Making Money Alert
Rewriting the Record Books
10/03/2007
Monday was the first day of the fourth quarter, and what a day it was!
The Dow surged nearly 200 points in the session, sending the Industrial Average to a new all-time high. The record-setting close on the Dow is just one of many this year, as 2007 has proven to be the year of rewriting the record books.
All three major averages, the Dow, S&P 500 and NASDAQ Composite, are now trading above both their short-term, 50-day moving average, and long-term, 200-day moving average.
In the chart below of the S&P 500, the recent spike toward a new high-water mark is quite easy to see.
There's no doubt about it, the bulls are back, and they are back in a big way.
I know that I've been telling you to take a cautious approach to equity investing over the past several months, and I think that a cautious approach was more than warranted due to the circumstances at that time.
Now, however, circumstances have changed, and so too has my approach to the market.
The Fed now is on the side of investors. In addition, the Fed is proving to be willing to cut interest rates to help the credit markets. That willingness to cut rates is the tonic that I was waiting for to see if the bull was truly back. And although it took a little while for stocks to fully react to the Fed's move, I think it safely can be said that now is the time to get back into the market with a hefty chunk of your investment capital.
Subscribers to my Successful Investing advisory service have spent much of this year on the sidelines, waiting for the right opportunity to jump back into the market. Well, given this week's record move in stocks, the right opportunity is now.
I recently recommended that Successful Investing subscribers take an aggressive allocation to broad-based domestic and international exchange-traded funds (ETFs) and mutual funds. I've also recommended an allocation to several sectors and sub-sectors of the market that I think have the potential to really outperform the average market return.
Speaking Atop an Iron Mountain
I just returned from a speaking engagement in Las Vegas. First off, let me just say that I had a great time! Sorry, I can't provide any more detail than that because, as they say, whatever happens in Vegas stays in Vegas.
One thing I can tell you is that I spoke to a group of employees from IT storage firm Iron Mountain (IRM). At this meeting, I met many smart IT professionals who were very interested in developing a plan of action for their 401(k) assets.
After helping them understand what was in their 401(k) plan, and how to best take advantage of their plan's choices, I asked for a show of hands as to how many people had heard of exchange-traded funds (ETFs).
Much to my surprise, I didn't get a single raised hand.
After I provided a briefing about what ETFs are and why they are so advantageous to the individual investor, this smart group of professionals asked the logical question, "Doug, why haven't we heard of ETFs before?”
The answer is that there is no financial incentive in the marketplace for brokerages or financial advisors to sell ETFs. There is no big commission charge, no 12b-1 fee, and no cryptic investment philosophy associated with ETFs.
In fact, buying an ETF is just like buying an individual stock in terms of the commission, and there are no hidden fees a brokerage firm can charge you. The holdings and passive management style of ETFs are transparent, meaning you'll know exactly what you're getting with your ETF purchase.
This experience with Iron Mountain made me realize that while ETFs are "old hat"to some investors, many well-educated, bright professionals have yet to find out about these fantastic investment tools.
Until the vast majority of individuals in any group I speak to can say that they have not only heard of, but are using ETFs in their own portfolio, I will continue singing the praises of ETFs.
New Life-cycle and Real Estate Funds
I can always count on my friend Tom Lydon of ETFTrends.com for the very latest on the new and varied offerings in ETF land. The following is excerpted from Tom's Oct. 2 article on what's new within the ETF space:
Exchange-traded fund provider, XShares Advisors, recently introduced 12 new ETFs on the NYSE Arca. Five of the ETFs are "target date" or "lifestyle funds" that range in maturities from 2010 to 2040, ETFGuide reports. XShares teamed up with TD Ameritrade to launch the funds that aim to replicate the performance of the life cycle indexes created by Zacks Investment Research of Chicago, reports David Hoffman of Investment News.
The funds with longer maturities have higher initial equity exposure, including international equities, with higher volatility and risk. ETFs with shorter maturities have higher fixed-income exposure with lower volatility and risk. The expense ratio of these ETFs is 0.65%. The five life-cycle ETFs are:
- TDAX Independence In-Target ETF (TDX)
- TDAX Independence 2040 ETF (TDV)
- TDAX Independence 2030 ETF (TDN)
- TDAX Independence 2020 ETF (TDH)
- TDAX Independence 2010 (TDD)
In addition, XShares launched six equal-weighted ETFs designed to provide exposure to narrow slices of the U.S. real estate market. Five of the real estate ETFs have 25 holdings, and the sixth ETF, which is the market-cap weighted Composite ETF, has 40 holdings. These ETFs have an expense ratio of 0.58%. They are:
- Adelante Shares RE Classics ETF (ACK)
- Adelante Shares RE Composite ETF (ACB)
- Adelante Shares RE Growth ETF (AGV)
- Adelante Shares RE Kings ETF (AKB)
- Adelante Shares RE Shelter ETF (AQS)
- Adelante Shares RE Value ETF (AVU)
- Adelante Shares RE Plus Yield ETF (ATY)
Once again, big thanks to Tom Lydon of ETFTrends.com for keeping us all up to speed on the very latest news from the ETF front.
I encourage all of my Alert readers to check out Tom's Web site, ETFTrends.com, as it is replete with news and commentary that is invaluable to your quest for big market gains.
ETFS: THE FUTURE OF INVESTING 3
Come visit Doug in person as he brings his latest workshop to Southern California for an exclusive look at one of the fastest growing investment products in the world -- Exchange-Traded Funds (ETFs).
Whether you're an ETF novice or an advanced trader, this workshop is packed with information that will change the way you invest. Click here to listen to Doug's passionate rant on the virtues of ETFs.
In this informative seminar, Doug will teach you:
- The current state of the market and how to identify what may be the best buying opportunity since 2003.
- A history of ETFs and what the current landscape looks like today.
- The advantages of investing in exchange-traded funds.
- A comprehensive overview of the different types and styles of ETFs.
- How to build portfolios using ETFs, including several sample portfolios that you can deploy in minutes.
- What are some of the pitfalls of ETF investing -- and how to avoid them.
- New ETFs Doug likes right now
- And much more!
This seminar will be held:
Tuesday, October 9, 2007, 6:30-9:00 p.m., at the
Pasadena Westin Hotel
191 North Los Robles
Pasadena, CA 91101
The cost for this event is only $24.95 per person. Don't miss out on our LAST Los Angeles area appearance of the year!
Register now and you'll get these four Special Bonus items:
SPECIAL BONUS #1: Workbook that includes the complete list of nearly 600 ETFs and their recent performance data.
SPECIAL BONUS #2: Audio recordings of the event that you can listen to again and again.
SPECIAL BONUS #3: My top three ETF portfolios to profit in bull and bear markets.
SPECIAL BONUS #4: A complimentary autographed copy of Doug's book: Maverick Investing.
Don't miss out on the most comprehensive ETF workshop of the year! We offer a 100% money-back guarantee if you are not completely satisfied with the presentation.
To register, click here.
Or call us toll free at 800.391.1118
Be sure to act soon. Doug's Southern California events almost always are sold out.
Blogs Away: A Fabian Aural & Visual Fixation 8
The market's record-setting start to the fourth quarter has me all fired up, and that makes for some juicy commentary about what's in store for investors as we finish out the year.
To listen to the audio blog, simply click here.
Fabian Roadside Assistance
As I am a big fan of the metaphor to help bring clarity to the subjects of investing and personal finance, I want to introduce you to a metaphor I think perfectly illustrates the kind of service we provide at Fabian Wealth Strategies.
First, picture your financial holdings as an automobile that will take you down the highway toward your ultimate destination -- retirement. In order to get to that destination, you have to make sure your auto is equipped for the journey.
You have to make sure you have enough gas, you have to check your oil regularly, you have to check your tire pressure and you have to pay attention to all the traffic signs along the way.
Failure to do any one of these things can result in your being stranded on the side of the road.
Fortunately, getting your financial automobile back in perfect operating condition is what Fabian Wealth Strategies is all about.
Think of us as your financial roadside assistance provider.
At Fabian Wealth Strategies, we can help you to correct any neglected aspects of your financial automobile. If you need more life insurance, we'll tell you. If you need to generate more income, we'll identify that too. Need to increase your tax-deferred investments? We can show you how.
Taking this analogy a step further, you might say that in addition to being your financial roadside assistance provider, we also are master mechanics. That means we can rebuild your engine and get your automobile back firing on all cylinders.
If you are in need of some financial roadside assistance, Fabian Wealth Strategies can help. All you have to do is call us and schedule your very own coaching session.
For more information on how to schedule your coaching session, call David Fabian at 800.391.1118, or e-mail him.
The Double-Edged Sword of Experience
"Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so."
—Douglas Adams
The great author of the Hitchhiker's Guide to the Galaxy series is renowned for his existential sense of humor, but his quote here hits on a serious flaw most of us possess. The experience of others is certainly a double-edged sword. It can be a shining beacon on a hill that helps direct our rational faculty, or it can be entombed in the darkest recesses of our minds. Don't fall victim to this double-edged sword in your own life. Let the experience of others enrich your thoughts, and your decision-making process.
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.