Dynamic Growth ETF Portfolio
NEW BUYS:
EEB: Claymore ETF BNY BRIC- .556
NEW SELLS:
None
SWITCHES:
To Honorable Mention:
OIH: Oil Services HOLDRS- .444
EWM: MSCI Malaysia (Free) Index- .429
Here are our Top 10 ETF's for the week of October 8th:
1) FXI- iShares FTSE/Xinhua China 25- .693
2) PGJ: PS Golden Dragon China Fund- .679
3) ITA- iShares DJ Aerospace & Defense-.577
4) EEB: Claymore ETF BNY BRIC- .556
5) EWS: iShares MSCI Singapore (Free) Index Fund-.543
6) IAH- Internet Architecture HOLDRs Trust-.522
7) PPA- PS Aerospace & Defense- .513
8) IXP: Telecommunications Sector Index Fund- .502
9) DND: Wisdom Tree Pacific Ex-Japan Total Dividend- .487
10) IHI- DJ Medical Devices- .461
Our newest addition to the top 10 is the Claymore ETF BNY BRIC (EEB) which invests in approximately 75 securities from companies in Brazil, Russia, India and China (BRIC).
Honorable Mentions:
OIH: Oil Services HOLDRS- .404
EWM: MSCI Malaysia (Free) Index- .429
Here are our Top 10 Fidelity Sector Funds for October:
1) FSESX- Energy Services
2) FWRLX- Wireless
3) FSDAX: Defense & Aerospace
4) FNARX: Natural Resources
5) FSCHX: Chemicals
6) FDFAX: Consumer Staples
7) FDCPX: Computers
8) FSENX- Energy
9) FSDPX: Materials
10) FSMEX: Medical Equipment
Honorable Mention (Holds):
FSNGX- Natural Gas ##13
FSTCX: Telecom-#12
FSPTX: Technology-#13
The Week in Review:
The stock markets recovery since August has been quite impressive. A little misguided, but impressive no less.
What is impressive is how the market seemed to shrug off bad news from financial companies like Citigroup, UBS, Merrill Lynch, and Washington Mutual. I didn't know that announcing multibillion-dollar write-downs were considered good news.
I realize that optimism sells, but I don't want to be like the guy that jumped from the 60th floor of a building. You know the story. As he was falling, he passed by the 22nd floor and said, "so far, so good".
While the market still has the momentum to climb further, the real problems with the economy are virtually being ignored. The stock markets "Wall of Worry' continues to be climbed.
JOBS
Once again, the jobs report is an area of concern. Goods-producing industries continue to declined, while most of the jobs gains continue to be in Health care, bars, and restaurants. US Manufacturing jobs continue to evaporate to the BRIC nations.
Let's face the facts, good paying manufacturing jobs have left our nation, and those that have not, will do so soon.
INFLATION
I read this week that the admission fee to visit Disney World is now $75 for the day (up 29% from 2004). Wow! Two years ago it was around $58/ day, and that was right after a price increase.
The Bureau of Labor Statistics continues to report inflation numbers that misrepresents the actual inflation numbers. This is why we have seen higher oil prices, big increases in food prices, and housing prices that are still unaffordable.
IN THE REAL WORLD
Since 2003, economic growth has relied on consumer debt to fuel the expansion. We all know that the current mortgage debacle is hurting personal consumption. This decline in consumption has been ignored by the stock market.
In time, lower sales and lower profits will begin to be reflected in stock prices. While the stock markets recent adrenaline rush has come from prospects for lower interest rates, a falling dollar, higher inflation, and lower corporate profits will eventually prevail.
When will this happen???
We may be able to get through the Christmas selling season before we know more. It will be interesting to see if companies begin to pre-announce bad news in November. If they do, a recessionary sell-off may begin sooner than many expect.
For now, we will continue to ride the markets new life a little longer before taking profits.
Our current asset allocation is as follows;
70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative
At Dow 14,500, S&P 1575, we will reduce our allocation models by 5% to;
65% Equities: (Normally 95%) Aggressive
55% Equities: (Normally 80%) Moderately Aggressive
45% Equities: (Normally 60%) Moderate
25% Equities: (Normally 40%) Moderately Conservative
10% Equities: (Normally 20%) Conservative
