation to discuss your portfolio and strategies to achieve your financial goals. This includes an in-depth analysis of all the holdings in your portfolio. We will share with you the unique strategies we are using for our clients right now and how active portfolio management can be of benefit to you.
This offer is available for goal-oriented investors with more than $250,000 in their investment portfolios. Contact us for a brief introduction and to schedule an appointment to review your accounts.
To schedule your free Portfolio Assessment, call us at 800-391-1118.
We’ve been asked to outline our top three favorite Exchange Traded Funds for investing in 2013. Over the next couple of weeks we’ll give you all three, and today we’ll talk about the first one: FXI.
FXI is an ETF made up of the China 25 ETF. It’s made up of the top 25 companies in China, and we picked FXI because the Chinese stock market has been underperforming for the last two years, and is likely to present some great investment opportunities soon.
If you’d like to find out about the opportunities, and perhaps more importantly, the risks you are likely to confront in the year ahead, then we invite you to join us this coming Tuesday, January 15, at 1:00 p.m. Pacific Standard Time, for our first live teleconference of 2013.
This teleconference, aptly titled, “Opportunities and Risks for Investors in 2013,” will give you our latest outlook on the equity markets as we embark on another year of uncertainty, and unknowns. Register here.
We are highlighting the “Fabian Five” because we think it’s very important for investors to monitor these five indices every week, and ask yourselves, are they changing for or against your portfolio? Here are the five indices that we are watching and that we encourage you to monitor as you make investing decisions:
You might notice that we crossed out “Oil” from the list of the Fabian Five and replaced it with “Commodities”. Originally, we had oil listed because it is the obvious energy choice: it moves the world and we’ve seen oil price spikes put an end to global economic recovery in the past. However, we’ve changed our minds on this, because as we’ve researched oil, it seems that there has been a seismic shift in technology and oil exploration. Couple that with the relaxing of tensions in middle east, and it seems that oil is not the key index to watch any more. We figured that a broader look at commodities would serve our purposes better as we monitor the markets, so we are watching GCC.
GCC is an Exchange Traded Fund that is an index of 17 equally weighted commodities – agriculture, precious metals, energy, etc. By using the Fabian Five and watching both the dollar (UUP) and commodities (GCC) we can see inflation coming. Know where the risks and opportunities are by watching these five key indices, and you can make wiser decisions for your investments.
If you have questions about these indices and how to monitor them, don’t hesitate to ask by emailing us at askdoug(at)dougfabian(dot)com.
(If you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on this topic, and please share this information with others who might benefit from our perspective.)