It seems that every day a new ETF is listed with a new twist on an index.
So, for a short history in ETF evolution:
1. First came the market-weight indexed ETFs. These were ETFs that benchmarked themselves to indices like the S&P (AMEX: SPY) or the Nasdaq (NASDAQ: QQQQ).
2. Then, Jeremy Siegel and the WisdomTree (WSDT) team introduced dividend -weighted indices. Instead of giving commensurate weight to the largest companies in an index, these ETFs looked at companies with the highest payouts in terms of dividends. These were shortly followed by earnings-weighted indices and the ETFs that track them.
In case you were too busy watching Obama win in Iowa or voyeuring in on Britney's travails, we're in the midst of what some pundits call a "supercycle" of a commodities bull market.
For more on this supercycle, I recommend reading uber-trader Jim Rogers' work on commodities. Jim was, along with George Soros, the founder of the Quantum Fund. He has been pretty accurate with his predictions regarding hard assets and the ensuing demand/supply issues that are being exacerbated by demand from India and China. There's an insightful interview with him here that's really good reading.
From the interview:"Nobody has discovered a gigantic oil field for thirty years. That's not a theory; that's a basic fact. In the meantime, demand for oil has been going up for many years. That's not a theory, either; that's a simple fact. Likewise, there has been one lead mine open in the world for the past twenty years, and the last lead smelter was built in the U.S. in 1979. I could continue: the number of acres devoted to wheat farming has been declining for 20 years.
Some have noted the similarities between the recent run-up in U.S. share prices and the move that took place from March through July. But it's the differences that investors should really be concerned about.
In both cases, powerful rallies kicked off following mid-month capitulation lows after investors fretted over the fallout from upheaval in credit markets. Each time, the S&P 500 index managed to tack on about 200 points, or 14%, pushing the benchmark index back towards its March 2000 highs.
Of course, the first run-up took four months to complete, while the latter occurred in less than half the time. Leaving aside the question of whether the latest move has been a case of "too far, too fast," other comparisons suggest the market's current technical position may, in fact, be more precarious than it was in July, when prices suddenly fell off a cliff.
For one thing, investors seem to be as or more exuberant now than they were back then, which is the kind of thing that makes most contrarians more than a bit nervous.
The TradeKing blog posted a nice review by Dominic Basulto of the May 2007 cover story of Kiplinger's Personal Finance. that pointed out some old tried and true investment strategies that are still the best way to build financial wealth over time.
While these strategies are nothing new, they should be reaffirmed from time to time.
Kiplinger's suggests that you consider the following when looking to consistently build your investment value over time:
1.) Get involved in a sector which has been underperforming for a considerable period of time and is showing strong signs of picking up. Consider Warren Buffett's railroads play. Could he be on to something?
2.) Keep a look out for "breakout technologies". I suggest keeping a close watch on solar and artificial intelligence plays as well as RFID. Basulto suggests telecom and biotech.
3.) Higher risk generally provides higher returns. Do ya think? Play the volatility game. This requires nerves of steel and a lightening hand but if you're good, the returns can be immense. It's like betting on the horse that's straining at the gate and sweating before the run. Either that pony will run uncontested or it'll spin circles in the first length. Volatility plays best if you're a heavy duty behind the scenes researcher.
4.) Look for fundamentally strong companies which have floundered under poor management and then wait for a management change. I have watched several people successfully work this angle.
The Kiplinger article seeks to provide insight into the strategies for compounding your money over various time frames. The information provided is valuable and time tested but Kiplinger's makes clear that they suggest a longer time table shall provide you with greater investment security.
If anyone on Wall Street is up at this hour, they were probably holding their collective breath as the clock ticked toward the open of China's markets today. Would more losses come out of the East? Would the Dow enter a spiral, instead of a "correction"? And at the opening bell, the Shanghai Composite was, indeed, down. But soon the market rallied and, by the end of the trading day, a nice 3.94% gain had been registered for a close of 2881.07.
You can let out your breath, now. Well, maybe not entirely; though China is doing well for the moment, Japan's Nikkei 225 Index fell 2.85%, or 515.80 points, to close at 17,604.12. Markets throughout Asia, in fact, were down in amounts ranging from tiny (Sri Lanka) to severe (the Phillipines), but for Taiwan (up 0.02%) and China.
What would Europe do? Evidently, continue along the downward path. At the FTSE's market open, the index fell, and at 3:24 a.m. EST was already down 2.31%. Will the markets keep tumbling, each one in reaction to the other, like so many global dominoes? Or will the U.S. again follow China and bounce back? Either way, the Dow Jones Industrial Average is still awfully close to record territory; I think we have a few percentage points to fiddle with before I'm hitting any panic buttons.
Sunday afternoon my family and I went Christmas tree shopping in our own neighborhood, in Southeast Portland, Ore. We took the wagon and found the price range at the "expensive" Boy Scout lot was $30 to $60, with a fabulously full seven-foot fir going home in the Red Flyer for $39. My four-year-old declared it "perfect" and "beautiful" at first sight and my purchase slid under the $40 quick cash I'd gotten from the ATM.
Christmas tree prices don't make the Consumer Price Index, and as far as I know they aren't tracked in anyone's livability indices. But I wonder if that's not one of those secrets of livable places: well-priced local Christmas trees. It's both a measure of economy (there's lots left over for Christmas presents and butter for those Christmas cookies in my world) and livability (I feel happy to have supported a local farmer, a Boy Scout troop, and not broken my bank in the process). It's why even the apartment building windows frame big Oregon firs in my neighborhood. It's why every Subaru we saw on the streets this weekend was bedecked by an eight-foot tree on its way home to someone's living room.
Reasonable prices on live Christmas trees help make the season bright in Burlington and in Portland. How do the Christmas tree prices affect your town?
The headlines all sing a siren song of "Bulls" and "sentimentalists" and "optimism." Yet our readers seem more suspicious, looking at every piece of news with a jaded eye. My favorite comments come from Mr. noitall, who offers up a mix of value-minded cynicism that I particularly love.
With the Dow Jones Industrial Average reaching the new trading high today of 12,125.16 (closing at 12, 116.91), an all-time record yet again, I have to know:
Are you an optimist or a cynic? Logical or sentimental? Bull or Bear? What does the record do for you?
As I start to type this story, it's 2:59 and the DJIA chart I just saw read 11999.97, the tiniest tick shy of yesterday's 12,000 milestone, and 11.76 points off the record close. [By the time I published the market had closed two points above the 12,000 mark.] I know, yawn! Everyone's doing the same story. Dow 12,000, milestones in history. Right?
Right, and wrong. Let's do something else here, in this time that seems fraught with cliche and over-valuation. So many Wall Street pundits are saying, watch out! There's a slowdown ahead. And surely, many of these valuations seem high. Too high. But in my opinion, there are just as many stocks that have room to grow.
I'm looking at the numbers and I've found five Dow stocks to stay away from, and five that may still have some legs.
Five with room to zoom:
3M Company (NYSE:MMM), $79.20 up 3.66% today; 52-week high $88.35; 52-week low $67.05. P/E 17.47. Latest quarter results show it is up 6% on LCD growth. I think that P/E is nice and low for a company which, despite its industrial roots, is really an innovative company that actually makes things that people want. A good 10% below the 52-week high sounds like lots of room to me.
Once again equity markets tumbled today, pushing the Dow and the Russell 2000 into the red for the year. For the NASDAQ it was the eighth consecutive day of losses.
Causes for today's sell-off are numerous:
Before the bell, the Labor Department reported a 0.3% increase in the May producer price index (core), slightly higher than expected.
About two thirds of global markets also reported major declines, mostly due to worries regarding rising interest rates in the U.S. choking off consumer demand for exports.
Yields of short-term to long-term bonds continued their inversion, indicating the market's expectation of an economic slowdown.
Fear the Fed is going too far with its rate hikes.
Declines in oil and gold prices didn't ease investors' concerns.
Tomorrow is what the market is really waiting for, the release of the May consumer price index at 8:30 a.m. eastern. The consensus for the CPI and core CPI is 0.2% and 0.3% respectively. If the numbers comes below or within estimate, we can expect the market to start recovering from this month long correction.
For more on this supercycle, I recommend reading uber-trader 
Some have noted the similarities between the recent run-up in U.S. share prices and the move that took place from March through July. But it's the differences that investors should really be concerned about.
On Sunday morning I opened my local newspaper to see a story of how an Oregon family takes 
As I start to type this story, it's 2:59 and the DJIA chart I just saw read 11999.97, the tiniest tick shy of yesterday's 12,000 milestone, and 11.76 points off the record close. [By the time I published the market had closed two points above the 12,000 mark.] I know, yawn! Everyone's doing the same story. Dow 12,000, milestones in history. Right?
John McCain, losing ground, goes for broke tonight
If nothing else, gasoline prices are falling!
Closing Bell: Dow slump puts bulls on suicide watch; BAC, MS, F, FSLR all down, AMD up
