Rant About It

Archive for the ‘Exchange Trade Funds’ Category

Interesting Stories That You Missed

Posted by rantaboutit on March 19, 2007

Over the past few days i came across some interesting news/facts which deserves some limelight.
Basic Material ETFs
ETFs that focus on large-cap companies with exposure to basic materials have had nice returns for the year. Why is that so ? Analyst believe U.S. economy is growing and a growing economy needs materials. Returns on the 2 popular ETFs are
  • Vanguard Materials ETF (VAW) = 8.3%
  • Materials Select Sector SPDR (XLB) = 7.5%
Top companies in both of these ETFs are: Du Pont (DD), Dow Chemical (DOW), Alcoa (AA), Monsanto (MON), and Phelps Dodge (PD).

Tax Efficient ETFs
Many of the newer ETFs are more specialized which could effect their tax efficiency in different ways.
Here are 5 funds that are top-rated for consistent returns and tax efficiency:
  1. iShares MSCI Austria Index (EWO): 5-year return of 36% and over that time lost 0.4% to tax costs.
  2. iShares Russell 2000 Value Index (IWN): 5-year return of 13% and over that time lost 0.5% to tax costs.
  3. Vanguard Small Cap Value Index (VBR): 3-year return of 14% and over that time lost 0.5% to tax costs.
  4. iShares Russell Mid Cap Value Index (IWS): 5-year return of 15% and over that time lost 0.7% to tax costs.
  5. Vanguard Value Index (VTV): 3-year return of 13% and over that time lost 0.5% to tax costs.
China Raise Interest Rates
China’s central bank said it would raise both its lending and deposit rates by 0.27 % points to bring investment and credit growth in check and help balance the economy. The one-year benchmark yuan deposit rate would rise to 2.79% from 2.52%. The one-year benchmark lending rate is to rise to 6.39% from 6.12%.

Energy Market
John Segner, manager of the AIM Energy fund, which has 17% average returns over the last decade said that the energy market will see a temporary improvement in the supply-demand balance in 2007, but will then return to a supply shortage in 2008 and 2009. Demand will continue to rise, driven by India and China, but supply from non-OPEC countries, particularly Venezuela, Nigeria, Iran and Iraq, won’t rise sufficiently.

No Wal-Mart Bank
Wal-Mart Stores Inc. (WMT) is dropping its bid to establish a bank after months of heated debate over whether the world’s largest retailer should be allowed to gain the added financial power of a federally insured bank. Wal-Mart announced that it was withdrawing its application for a bank charter, which aroused widespread opposition from banks, lawmakers and consumer groups, and spurred debate within Congress and before the Federal Deposit Insurance Corp.

Top Subprime Mortgage Lenders With Q4 Originations

  1. HSBC Finance (HSBC) – $12.3 billion
  2. New Century Financial (NEWC.PK) – $12.2 billion
  3. Countrywide Financial (CFC) – $10.1 billion
  4. WMC Mortgage (GE) – $9.0 billion
  5. First Franklin (Merrill Lynch) (ML) – $7.8 billion
  6. Wells Fargo (WFC) – $7.4 billion
  7. Option One (H&R Block) (HRB) – $6.1 billion
  8. Fremont Investment & Loan (FMT) – $6.0 billion
  9. Washington Mutual (WM) – $5.7 billion
  10. CitiFinancial (Citigroup) (C) – $5.0 billion
Life Cycle ETF for Investors
TD Ameritrade (AMTD) plans to offer an ETF that rebalances frequently. The ETF will be a life cycle ETF with a target date for the investor, who will choose a year close to when he plans to retire. Life-cycle funds invest in multiple asset classes and become more conservative as time passes.

Cisco buys WebEx

Cisco (CSCO) bought WebEx (WEBX) for $3.2 billion. WebEx is a specialist on online conferencing and collaboration, and one of the most successful players in the software as a service segment. Buying WebEx creates a new point of competition with Microsoft (MSFT) which offers various collaboration tools of its own.

Microsoft buys Tellme Networks
Microsoft (MSFT) will buy privately held voice-recognition software company Tellme Networks for a estimated price of $800 million. The purchase will give Microsoft several promising new capabilities, particularly in mobile search. Tellme Networks already does more mobile search support than Google and Yahoo combined. Microsoft already offers a product that combines e-mail, instant messaging and VoIP into one voice-activated client; but the Tellme acquisition gives it advanced, enterprise-class speech recognition technology.

Wal-Mart Movies
Wal-Mart Stores (WMT) will team up with Fox Broadcasting to offer movies and television shows on its new online download service, and the collaboration between Amazon (AMZN) and TiVo (TIVO) to offer recordable content for download. This is bad news for competitors Netflix (NFLX) and Blockbuster (BBI).

Emerging markets ETFs
During the recent meltdown emerging markets ETFs were hit bad, but Russia seemed to be one of the hardest hit. The Russian RTS index is now down 9.6% for the year. This makes Russia the worst performer year-to-date among major global benchmarks. Falling commodity prices, particularly oils and metal puts more pressure on the Russian market as well as other emerging markets which tend to have a commodity-driven economy.

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Posted in Asia, China, Exchange Trade Funds, Oil, Walmart | 2 Comments »

Investing in ETF Options: Perspective of a Trader

Posted by rantaboutit on March 17, 2007


I found an enlightening interview of a trader talk about investing in ETF options. Let us have a quick look at what ETFs and Options are before we move to the interview…

What are ETFs
A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold.

What are Options
A privilege sold by one party to another that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price (strike price) during a certain period of time or on a specific date. Options are extremely versatile securities that can be used in many different ways. Traders use options to speculate, which is a relatively risky practice, while hedgers use options to reduce the risk of holding an asset.

Naked calls increase in value as the underlying stock increases in value. Likewise naked puts increase in value as the underlying stock decreases in value. Buying both a naked call and a naked put means that if the underlying stock moves up the call increases in value and likewise if the underlying stock moves down the put increases in value. The combined position can increase in value if the stock moves in either direction. The position loses money if the stock stays at the same price or within a range of the price when the position was established. This strategy is called a straddle. It is one of many options strategies that investors can employ. Options strategies can favor movements in the underlying stock that are bullish, bearish or neutral.

Taipan Financial News’ Smart Investing host Sandy Franks gets ETF trader Rick Pendergraft’s advice on profitable ETF investing.

Recommended Books:

Related Posts:

(Source: Wikipedia, Investopedia)

Posted in Educational, Exchange Trade Funds, Investment, Options, Trading, Video | Leave a Comment »

Can Weak Dollar Make Money

Posted by rantaboutit on February 25, 2007

Can Weak Dollar Make Money

Yes it can. Deutsche Bank and PowerShares announced the listing of PowerShare DB U.S. Dollar Bullish UUP and the PowerShare U.S. Dollar Bearish UDN exchange traded funds (ETFs) on the American Stock Exchange. These ETFs offer investors access to the performance of the United States Dollar against global currencies.

Rant: This is simply wow. Investors can make money not only in the strong dollar, but also in the weak one. However investing in foreign exchange related product is not for everyone. One needs to understand and monitor the national debt levels, trade deficits, changes in domestic and foreign interest rates, regional and foreign politics, economics and financial events.

Wal-Mart soon to enter India
A potential joint-venture between Wal-Mart WMT and India’s Bharti Retail is likely on the way. Multi-brand foreign retailers are only allowed to operate in India with a local joint-venture partner. Bharti plans to invest $2 to $2.5 billion by 2015 across 30 Indian cities each with a population greater than 1 million. Wal-Mart has not said how much it plans to invest. At this stage Wal-Mart’s role seems focused on providing supply-chain and technology management to the venture.


Rant:
Once Wal-Mart breaks into the Indian market, they have the capability to capture a huge market. However it would be a big mistake from their part if they step into the market without thoroughly understanding the mind-set of Indian consumers.

Sirius and XM Satellite to Merge
Satellite radio companies Sirius SIRI and XM XMSR have signed a merger agreement. The tax-free, all-stock deal values the combined company at $13 billion, including $1.6 billion in debt. The companies have lost $7 billion over the past eight years as they have battled for subscribers and high-profile talent, and their share prices have fallen 47% over the past year. Together, they can offer subscribers greater variety, including sports, news, and celebrity hosts. Sirius and XM claim their marriage would not create a monopoly, since they compete with media offerings like iPods, cellphones, and HD Radio.

Rant: The Department of Justice will need to decide whether the combination would violate antitrust regulations. This is going to be an really interesting merger. What you and me as an investor needs to find out is will a combined company be better equipped to stem the slowdown in satellite subscriber growth ?

JetBlue CEO Promises Big Changes
Recently a breakdown in communications at JetBlue JBLU led to passengers stranded for almost a week. JetBlue assumed that the ice storm would pass quickly and refrained from cancelling flights right away, as other airlines did. The storm intensified, and JetBlue ended up cancelling 1,000 flights within five days and shutting down service in 11 cities. At one point, nine full JetBlue planes sat on the runway at JFK for up to 10 hours. The company’s communication system failed to cope, pilots and flight attendants were not where they were needed, and there was no method in place to contact them.

JetBlue said they will enact a customer bill of rights that will pay stranded passengers and vowed to make changes.

Rant: Consumer confidence will be low after this mishap which would possibily affect their quarterly earnings. The stock is already seeing negative numbers.

(Source: SeekingAlpha)

Posted in Asia, Dollar, Exchange Trade Funds, India, Sirius, Walmart | Leave a Comment »