Dynamic Growth: ETF Portfolio
NEW BUYS:
DBA: Powershares DB Agriculture Fund- .562
IYF: iShares Dow Jones US Financial Sector- Not Rated
NEW SELLS:
UTH: Utilities HOLDRs Trust- .239
SWITCHES:
To Honorable Mention
VWO: Vanguard ETF Emerging Markets- .317
PGJ: PS Golden Dragon China Fund- .310
Back to Top 10:
PZD: PowerShares Cleantech Portfolio- .335
Here are our Top 10 ETF's for the week of January 28th:
1) DBA: Powershares DB Agriculture Fund- .562
2) EWZ: Brazil Index- .469
3) SLX: Market Vectors Steel Index Fund- .468
4) FXF: Currency Shares Swiss Franc Trust- .461
5) EEB: Claymore ETF BNY BRIC- .434
6) OIH: Oil Services HOLDRS- .401
7) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .355
8) INP: India Total Return Index- .342
9) PZD: PowerShares Cleantech Portfolio- .335
10) IYF: iShares Dow Jones US Financial Sector- Not Rated
Honorable Mention:
VWO: Vanguard ETF Emerging Markets- .317
PGJ: PS Golden Dragon China Fund- .310
Notes:
Investors are clearly running scared as Bonds, Foreign Currencies, Gold, and a few select Commodity Funds now dominate the top spots in our weekly research rankings. If the economy and the stock market continue to weaken, Commodities will be the next sector to undergo a major pullback, but Agriculture looks like a great long term buy.
We are adding the ultimate contrarian play by placing the iShares Dow Jones US Financial Sector Fund (IYF) to our top 10 list. By the end of the year I believe the financials will make a major recovery, and lead the broad market higher.
We are pleased with our 2007 results for both Dynamic Growth portfolios. From January 2, 2007- December 31, 2007:
Our Top 10 ETF Portfolio Gained: + 10.56%
Our Top 10 Fidelity Sector Fund Portfolio Gained: + 13.028%
During the same period;
DJIA: +6.4%
S&P 500: +3.5%
NASDAQ: +9.8%
The Week in Review:
US Equity Markets:
DJIA: 12,207.17, down 171.44
S&P 500: 1,330.61, down 21.46
Nasdaq Composite: 2,326.20, down 34.70
From Wednesday's intraday low to Thursday highs, the DJIA has climbed about 6.5%, while the S&P 500 gained 6.7% and the NASDAQ 7.2%.
The action on Wednesday and Thursday looked more like an oversold bounce fueled by short covering. I believe a re-test of Wednesdays lows will occur after this brief, but sharp rally plays out.
On Friday, the stock market closed out the week down. The Financials led the market lower as Fannie Mae fell 2.39 to 31.80 on concerns it may face stricter regulation in Washington.
We would love to sound the all-clear signal, but given the headwinds facing consumers and the economy, its way to early to do so. All-clear signals don't happen overnight. Politicians are in a panic to stop the current economic decline, so much so that they were willing to urgently pass a fiscal stimulus package backed by Congress and the White House.
I don't care what you hear on TV, the Mickey Mouse stimulus package giving consumers $300, $600, or even $1200 tax rebates will do little to revive the economy. When you take into account that the average consumer is neck deep in credit card debt, lines of credit, and high mortgage payments, it’s a bit naive to believe the problem will be buoyed by a tax rebate of few hundred bucks.
As for the potential solutions to the current crisis, they are aggressively being worked on. I have always said;
"Throughout our history, the track record is clear. Solutions to major problems always appear".
The one caveat to this slogan is will the economy get much worse before the solutions appear. Sometimes solutions appear quickly, and sometimes they do not occur until a country's pain becomes unbearable.
In short, the stock market has a very bad financial virus. A 75 basis point Fed Rate cut, a $150 billion economic stimulus package, may make investors feel better, but the virus still has to run its course. This means more nausea is in store for investors, and you know what comes with being nauseous.
As far as potential entry points are concerned, look and see where the Dow would be at declines of 10%, 15%, 20%, and 25%. The following percentage declines would put the DJIA at the following levels:
Declines from 14,166:
10%= DJIA 12,749
15%= DJIA 12,041
20%= DJIA 11,332
25%= DJIA 10,624
Before we go any further, I told you if I found the clip of CNBC's Erin Burnett calling Apple Computer the s**t stock, I would post the link. Well here it is!
I have to admit, this is one of the funniest things I have ever heard from a financial commentator. What is really funny, is whoever wrote this, and put it on the teleprompter for Erin to read, may be absolutely right about Apple's 2008 prospects. Could we be finally hearing the truth?
For the week:
-Gold closed at $910.70/oz +29.00 for the week. Last week gold closed at $881.70, and was trading at $897.70 two weeks ago.
Gold shot up again as the U.S. dollar dropped after the Feds .75 basis point rate cut.
-The Commodities CRB Index closed at 361.64, up from 360.87 last week, and down from 365.15 two weeks ago. Three weeks ago the CRB hit a new high of 366.22. The previous high was on November the 7th at 359.05.
-Crude Oil closed at $90.71 /bbl up from $89.92 last week and down from $92.16 two weeks ago.
Oil prices are in a tug of war between a weaker dollar, and the potential for a weaker economy.
Like I had said last week, I wouldn’t be surprised to see an adjusted trading range of $75-$85/ barrel. This is why I refuse to overweight oil in the ETF portfolio despite of the current rankings in our system.
Adjusted for inflation, oil traded at $100/bbl a few weeks ago for the first time in history. This includes the highs set in the 1970s.
-The U.S. Dollar close at 75.99 down from 76.37 last week, and down from 76.01 two weeks ago.
This Week:
-Monday, December New Home Sales (previous -9.0%).
-Tuesday, December Durable Goods Orders (previous 0.1%).
- Wednesday, the Fed meets, and investors are hoping for another rate cut of .50 basis points.
-Thursday, December Personal Income. (previous 0.4%), December Personal Spending (previous 1.1%), January Chicago PMI (previous 56.6).
-Friday, January Nonfarm Payrolls (previous 18,000), January Unemployment Rate (previous 5.0%), December Construction Spending (previous 0.1%), January ISM (previous 47.7).
Our current asset allocation is as follows;
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
