Making Money Alert
Beating the Averages
03/03/2010
The major stock indices are finding their legs after six weeks of trading between the 50- and 200-day moving averages. As you can see in the chart below, the S&P 500 Index has pushed back above the 50-day average, which is a green light for a new uptrend in stocks.
My ideal trade setup was for the markets to fall below the 200-day average to re-initiate new equity exposure. But, as in life, the markets don’t always give us what we want. Right now, we are seeing stocks continue to strengthen. If you have positions in equity ETFs, then continue to ride the trend while it lasts.
After four-straight up days in the market, I don’t feel that this is the best point to add new exposure to stock ETFs. However, as I do each week, I will be watching the markets closely for an opportune entry point that I will communicate to my investment advisory subscribers.
If you want to join me for my next big buying opportunity in stocks, simply click here to sign up for my ETF Trader advisory service.
33 Years and Counting
Right now, I am in the process of writing the 33rd anniversary issue of my flagship newsletter service, Successful Investing. This newsletter was started by my parents Dick and Marie Fabian in April of 1977 on the dining room table. Today, my team and I are continuing their legacy.
It has been an honor to serve our readers during the past three decades by helping them to navigate the markets with their serious money. Our simple, trend-following approach has kept us out of harm’s way during major bear markets and allowed us to participate in new uptrends during bull markets.
As subscribers have reminded me over the years, the most important benefit to the newsletter has been our vigilance in knowing when to sell and protect capital whenever stocks get volatile. Successful Investinghas averaged double-digit percentage annualized returns since its inception and I can’t think of a better time to join us than now. For further information, click here.
ETF Talk: New Fund of Funds Focuses on High Yields
High-yield investments include heightened risk but one way to mitigate potential fallout is through diversification. A new “fund of funds” ETF now is available that offers diversification by investing in a number of high-yield, closed-end funds.
PowerShares CEF Income Composite Portfolio (PCEF), just launched Feb. 19, is designed to invest in more than 70 high-yield, closed-end funds, with the intent of paying a lofty dividend yield. To my knowledge, this new exchange-traded fund (ETF) is the first high-yield instrument to be structured as a fund of funds.
The ETF, based on the S-Network Composite Closed-End Fund Index, is designed to invest 80% of its total assets in the securities of funds that are included in the index. The index currently consists of closed-end funds that invest in taxable, investment-grade, and fixed-income securities.
The fund’s diversification across assets, strategies and managers is expected to help to mitigate specific risks. At the same time, the fund is intended to produce an average rate of distribution that is competitive with or higher than many other fixed-income investments. In addition, the ETF uses a weighting methodology that assigns greater portions of its holdings to closed-end funds that are trading at discounts.
Intra-day trading lets investors buy and sell shares of closed-end funds just as they do with other publicly traded securities. When the shares of closed-end funds trade at prices below their underlying NAVs, such funds are considered to be trading at a discount and offer investors a chance to enhance their return on investment by buying the shares at bargain prices to produce heightened yields.
If you are like me, you like bargains and high yields. This fund is supposed to give you both. Until the new ETF establishes a track record and boosts its average daily trading volume above 100,000 shares, I’ll avoid recommending it. However, if you do not mind buying a fund early in its existence, in hopes it will gain traction quickly, PCEF is an ETF that you may want to consider, especially if you like high-yield investments that offer diversification.
As always, I am pleased to answer any of your questions about ETFs, so do not hesitate to reach out to me via email if you have one. To send a question to me, simply click here. You may see your question answered in a future ETF Talk.
Follow Me on iTunes
Many of you know that I host a weekly radio show, Doug Fabian’s Wealth Strategies, in Los Angeles every Saturday morning at 10 a.m. PST. But for those of you that aren’t in the Southern California region, we have made it possible for you to follow along at my radio Web site, www.dougfabian.com.
In fact, you can set your computer to download my show each week automatically by using a system known as “podcasting.” If you’re not familiar with podcasting, it’s incredibly simple -- it’s like Tivo for radio!
Follow the instructions below to download free Podcast Software and begin listening to my radio show at your convenience!
- Download free Podcast Software.
- Open the software, select Music Store on the left navigation bar.
- Enter the name “Doug Fabian” in the Search Music Store box in the upper right hand corner and press enter.
- Highlight “Doug Fabian Podcast” and click the subscribe button. It’s that simple! New shows are usually posted by 1:00 p.m. PST.
I look forward to sharing my thoughts on the markets and ETFs with you every Saturday morning.
Announcing My FREE Teleseminar
Join me on Saturday, March 6, at 12:00 p.m. (noon) Pacific Standard Time, for a FREE update on the financial markets in 2010. In this teleseminar, titled “Return of the Bear Market,” I will be offering my opinion on how you should be managing your assets as we navigate these choppy market waters.
Let’s face it, the last two years have been a wild ride for both stock and bond investors. What I call Phase One began in 2008, with the biggest decline in stocks since the Great Depression. Phase Two saw a recovery of more than 50% for the S&P 500 Index. Most investors now have been pacified by Wall Street and Washington, and many think the worst is behind us.
I believe that we are close to entering Phase Three of this investment cycle, and that could mean another devastating wave of wealth destruction. The good news, however, is that there is time to prepare, as well as clear signals on the road ahead that will give us time to adjust before any real damage is done.
Four key points you’ll learn in this seminar are:
- Why stocks and bonds have the potential to enter a new bear market
- What are the warning signs to look for in the markets
- Where investors can seek safety during the next 12 months
- How you can profit from the crisis
This FREE, one-hour teleconference will be held exclusively for the first 800 registrants, and judging by the participation in our last teleconference, we will reach capacity quickly. We urge you to take advantage of this opportunity and reserve your spot today.
NOTE: Fabian Wealth Strategies is a SEC registered investment adviser, and is not affiliated with Eagle Publishing.
Wisdom of Repetition
"A baseball swing is a very finely tuned instrument. It is repetition, and more repetition, then a little more after that."
--Reggie Jackson
We've all heard the saying, "practice makes perfect." This is particularly true in the world of sports, as expressed in the above quote by baseball great Reggie Jackson. This pedestrian, yet profound notion, also applies to managing your money. You can't get really good at something unless you practice, practice, practice. When it comes to your finances, you always should be practicing ways to increase savings, reduce expenses and manage risk. Take it from Reggie, repetition followed by a little more after that often is the secret to success.
Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Alert readers, send it to me, along with any comments, questions and suggestions you have about my radio show, newsletters, seminars or anything else. Click here to ask Doug.
P.S. My publisher, Eagle Financial Publications, is now on Facebook. Click here to see our page and be sure to become a fan when you get there.