ETF/No Load Fund Tracker StatSheet
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Friday, September 9, 2011
ANOTHER ETF ROLLER COASTER RIDE
Equity ETFs were handed a sharp loss today amid rumors that Greek might default over the weekend (no surprise here) and that an ECB high level official resigned among rumors of disagreement in regards to the central’s banks decision to buy bonds of over indebted Euro zone countries.
Not helping matters were reports that Germany was preparing to throw an assist to its banks should the next installment of Greece’s bailout be denied, and the country defaults.
It was uncertainty at its finest, and the equity market closed down sharply. The dollar strengthened, bonds rallied and gold closed up, but only slightly. That came as a surprise to me, as I would have expected gold to rally strongly. Maybe that will be the case, once the rumored default actually occurs.
Overshadowed by the major events was Obama’s plan to create jobs. There was nothing chest pounding about the plan itself, but if the subject interests you, consider reading Mish Shedlock’s opinionated piece on the topic.
Our Trend Tracking Indexes (TTIs) dropped with the market and are showing the following positions in regards to their respective long-term trend lines:
Domestic TTI: +0.71% (last week +1.35%)
International TTI: -12.03% (last week -9.42%)
Please note that the Domestic TTI still hovers above its trend line, but we have been in ‘Sell’ mode since 8/9/11. In case you missed it, this indicator has been dancing around the trend line for a month now without giving us any clear indication as to the major trend. That’s why I have held off issuing a new ‘Buy’ in order to avoid a possible whip-saw signal.
If more bad news surface out of Europe over the weekend, the downside will come into play even more, and we may subsequently see the Domestic TTI move back to the bearish side. If it stays there, I will consider putting on the PRPFX hedge again.
Yes, with the benefit of hindsight, I should have held on to the recently liquidated hedge. It just goes to show how difficult the markets currently are, and that minor trends in both directions have the bulls and bears engaged in a yet to be decided tug-of-war.
Have a great week.
READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
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A note from reader George:
Q: Ulli: Was curious why you didn’t apply SH hedge to Portfolio 7 ETF version of Permanent Portfolio whereas you did for portfolio #1 based on PRPFX? Or did I misunderstand?
A: George: The reason was simply that we have a different view of how portfolios hold up. I did hedge a couple of my ETF equivalent portfolios in my advisor practice, but most of them were with PRPFX.
As I said before, #7 tends to hold up much better in down markets.
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