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Is The Crisis Over?

There's no denying that April was a really good month for the equity markets. To that I say -- it's about time!

After the worst first quarter in recent memory, stocks finally showed everyone that the bears hadn't taken up permanent residence on Wall Street. Now in the wake of the admittedly very good performance we witnessed in April, many pundits have taken to asking if the credit and equity market crisis is now over.

In my opinion, the answer to this question is a definite no.

Will this rate cut by the Fed be the tonic the credit market and the entire economy need to recover from the widespread downturn we've seen during the past 10-plus months?

Once again, in my opinion, the answer is no.

Because there is an extreme lack of conviction about the state of the economy and the credit crisis operating in the market right now, my advice to you is to approach things here with extreme caution, but with a healthy sense of what I call, "objective optimism."

By objective optimism, I mean now is really the time to rely on the battle-tested, buy-and-sell rules that govern the Fabian investment plans.

Now as you can see by the table of the major market index performances during the past four weeks, eight weeks, 12 weeks and year-to-date (YTD), things certainly have improved. But the real key objective number to watch is the 200DD column. That column represents the price of the index in relation to its 200-day moving average.

This 200-day moving average is crucial to monitor, because if the major market indices can move above that average (into the positive column), it could really be the objective confirmation we are looking for that the crisis is indeed over.

Until that time, however, I think the best approach is objective optimism.

For more on how to objectively manage your money in times of market crisis, I invite you to check out my Successful Investing advisory service.

To find out more, click here.

Miles And Milestones

I've logged a lot of miles in this investment journey, and I've been fortunate enough to celebrate many big milestones in my career. But perhaps no milestone was as satisfying as my recent nine-year anniversary radio show broadcast on April 26.

In addition to celebrating my nine years of radio broadcasting, the show also commemorated the 31st year of my flagship newsletter publication, which started out as a labor of love by my father literally on his kitchen table. The newsletter wasn't called Successful Investing back then. At than time, it had the now humorously anachronistic moniker -- The Telephone Switch Newsletter.

Although we've made changes to the newsletter throughout the years, and although there's been a torrent of change in the investment world during those three-plus decades, one thing has remained constant. That constant is that a Fabian always has been there helping investors achieve greater financial success -- and by extension living better, more secure and, dare I say, even happier lives.

Now that my sons, David and Michael, are partners with me in my money management firm, Fabian Wealth Strategies, the next three decades now are a lock to have a Fabian helping investors navigate the muddy waters on Wall Street.

For anyone interested in a belated radio celebration of the best within us all, I invite you to go to my radio show archives page.

Then click on the April 26, Fabian Open House link. The last step is to turn up your speakers and tune in to the sounds of a man in love with life, and one who wants to drink up every moment of its wonder.

To the best within us,

Doug

ETF Talk: Actively Managed ETFs

Active management used to be the exclusive province of the mutual fund industry, but thanks to some new exchange-traded funds (ETFs), those days of exclusivity are over.

Actively managed mutual funds frequently do not outperform market averages, so it remains to be seen how actively managed ETFs will fare under a loosening of their traditional focus on matching the returns of specific indexes.

To my knowledge, Invesco PowerShares is the first ETF provider to take the plunge into actively managed ETFs. The company unveiled its plans formally in a Webcast aired Wednesday, April 30. The Invesco PowerShares move into actively managed ETFs shows that the ETF industry is taking a big step forward in trying to compete with mutual funds on what traditionally has been mutual fund turf.

Of course, actively managed ETFs will need to prove themselves as superior to their counterparts that try to mirror the performance of selected indexes. Those of you who have subscribed to any of my advisory services for any length of time know that I regularly scour the mutual fund universe for underperformance. The worst offenders find themselves with the dubious distinction of being named to my "Lemon List" of sour funds.

Well, I can envision the day when I may need to do likewise with actively managed ETFs. I personally wish the people at Invesco PowerShares well, and I will be among those industry observers who track the performance of their actively managed ETFs closely.

The Wheaton, Ill.-based investment firm launched the following funds on April 30:

• PowerShares Active Low Duration Fund (PLK)
• PowerShares Active Mega Cap Fund (PMA)
• PowerShares Active AlphaQ Fund (PQY)
• PowerShares Active Alpha Multi-Cap Fund (PQZ)

Actively managed ETFs are investment vehicles that involve the trading of assets within a portfolio, in contrast to traditional ETFs that use a strategy of buying and holding a market basket of equities that attempt to track a specific sector or region. With the advent of actively managed ETFs, investment teams will rely on research, expertise and proprietary processes to choose their portfolio holdings. The intent of active management is to provide higher returns than benchmark indexes, consistent returns, effective risk management, and reduced volatility.

ETFs also should be able to maintain a tax-efficient structure to substantially mitigate capital gains distributions by using an in-kind redemption process until they sell their shares, said Ed McRedmond, senior vice president of portfolio strategies at Invesco PowerShares. Although actively managed ETFs logically will trade stocks more often than index-based ETFs, careful management of the in-kind transfer process may give the managed ETFs a similar degree of tax efficiency, he explained. However, there is no guarantee that the PowerShares actively managed ETFs will not distribute capital gains to their shareholders.

One feature that investors should like is that the investment company plans to report its holdings in each ETF daily. In contrast, the holdings of mutual funds usually are disclosed at the end of each quarter.

The introduction of these new, actively managed ETFs is an indication of the growing popularity of ETFs. The United States clearly is a major source of investable assets for ETFs. It took mutual funds 44 years to reach $450 billion in assets under management in 1984, while ETFs amassed $470 billion in assets after just 14 years. ETFs worldwide currently are estimated to have $570 billion in assets under management, and Morgan Stanley projects that the assets will top $2 trillion by 2011.

Actively managed ETFs should be able to retain traditional advantages over mutual funds through lower expenses, the transparency of reporting each fund's holdings every day, and trading at or near net asset value (NAV). In addition, the presence of a fund manager may allow actively traded ETFs to be marketed as comparable to mutual funds in responding to changing market conditions. In this way, actively traded ETFs eventually could become part of 401(k) plans.

Finally, ETFs appear to be gaining momentum in their competition with mutual funds. A Charles Schwab survey cited during the April 30 Webcast found that 36% of 1,006 independent investment advisors said that they planned to put more of their clients' money into ETFs during the next six months. Mutual funds that use hedging strategies followed far behind with 14% of respondents. Investors should consider ETFs a proven investment vehicle that has a role to serve in virtually everybody's portfolio.

Investor Education Hub 3

Looking for a little education?

I know we can all use a little information edge with the markets gyrating as wildly as they are, so that's why today I wanted to give you a few links to some of my favorite Fabian educational sites.

Each of these sites addresses a specific investment area that you need to know about right now. Here are my "fab four" investor education links.

1) The Fabian Lemon List
Does your mutual fund taste sour these days? Do you even know how your funds are performing versus their peers? If the answer to either of these questions is yes, you need the Fabian Lemon List.

2) The Fabian Wealth Strategies Risk Management Primer
Do you know the six threats to your retirement nest egg? In my experience, most investors are woefully unaware of what could happen to the most important money that they manage -- the money that will fund their retirement years. This special report by Fabian Wealth Strategies, a fee-only investment advisory firm specializing in ETFs, will tell you how to manage the biggest threats to your nest egg.

3) The Retirement Income Coaching Call
Retirement income investing isn't as easy as it used to be, especially in this tough market. Find out how to get yourself on the right path toward reaching your retirement goals by listening to my monthly retirement investment conference call.

4) Big Money's "Secret Weapon"
Want to know how the pros on Wall Street make huge money even when the markets are tanking? Want to learn how to employ those same tools and strategies in your portfolio? We show you how in this special report.

Your Retirement's Calling -- Are You There to Answer? 2

This Saturday, May 10, at 12 p.m., Pacific, I will be presenting part II of my three-part Retirement Income Conference Call series. If you are in retirement, approaching retirement or are in charge of the financial assets of parents or grandparents, I invite you to join me for this FREE, 45-minute presentation.

In our first call we covered the basics of retirement income investing such as: getting organized; understanding your income streams; essential and discretionary expenses; the threats to your income; and how to create new lifetime income streams. Now we are moving into a new discussion about two very important topics for retirees.

The first will be income investing, and just how it is done. What vehicles should you use, and where are the opportunities today for income investors. Second, I will be talking in much greater detail about the new living benefits within today's variable annuities. There is a new breed of no-load annuity available that allows you to receive income without annuitization -- and while still maintaining control of your assets.

This type of annuity could be a great choice for a portion of your 401(k) or IRA. All this and much more will be discussed in our dynamic and informative conference call format. The best part of this conference call is the interaction, as you will be able to ask me specific questions pertaining to your particular situation.

Please join me this Saturday, May 10, at 12 p.m., Pacific, for this informative, second installment in our retirement income series. Please click here to register for this event.

I look forward to speaking with you.