ETF/No Load Fund Tracker StatSheet
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Friday, December 30, 2011
NO PREMATURE NYE CELEBRATION AS MAJOR MARKET ETFS TAKE A DIP
As could be expected, the last trading day of the year didn’t have too much excitement in store. The S&P 500 finished down 0.43%, ending 2011 almost exactly at the same level from where it started the year.
However, other global markets didn’t fare well this year with $6.3 trillion in market value gone. For instance, Asian markets where the Nikkei lost 17% and the Shanghai Composite lost 22%. And it doesn’t look like next year will offer much hope for improvement at the current rate of Europe’s deterioration.
The 10-year Treasury dipped to a yield of 1.87%, indicating that risk is still quite high although the current VIX level might appear to show otherwise. It’s been a wild roller coaster as far as volatility has been concerned this year, which will likely extend into next year. We’ll all have to buckle up tight to say the last.
The Euro finished off the year at $1.30/Euro while hitting a 10-year low against the Yen, signifying the significant turmoil that persists in Europe as investors have shifted toward assets with limited European exposure.
Interestingly, although there has been greater demand for U.S. Treasuries from investors, foreign central banks have reduced their Treasury holdings.
Spain announced that it will impose further austerity measures and institute tax hikes in order to reduce its budget deficit, putting further strain on any hopes of near future growth. With its 2011 budget deficit coming in at 8% of GDP, which is higher than forecast, returning toward economic sustainability will be a very tall order.
China continues to experience weakness as data show that factory activity fell in December. With domestic demand unable to make up for diminished exports, China’s manufacturing woes may slide into 2012. Not to mention, there’s a property bubble blowing up and other factors pointing toward reduced growth prospects.
With regards to our Trend Tracking Indexes, nothing has really changed. The Domestic TTI (Trend Tracking Index) still hovers above its trend line by +2.33%, while the International TTI is currently at -7.65%. From this perspective, our long-term outlook remains the same.
Heading into 2012, I want to stress the importance of reducing risk via greater bond ETF holdings as global economic frailty hasn’t subsided. In the midst of all this market uncertainty and dour atmosphere, I hope you have a safe and fun-filled New Year celebration.
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 Maghar:
Q: Ulli: Why have you stopped updating the #7 portfolio as of 9/26/11?
A: Maghar: The #7 portfolio is the ETF equivalent of PRPFX. We got stopped out of it in September 2011 and have not reentered due to PRPFX having remained below its long-term trend line. In other words, that portfolio has been in cash since.
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