Welcome to the Global Bear Market

If this market decline feels different to you, then you’re not alone.

It certainly seems like we are entering a bear market in U.S. stocks, and so far the major U.S. averages are quickly approaching official bear market status (i.e. 20% or more below their most-recent highs).

The Dow is down nearly 14% from its most-recent high while the S&P 500 is off that mark by 13%. The NASDAQ Composite is down 17.5% from its latest high. That’s teetering on the verge of official bear market status, but the story doesn’t end there.

The small-cap Russell 2000 Index is already in a bear market, having plunged more than 25% off its high. Then there are international stocks, which have been in a bear market for a while. Emerging markets are down 34% from their highs while European stocks are down some 25%.

Sector-wise, the bear has already invaded U.S. financial (-20.4%), biotech (-38.6%), basic materials (-24%), transportation (-23%) and, the worst of all, oil and gas stocks, which now are down some 56% from their highs.

Perhaps the most troubling thing is that the broadest of all market indices, the Vanguard Total World Stock Index (VT), now is down 20.4% from its high.

I say most troubling because this is the ETF that holds all international and domestic stocks. Now that VT is in official bear market territory, it’s safe to proclaim that we are, in fact, in a global bear market.

So, given the bear market in stocks, is there anything working for investors right now?

The answer is gold.

The chart here of the SPDR Gold Trust (GLD), an ETF pegged to the price of gold bullion, shows it is up some 16.5% in 2016, completely bucking the trend of the major equities averages.

The gains in gold are something subscribers to my Successful ETF Investing advisory service have enjoyed since early January.

Given the fear bid in the market right now, and the likelihood of more fear fueled by a global recession, plunging oil prices, central bank missteps and failed fiscal policy around the globe, gold’s safety bid is likely to continue to keep the yellow metal shining.

If you want to find out how we are currently taking advantage of this global bear market with gold, targeted equity exposure and targeted bond exposure, then I invite you to check out Successful ETF Investing today!

ETF Talk: India Fund Offers International Investment Alternative

This week’s growth-oriented exchange-traded fund (ETF) presents investors with an opportunity to invest in the emerging-market country of India through the iShares India 50 ETF (INDY).

India is a country that, in recent years, has become a place of interest for many investors and companies. The country has a pro-capitalist political climate, a huge amount of human capital and citizens who are hungry for economic growth and enhanced living standards.

The iShares India 50 ETF is designed to tap into this great potential by tracking the CNX Nifty 50 Index, comprising the 50 largest and most liquid stocks currently trading on the National Stock Exchange of India. With India’s drive for an improved economy and overall higher standard of living, the financial and technology sectors are the top two areas represented in INDY, with 30.38% and 16.48% of the fund’s holdings, respectively.

View the current price, volume, performance and top 10 holdings of INDY at ETFU.com.

While India’s growth on the global stage shows no signs of slowing, financial uncertainty worldwide has shaken the INDY fund over the last few months, with a decline of about 10% in the fund’s price since early December. However, thanks to a massive 50% rise in the share price throughout 2014, INDY is still more than 10% above its price two years ago. INDY currently has around $758 million in assets managed, a 0.93% expense ratio and a small dividend of 0.61%.

INDY’s top holdings are primarily a combination of its four main sectors: financials, technology, consumer cyclicals and energy. The fund’s largest holding with 7.81% of its assets is Infosys Limited, India’s second-biggest IT services company. The next-highest percentage position of INDY is HDFC Bank, which is close behind the leader at 7.57%. The rest of INDY’s top five holdings are Housing Development Finance Company, 6.99%; ITC Limited, 6.60%; and Reliance Industries Limited, 5.98%.

If you think it might be advantageous to pay attention to this up-and-coming country, the iShares India 50 ETF (INDY) might be a good place to start.

Remember to look for the current price, volume, performance and top 10 holdings of INDY at ETFU.com.

If you want my advice about buying and selling specific ETFs, including appropriate exit points, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

The Best ETF Ideas for 2016

Over the past several weeks, we’ve covered what I think are the five best ETF ideas for 2016 for both growth investors, and income investors.

Here’s a quick review of all 10 ETFs on our list.

Growth ETFs

1) Health Care Select Sector SPDR Fund (XLV). Health care is an industry that continues benefitting from demographics, innovation, M&A deals and insurance mandates. XLV is the ETF that holds the biggest and best health care stocks around.

2) First Trust Dorsey Wright Focus 5 ETF (FV). This is a “fund of funds” that simultaneously holds other funds that have allocations to top-performing sectors. Biotech, Internet, consumer staples, consumer discretionary and health care all are part of this fund.

3) PureFunds ISE Cyber Security ETF (HACK). This is the cyber security stock ETF, one that we’ve written about extensively in this publication, and in the Successful ETF Investing newsletter. We also recently conducted a FREE webinar on HACK, which I encourage you to check out before you start making investment decisions in 2016.

4) iShares India 50 ETF (INDY). India is a country that has a pro-capitalist political climate, a huge amount of human capital and citizens hungry for economic growth and an enhanced living standard. INDY is a way to get exposure to the companies benefitting most from these trends.=

5) WisdomTree Japan Hedged Equity Fund (DXJ). Japan continues to put the pedal to the metal on “Abenomics,” which means more quantitative easing from the Bank of Japan, and likely more upside for Japanese stocks. And, with DXJ’s hedge component you get that performance without the negative influence of any currency disparities.

Income ETFs

1) SPDR DoubleLine Total Return Tactical ETF (TOTL). This bond fund is actively managed by the “New Bond King,” Jeffrey Gundlach of DoubleLine Capital, and it takes advantage of the best bonds in the market. The fund invests across global fixed-income sectors, and with an eye toward shorter-duration bonds.

2) iShares US Preferred Stock (PFF). This fund gives you exposure to the best preferred stocks in the market. These hybrid securities are sort of like stocks, and sort of like bonds, as they tend to move higher with the equity markets while also delivering strong yields.

3) PowerShares CEF Income Composite ETF (CEF). This ETF “fund of funds” gives you exposure to the closed-end fund market, a market that’s consistently delivered outstanding yields for income-oriented investors.

4) iShares US Real Estate ETF (IYR). Real Estate Investment Trusts, or REITs, are a fantastic tool for generating yield, and in this fund of funds you get broad-based exposure to the best REITs operating in the market today.

5) iShares Select Dividend ETF (DVY). This is the best ETF for exposure to the biggest and arguably the best dividend-paying stocks in the market today. DVY gives you a very solid yield along with the upside potential of the broader equity markets.

If you want more ideas, including which funds we’re buying right now, then I invite you to check out my Successful ETF Investing newsletter, today!

Twain to the Democrats

“Don’t go around saying the world owes you a living. The world owes you nothing. It was here first.” — Mark Twain

Political season now is in full swing, with two presidential primaries down and another one on the slate for next week. Listening to the Democratic debates of late, you would think it’s all about how much government can give you, and to what extent it’s necessary to punish the rich and successful. That debate reminds me of what one of my favorite literary figures, Mark Twain, had to say about the world. I just wish Hillary Clinton and Bernie Sanders were Twain fans, too.

Wisdom about money, investing and life can be found anywhere. If you have a good quotation you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Doug.

I encourage you to read my column from last week about the way markets reacted to the recent jobs report. I also invite you to comment about my column in the space provided below my Eagle Daily Investor commentary.

All the best,

Doug Fabian