We’re recommending pharmaceuticals, which have shown comparative strength relative to the overall stock market.
Monthly Archive for November, 2009
Though stocks have slid slightly over the past week, the trend in stocks is still up. We are recommending a fund that follows Austrian stocks, since, in our estimation, it has the best uptrend.
Question: Alex, I have a question. I see that last week you recommended XOP and XLP for the conservative portfolio. These ETFs still perform outstandingly, however, today you recommend switching to EWM. I noticed that XOP went up 2.11%, XLP went up 0.56% today whereas EWM went up 1.55%. VEA went up 1.56% (VEA was the sole recommended ETF last week for the balanced portfolio).
Are you just switching randomly through different growth sectors even though the currently invested ETF is still going strong? This would increase commissions and costs.
Response: It’s a great question.
When everything is going up, a strategy that switches often and a strategy that stays in its investments for a longer time will perform about the same. The difference will be, as you correctly point out, that the strategy that switches often will incur more transaction costs.
The problem is that we do not know ahead of time what the future will bring. We do not know ahead of time whether, in the future, everything will be going up. So your criticism, while understandable, applies only when looking into the past, not into the future.
Since I do not know what the future holds, my strategy attempts to invest in what it calculates to be the “best” investment at the time. Even if “the market” as a whole starts declining, hopefully, the “best” investment will not decline, or will not decline by as much.
By the way, the recommendation from last week (Conservative: XOP/XLP; Balanced: VEA) was actually in force for two weeks straight.
We are launching a new letter, called “Core ETF”. The newsletter follows twenty core exchange-traded funds that cover different countries, sectors, and asset types. We chose these twenty ETF’s to be representative of the entire ETF universe. Limiting our choices to these twenty makes our newsletter’s performance independently verifiable.
Stocks have continued to climb at a solid pace. For example, during the past couple of weeks, we’ve made about 6% in VEA, which follows stocks from Europe and the Pacific region. We are now switching into another foreign stock fund, which also looks very strong.
Stocks have continued to climb at a solid pace. For example, during the past couple of weeks, we’ve made 3.83% in the I Fund (“Europe Pacific”). While all three TSP stock funds are going up, the C Fund (“S&P 500″) looks strongest.
The funds that we recommended last week, including a fund that follows stocks from Europe and the Pacific region, have all made money over the past week. We are continuing to recommend them as they still have potential for growth.
Though stocks have been declining in the latter half of October, we believe that they still have a good potential for gain. Of the three stock funds, the one with the best prospects is the I Fund (“Europe Pacific”). Incidentally, in our ETF newsletter, we are recommending a similar fund.
Though stocks have been declining in the latter half of October, we believe that they still have a good potential for gain. In our Balanced allocation, we are recommending a fund that follows stocks from Europe and the Pacific region. Incidentally, in our TSP newsletter, we are recommending a similar fund. In the Conservative allocation, we are recommending stocks as well, though, in our estimation, they have a lower risk.