Exchange Traded Funds

ETF InvestingManaged ETF portfolios are all the rage among money managers. The problem for individual investors is that the fees layer up quickly. A financial advisor might charge about 1% to recommend money managers to clients. The money managers often charge another 1%. The combined 2% in "service" fees is a HUGE barrier to overcome. Most people can manage an ETF portfolio very efficiently without having to overcome the layers of fees within the financial industry.

The Fundamental Trends Global Trends ETF portfolio is designed to be a slowly traded strategy that takes advantage of the big trends in the global economy. By managing risk with periodic trades out of downtrending asset classes and into uptrending asset classes we can greatly reduce our risk and increase reward. The combination of low expenses at Fundamental Trends, understanding the big trends in the global economy and stepping out of the way of falling markets is a winning combination. 

I screen ETFs based upon several key criteria: expenses, valuation, internal holdings, methodology of the index an ETF is tracking and long-term growth outlook. In this way I am considering both the top down and bottom up prospects for an ETF. Very few do either side of this analysis, rather others simply buy hot sectors and asset classes only to get burned in short order. By comparing the internal workings of ETFs we can pick out the best ones in the expanding universe of funds.

ETF strategies are ideal for both smaller beginning investors and those managing a larger asset allocation.

Summary

Traders trade, that's what they do, don't listen to their stories though.

Oil is at the bottom of it's new range, it's an easy buy once again.

The intermediate bias in oil is bullish and so is the short-term.

Buy oil ETFs as futures swing back to backwardation from contango.

Traders, from time to time, give us slow handed folks a wonderful opportunity. The traders will beat down or drive up an asset to silly price levels, unsupported by fundamentals, setting up high probability reversal trades. That's the land I trade a bit. 

If you watched my last several webinars, then you saw how my group of slow handed position traders, who occasionally swing trade, were able to sidestep the October correction and get into the PowerShares QQQ ETF (QQQ), Tesla (TSLA), Amazon (AMZN), Googlebet (GOOG) and First Solar (FSLR) very close to recent bottoms. 

How did we do it? Well first, we understood what was really driving the stock market, which was the stock buybacks. So as not to rehash, you can read all about it here in my Editor's Pick 4th Quarter Macro and Market Outlook, and a follow on piece - Q4 Portfolio Playbook Review.

Right now, the traders are giving us another wonderful set-up to jump into. This time, the trade is in oil, something we have fairly successfully traded the past few years. 

Summary

To protect the integrity of our picks, the focus ETFs will be found in an article within the website each month.

These are the highest conviction ETFs to add to asset allocations in November 2018.

Look to buy around the 200-day moving averages and when RSI falls below 30.

Use the "bottom fishing" prices for second entries on any ETF that violates the 200-day moving average.

Scale in using GTC limit orders and do not overextend on your asset allocation.

The Global Trends ETF approach is to use a tactical asset allocation strategy to improve the risk-adjusted returns of passive management investing. 

Tactical asset allocation using ETFs is a a fairly straightforward 2-step process.

Summary

Updated "bottom fishing" prices for semiconductor ETFs.

Semiconductor ETFs have been market leaders over most time frames, however, have significant bear markets once or twice per decade.

I believe there will be a shallow bear market in semiconductor ETFs.

Look for a chance to buy the SPDR┬« S&P Semiconductor ETF (XSD).

I updated the bottom fishing prices for semiconductor ETFs today. 

These have been market leaders for an extended period and should be a part of any tactical portfolio that makes occasional asset allocation shifts. 

September and October have historically been months when the stock market sees disruptions. There is no absolute answer on whether or not a stock correction will occur though, only the tendency to happen more often this time of year. 

This year, there are four catalysts, which I identified in this article and the Friday webinar below, that could conspire to cause a correction due to a weakening market structure: 

Here are a few trades I will try to make if conditions and pricing allows. These might not get executed. We don't tell the market, the market tells us.

Over the past two weeks, I have become a net seller into this weak stock market rally. I talked extensively about it in our last webinar: https://youtu.be/_11AvJl3m_M

While I do not believe what is coming is "the big one" as far as market corrections is concerned, I do think it can mimic significantly what happened in February, but for different reasons.

For those who would actively try to navigate an uncertain stock market, raising cash levels by trimming winners and outright selling losers is a move to make now. Investors who would rather stay a bit more fully invested, and control risk with fewer moving parts, can rely on a smart asset allocation to offset a potential correction.