Pass the Advil: Coping with a Global Hangover

09/03/2008

There's no denying that the world is smack dab in the middle of a substantial global economic slowdown, one that has been particularly severe during the past couple of months.

In fact, news came out just yesterday that manufacturing in China, the world's fastest-growing major economy, contracted for a second-straight month in August, according to a survey of purchasing managers.

The Purchasing Managers' Index was a seasonally adjusted 48.4, unchanged from July, the China Federation of Logistics and Purchasing said in an e-mailed statement.

The China news should come as no surprise to those of us who've watched many of the fastest-moving global stock markets do a nosedive in recent months. Lately, global traders -- and particularly commodities traders -- are passing around the Advil to deal with the hangover symptoms of the recent global economic slowdown.

Just look at the chart here of the DB Commodities Tracking Index fund (DBC).

It's been nothing but down, down, down ever since July, and that sharp decline has put a lot of investors in jeopardy. You see, it's the nature of momentum investors to constantly seek higher and higher returns in the fastest-moving segments of the market. That's fine and dandy, if your timing is right.

Unfortunately, many investors come to the party too late, drink the over-extended market booze too fast, and end up with a big hangover of market losses. The way I see it, now is not the time to be long commodities like oil, gold and agricultural products.

In fact, right now subscribers to my ETF Trader service are taking advantage of the commodity sell off via a leveraged fund that doubles its gains when the price of gold falls.

If you want to take advantage of this commodity market hangover caused largely by the wider global economic slowdown, then my ETF Trader advisory service just might be the Advil you need. To find out more about ETF Trader, click here.

The Income Coach is In

One of the biggest retirement dilemmas you'll face is determining how to create an income stream that has the opportunity to grow in a bull market -- while being protected from the ravages caused by a bear market.

Sure, there are a lot of income products out there that claim to help you generate income, but how do you know which one is the best fit for you? How do you know if one income-generating vehicle is better than another for your particular financial situation? The answer is to consult an "income coach."

What or who, you ask, is an income coach? The short answer is -- me.

Right now, I am offering a FREE 45 minute income coaching session to help you get started in creating your own personalized income plan. If you want to put the power of knowledge -- and the power of outstanding income investing tools to work for you -- then call me at 888.300.3684 or e-mail me.

You can also visit my Web site where you'll find out about new exciting retirement income products such as the Ameritas No-Load Variable Annuity with the Guaranteed Lifetime Withdrawal Benefit Rider, issued by my friends at Ameritas Life Insurance Corp.

Hey, the income coach is now officially on duty, so put me to work for you today!

ETF Talk: Sailing the SEA of Opportunity

This week's ETF Talk features the brand new Claymore/Delta Global Shipping ETF (SEA), the first exchange-traded fund (ETF) of its kind to offer investors a cost-efficient way to gain access to the transportation industry's global shipping sector.

This new fund provides exposure to 30 global shipping-related stocks, and because these stocks operate around the globe, SEA offers some nice geographic diversification. The holdings of the index, as of July 31, 2008, were most heavily weighted in Greece, the United States, and in Bermuda.

This ETF seeks investment results that correspond generally to the performance of an equity index called the Delta Global Shipping Index. The fund has a stated goal of investing at least 90% of its total assets in common stock, American depositary receipts (ADRs) and global depositary receipts (GDRs) that comprise the index. The fund also seeks to tap investments that have economic characteristics substantially identical to the index's securities.

Chip Hanlon, chairman and chief executive officer of Delta Global Indices LLC, recently described the global shipping industry's outlook positively. "With approximately 80% of all shipments being transported by water, the increase in demand has pushed shipping activity up considerably and gained significant interest among investors," Hanlon said.

Since the fund is brand new, it has not paid a dividend yet. But when a dividend is paid, it will be distributed quarterly. As of August 28, 2008, the top three holdings in SEA included Euroseas Ltd., 4.59%; Navios Maritime Holdings, 4.25%; and Seaspan Corp., 4.18%. While the fund has been actively trading on the NYSE for only a little more than a week, it already had risen more than 2% by the Aug. 29 close. However, there is a caveat to consider. While the future for the global shipping industry, and SEA, looks strong, there are some key financial risks associated with this sector that you definitely should weigh before investing.

First, companies in the global shipping sector are subject to fluctuations in the price and supply of energy fuels, steel, and raw materials. Such companies also are affected by adverse changes in seaborne transportation and weather patterns, as well as unpredictable events, such as hurricanes, fluctuating commodities prices, international political developments, and labor strikes. As with all ETFs that focus on a single industry, SEA holds more risk than if it was broadly diversified across numerous industries and sectors of the economy.

Similar to any new fund, SEA has a limited track record and currently falls short of the trading volume of 100,000 shares a day that I like to see before entering a position. Therefore, I recommend observing how SEA performs during a longer period of time before you consider buying the fund.

As always, I encourage my readers to send me their ETF questions. If you have one that you want me to answer in an upcoming issue, please click here. We are facing volatile market conditions and an overall downward trend right now. As a result, it could pay off for you to take a cautious approach and let the most daring investors take the risks in this unpredictable market.

Estate Planning Mistakes: The First is the Worst

In last week's Alert, we discussed the seven biggest estate planning mistakes made by investors. Now in case you missed it, here's a quick review:

Not having an estate plan
Not reviewing your plan annually
Not placing your assets in your trust
Not having the liquidity your estate needs to pay estate taxes
Delaying decisions and planning due to tax policy uncertainty
Not taking advantage of tax panning and wealth transfer strategies
Failure to properly utilize life insurance as a planning and liquidity tool

You've probably heard the old saying, "The first cut is the deepest." Well, when it comes to estate planning mistakes, "The first mistake is the worst."

You see, if you don't have an estate plan in place, you are leaving your family's wealth in the hands of attorneys and tax collectors -- both in Washington and your state capitol. I don't know about you, but I can't think of anything more abhorrent than to work hard all your life and then leave control of your assets to federal and state bureaucrats.

Please don't let this happen to you.

If you have substantial assets, you need to have an estate plan in place. Fortunately, my friend and colleague Kevin Yurkus, President of Fairway Capital, is an expert at helping high-net-worth investors manage their estate plans. Fairway Capital is a sponsor of my weekly radio show, and one reason why is because I trust Kevin's judgment when it comes to all things estate planning. If you have assets over $2 million, you MUST listen to my new audio special report. In this report, we cover all each of the seven biggest estate planning mistakes, and we explain how easy it is to correct each one.

To listen to this FREE audio special report, click here.

A September to Remember: Video Thoughts on a Big Month

September always is an interesting month for stocks, and this month I think we are in for a lot of movement -- both to the upside as well as to the downside.

In this week's video blog I'll be covering some of the main factors that have made September a historic month for the equity markets.

To watch my "September to Remember" video rant, click here.

The Election, the Markets, and Your Money 6

Join Fairway Capital President Kevin Yurkus and me on Thursday, Sept. 18, 2008 from 2:00 p.m. to 5:00 p.m. at the Ritz-Carlton, Phoenix hotel for the most important financial seminar of the year.

The risks and opportunities heading into this voting season have made this the most important election in recent memory. That is why Kevin and I are so concerned about the future of taxes, the markets, and your investments.

If you are a high-net-worth investor who also is concerned about the current economic environment, you must come out on Sept. 18 and hear how you can prepare for the inevitable winds of change blowing into Washington, D.C.

Ritz-Carlton, Phoenix
2401 East Camelback Road
Phoenix, AZ 85016

This seminar is co-sponsored by Fabian Wealth Strategies and Fairway Capital. To register for this event, simply click here or call 800.391.1118 Monday through Friday from 8 a.m. -- 4 p.m. PST.

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How Quickly Fortunes Change

"Hillary Clinton went from top political cougar to mortally wounded kitty in just three short days,
courtesy of John McCain's choice of Sarah Palin."
--Jim Woods

In life, fortunes certainly change quickly -- just ask Hillary Clinton. A week ago she was without doubt the top female in presidential politics. But with one bold -- some say even a little crazy -- move by Sen. McCain and his selection of Alaska Governor Sarah Palin for VP, Sen. Clinton now has faded away as the most talked about female on the political scene. It just goes to show you that what goes up, almost always comes down. That's a lesson we can take with us, both when it comes to the action in Washington -- and the action on Wall Street.

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