ETF Country Funds

Sep 28, 2012 in Country Funds
 
Good analysis is the synthesis of a lot of different research you do.   Below is one way to look at the global market in terms of its trend.   By this account, the trend remains up and the fact that the world markets had problems in the middle part of the year (significant drawdowns) is entirely consistent with many other bullish years.   September proved rewarding for the bullish camp.  On to October.   #RiskReward #Sharperatio
 
 
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Avoiding Trouble

Sep 24, 2012

U.S. Industrials have continued to be poor relative performers.   The weak performance has been accompanied by weak earnings guidance from firms like FedEx (FDX) and Caterpillar (CAT).     Allocation board portfolios have tilts to segments like financials and small caps -- and have avoided industrial ETFs altogether.

While we favor the use of relative strength lists for what to look to buy/overweight,  simplified relative strength ratio charts can sometimes be useful to your overall process by helping to see what to possibly avoid/underweight:

 

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"All Others Bring Data"

Sep 06, 2012

Eric Schmidt, Chairman of Google, often uses the phrase  "In God we trust, all others bring data."  He is referring to Googles ability to position itself based on a lot of data, not just guessing -- or being fooled by mainstream commentator group-think. 

Like the Internet in general, the financial markets are filled with a lot of confusing and erratic noise.  That sound-byte you heard on TV (or this blog post for that matter) is one tiny, tiny, tiny piece of the bigger picture. 

Let's look at some data.   Below is a list of 52 equity ETFs, including international index ETFs.   To avoid any perceived bias,  we just used the Ameritrade list of no-commission ETFs.   There are 101 of those but of the 101, just 52 are equity ETF's.

 

Note how in each of the past few years, there has been a drawdown and a recovery.   We use 3-months because generally speaking, you really don't want to wait for everything to be making 6 or 12-month highs before you make a move.   August was a month loaded with new highs and you could also see this in our ETF moving average and relative strength backtesting modules.    Do you want to just go with your gut and be a victim of the pitfalls of behavioral finance related to reading news headlines?   Or would you rather be data-driven?

 

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