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July 30, 2014
Weekly ETF Report

The Fed Tapers While GDP Surges It has been a big week of news so far, with this morning’s second-quarter gross domestic product (GDP) print showing the economy grew some 4% from April through June. That number was a welcome relief from the revised contraction of 2.1% in the winter-ravished first quarter. The economy now seems on pace to deliver GDP growth of about 2%, which is not fantastic, but not bad either. I think what today’s GDP print tells us is that the Federal Reserve will almost certainly continue the taper of its bond-buying program. The Fed also will likely stay the course, depending on the data, and raise interest rates sometime in mid-2015. That’s essentially the path the Fed took in its latest Federal Open Market Committee (FOMC) meeting. The central bank continued to taper its asset purchases by $10 billion per month, as expected, and it also left short-term interest rates alone at near-zero. The Fed’s statement contained language that acknowledged prices were climbing to their 2% inflation target. It also acknowledged improved economic conditions and an improving labor market. We’ll soon know just how well the labor market did in July, as the official employment data comes out on Friday morning. I suspect that the number will reflect what we’ve seen of late, and that is a moderate-but-steady improvement on the jobs front. The bottom line here is that the market has some positive data to support current equity levels. Now, however, we have to see [...]

July 25, 2014
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July 23, 2014
Weekly ETF Report

Innovation: Another Reason to Choose ETFs There are myriad reasons why investors should choose exchange-traded funds (ETFs) over mutual funds. Factors such as much lower expense ratios (i.e. lower costs), greater tax efficiency, increased access to targeted markets and much more transparency are just some of the headline reasons why I recommend investors choose ETFs as their primary investment vehicles. Yet one very important reason why I’ve come to really love ETFs, particularly during the past several years, is product innovation. Now, most ETFs still are index-based, traditional funds that are pegged to particular market indexes such as the S&P 500 or the NASDAQ 100. Yet these funds, known as “vanilla funds,” are by no means the only types of ETFs out there. There are leveraged ETFs, actively managed funds, inverse funds, funds that track relative strength and even funds with an “ethical” focus. These days, there’s an ETF for just about every flavor of investor, not just the ones who like the taste of vanilla. One fund that I find a particularly interesting example of ETF innovation is the LocalShares Nashville Area ETF (NASH). Launched less than a year ago, NASH is designed to offer investors a targeted focus on companies headquartered in the boom town of Nashville, Tennessee. Some of the current holdings in NASH are LifePoint Hospitals (LPNT), HCA Holdings (HCA) and Dollar General (DG). This city-focused fund is one great example of how diverse ETFs have become of late. The fund’s outstanding gain of nearly 12% [...]

July 18, 2014
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How the Fed Affects GDP

July 30, 2014

The Fed Tapers While GDP Surges It has been a big week of news so far, with this morning’s second-quarter gross domestic product (GDP) print showing the economy grew some 4% from April through June. That number was a welcome relief from the revised contraction of 2.1% in the winter-ravished first quarter. The economy now seems on pace to deliver GDP growth of about 2%, which is not fantastic, but not bad either. I think what today’s GDP print tells us is that the Federal Reserve will almost certainly continue the taper of its bond-buying program. The Fed also will likely stay the course, depending on the data, and raise interest rates sometime in mid-2015. That’s essentially the path the Fed took in its latest Federal Open Market Committee (FOMC) meeting. The central bank continued to taper its asset purchases by $10 billion per month, as expected, and it also left short-term interest rates alone at near-zero. The Fed’s statement contained language that acknowledged prices were climbing to their 2% inflation target. It also acknowledged improved economic conditions and an improving labor market. We’ll soon know just how well the labor market did in July, as the official employment data comes out on...

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Investors have become complacent. Stocks are near all-time highs. Volatility is low. It's almost like investors are blind to the three coming catastrophes that can crash the market 30% or more in 2013:...
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Fund Allocation
abc
25%
def
25%
ghi
25%
jkl
25%
Name Ticker Date Buy Price Stop Price
number 1 abc 08/30/2009 19.74 17.74
number 2 def 10/13/2009 19.72 17.72
number 3 ghi 05/15/2009 19.35 17.35
number 4 jkl 03/30/2009 20.08 17.08