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

Scaling into or out of positions when changing asset allocations eliminates the need to be perfect on trades.

If you scaled out of equity heavy asset allocation from late July to late September, then scaled back in from late October to late December, you'll be fine.

Panic selling at the end of a correction turns temporary losses into permanent losses.

I preach scaling into and out of positions and asset allocations ad infinitum. There is a simple reason. Trading perfection is impossible with any sustainability. Yes, we will sometimes nail a trade almost perfectly, but the idea that is what we are trying to do is completely and utterly wrong. 

Summary

The API reported an inventory build this week, however, last week they had a huge draw.

The EIA last week had a small draw and reports at 10:30AM Wednesday.

It is very possible that the API numbers are fudged week to week due to when they account, so, we could see EIA with a draw.

The Fed will likely be dovish tomorrow and might even surprise with no rate hike.

If EIA shows a draw tomorrow, especially of about 8m barrels representing 2-week differences with APi and new Saudi cuts, that could mark the bottom in oil prices.

We have taken it on the chin with oil even though America is unique in having built oil inventories the past several months. The rest of the world did not. Our inventories are a direct result of Saudi Arabia increasing exports to the U.S. in response to the Iran sanctions and at President Trump's request.

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.