Out Of The Flames The Bull Will Rise!!

One commentator I heard the other day described the stock market as a “supercharged yo-yo”!  

If you were just an average investor you would definitely feel that way. After a very rough 2008, and encouraging latter part of 2009 and a very tiresome 2010, investors have every right to feel discouraged.  

However, many investors, unfortunately, play “victim” at times like these. They make 2 major mistakes.  

The first thing they do wrong is buy the “wrong stocks“.  

The second mistake average investors are making is “buying high, and selling low” in a panic when the news “turns” the next day.It’s understandable for people to do this.  However, this is “emotional investing”.  

The only way to make money in a “meat grinder” market is to follow specific “Rules” that when followed to the letter will make you money irreagrdless of whether the market goes up or down.  

The question is to do you want to lose money like the average investor or do you want to set yourself up for a amazing financial future?  

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 I am referring to the “buy and hold” mentality that worked so wonderfully from 1982 through 1999, then imploded so spectacularly from 2000 to today.  In a bull market, such as we saw from ’82-’99, the best’strategy to employ was to buy on the dips, and hold those stock long term. And that is exactly what millions of investors did. And it worked!  Never had so many made so much from any previous bull market.

Those strategies however will no longer build your wealth, and they certainly will NOT get you the retirement savings you need. The average retirement investor has been applying the incorrect investment strategy to the market that we are currently in and if they don’t change something fast they will be in for a world of financial pain. 

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You must learn to employ strategies that accept the new reality of the market we are in rather than the market you wish were were in. This is absolutely essential to realising your retirement aspirations. Those that continue to bury their head in the sand will be a victim of their own inaction.If you are feeling despondent about your retirement, the good news is that you CAN still do something about increasing your wealth rapidly & consistently. It is not difficult and if you plant the seed of knowledge now you will be rewarded with the harvest on retirement. 

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The news of late has been sending the market into a meltdown. News such as the European Debt Crisis, the gulf oil spill and US unemployment not coming down quickly enough. 

 But lets take a look at a few things that have been missed by my many:  

• China announced that exports rose 50% and European exports were strong
• The Euro has stabilised and is now rising
• US economic data improves with each month
• Oil is rising on increased demand
• European industrial production in May was up strongly
• Corporate profits are set to again beat expectations in the June earnings reporting season

The EU debt crisis will subside (as it seems to be doing now) and the gulf oil spill will cost BP billions, possibly as much as only 6 months profits. Yes, the world is definitely not as bad as many of the Nervous Nellie’s like to make out. 

All market corrections they have a catalyst, and the EU debt crisis was just that catalyst. In time, it will be looked back upon as just another temporary glitch on the market charts and life will go on. 

Last week, the charts indicated that the worst was over and the bottom of the correction had been found, I have just been waiting for confirmation of this.  

I have no doubt, when you look back a year from now, you’ll regret not investing in some of the great ETFs that are now at their bottom. I’m personally not taking that chance, the weight of evidence heavily favours the stock market at this point in time and I am snapping up some terrific ETFs that should do very nicely for me over the coming months and beyond.Today’s message is simple, and to quote Warren Buffett, “Be fearful when others are greedy, and be greedy when others are fearful.”

What a rocky ride we have been on over recent times, the stock market indices continue to be volatile, spiking and then selling-off in back to back sessions. Pessimism amongst investors has been at a multi-year high.

The good news though is that the recent spike in the VIX (Symbol: VXX) typically means we are near a bottom. We still need to wait for a few more confirmation signs of this, but now is certainly the time to start looking for profit opportunities. When signs indicate we have definitely hit a short-medium term bottom, then you can pounce on these opportunities.

However, you don’t have to wait to profit from a bull market because there are currently bull markets in certain sectors that you can exploit and profit from right now!

 Here are 2 bull market opportunities you can take advantage of immediately:

Currency ETF 

PowerShares DB US Dollar Index Bullish (Symbol: UUP)

This ETF tracks the Deutsch Bank Long US Dollar Futures Index – in other words it tracks the value of the U.S. Dollar.  The greenback has lost nearly 50% of its value over the last 5 years, but since the rest of the world started imploding, the U.S. Dollar is up — and you can play that up trend. 

So if you want to exploit the returns of the U.S. dollars you already store value in, this is a great way to do it. 

What Is The Best Way To Take Advantage Of This Currency ETF?

You can easily profit by buying deep in-the-money put options on currency ETF.  To reduce risk on the leverage you gain by trading ETF Options I suggest you only use 10% – 15% of the money you would normally commit to an unleveraged position.

ETFs trade like stocks, so they give you the ability to trade currency without having to open a separate account. You can also trade currency based purely on technical analysis, so you don’t need to be an expert on the global economy to be profitable!

Gold ETF

In recent years, investors have embraced exchange-traded funds as an efficient means of establishing exposure to commodity prices, a trend evidenced by the explosive growth of gold ETF assets.

And that brings me to the next Commodity ETF:

“StreetTRACKS Gold Trust” (Symbol: GLD). 

This popular ETF tracks the price of gold in the market and the charts show that it has just started to break out again, presenting us with another opportunity to profit from gold’s advance.

GLD offers investors an innovative, relatively cost efficient and secure way to access the gold market. They have been one of the fastest growing ETFs in the US and posted the biggest asset growth in May, adding more than $5 billion.

A number of hedge-fund managers are highly enthusiastic over this prolonged run up in gold prices. GLD is among John Paulson’s largest holdings, and legendary manager George Soros disclosed earlier this year that his holdings included more than 6 million shares of the popular gold ETF. So there is a lot of smart money in GLD right now.

UUP and GLD are two ETFs that you can take advantage of immediately.

However if you don’t want to play the market right now, then make certain you invest in yourself – your education.  Learn how to use technical analysis, or how to trade the right ETFs and you will be ready to jump on the fantastic opportunities the market will soon provide.

Chinese real estate investors are extremely value oriented.  The institutional players are also extremely keen to secure valuable land parcels before 2020, when we will see one of the greatest urban migrations ever recorded. 

This is when it is estimated 500+ million Chinese citizens will have relocated into China’s cities.

To put this into perspective that’s 1.6 times the entire U.S. population moving from China’s countryside to its cities in the next 10 years.

This massive urbanization can’t help but be a major catalyst for rising real estate values, particularly in top-tier cities as Beijing and Shanghai. This population shift will also significantly change the dynamics of the market of second-tier municipalities – such as Chongqing, where people are pouring into the cities by the millions.

China has been dubbed, “Dubai times 1,000,”- a huge statement but one that could create a dramtic increase in real estate prices. Right now Chinese real estate is underperforming the benchmark MSCI China Index, and in my opinion is significantly undervalued. Comparing price-to-book ratios to return on equity, the Chinese real estate market was the most undervalued when compared to other high-growth nations.

The best way for For U.S.-based investors to participate is to consider investing in one of a handful of exchange-traded funds (ETFs) that offer exposure to China’s real-estate market:

Claymore/AlphaShares China All-Cap (NYSEArca: YAO). YAO provides exposure to Chinese lenders China Construction Bank (CICHF.PK) and Bank of China (BACHY.PK), along with construction and contracting giant China Overseas Land & Investment.

FTSE/NAREIT Asia (NYSEArca: IFAS). IFAS allocates more than 8% of its assets to Chinese real estate holdings.

Claymore/AlphaShares China Real Estate(TAO), which solely focuses on Chinese real estate.

In short, the Chinese real-estate sector offers some of the best long-term appreciation of any China-oriented investment category. My advice is look for a short -term pull back in the market and then snap up some of these Chinese real estate ETF, because while like they do have their risks, their upside is very impressive!

To determine what stock or ETF to purchase, traders and investors will typically base their trading decisions on one of the following:

1. Fundamental analysis

2. Technical analysis.

With fundamental analysis you are analyzing things such as financial performance, growth rates, economic factors, competitive strengths and weaknesses,  threats to the business, on of the units held by the fund. From this you can select the best funds to buy. Another fundamental strategy is to rotate  in and out of different ETF Securities.

Most fundamental approaches to investing in ETFs include a buy and hold kind of strategy where you are fully invested.

When you use technical analysis to determine good trading opportunities you are trying to analyze what is happening with ETF share prices using tools such as trend-lines, support & resistance levels, moving averages, and a number of other price related indicators. Technical analysis is based on the belief that all fundamentals are already factored into the price of the shares and so all that is required to make trading decisions is an analysis of the price.

Most technical analysis approaches involve trading in and out of ETFs for a relatively short time.  The key challenge for technical analysts is to develop an edge when trading the markets with common technical indicators but using ‘uncommon trading tactics’.

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Others incorporate both aspects of fundamental and technical analysis into their trading strategy. This gives them an holistic view of the market and presents them with more information with with to make intelligent trading decisions.

The important thing though is that there are ‘systems’ and ‘trading strategies’ that can be employed to greatly improve your portfolio performance. Learn them and you will become one of the best traders you know. In less than 20 minutes a day you can be successfully trading the ETF market, and making huge profits along the way.

Why learn this stuff?

“Give A Man A Fish & He Will Eat For A Day. Teach A Man To Fish & He Will Eat For A Lifetime”.

Trust me. The only way you will ever be successful at growing your own portfolio is to educate yourself on how to invest and trade. Don’t rely on anyone else to tell you what to trade because inevitably they will be wrong. You should be placing your destiny in your own hands, not someone else’s. It is not difficult, you just need to put in a little time and effort and  your portfolio will multiply as a result.

Will you be heading off to the beach this May-June? If you did last year you would have missed huge market gains by the time you returned to the market in November. I suggest you stick around and exploit the ‘Fear’ that currently pervades this stock market.

The recent market turbulence has caused the indices to be shaky as investors have panicked with the media pummeling them with the idea that Europe’s economies are going to implode.

The emphasis on the problems in Europe has led investors to drop their bundle at the thought the U.S. economy will be hit hard as Greece and other European countries falter. They fear a double-dip drop and have jumped ship as a result.

My Opinion:

Well I believe these investors have provided you and I with a fantastic opportunity to invest in some world class ETF Securities that are priced well below their true valuations.

Lets face the facts here about the U.S. economy:

Recent data on housing, retail, auto sales and inflation are favorable. GDP, hiring, corporate sales and leading indicators like semiconductor demand, are also showing signs that demand will exceed Wall Streets expectations.

Don’t be disheartened by this drop in the market. It only serves to provide you with a timely opportunity now to grab some cheap high quality stocks and ETF Funds that will increase rapidly once investors come to their senses. Ignore the ‘talking heads’ and doomsayers and  focus on how you can profit from this situation.

My Advice:

Look for undervalued stocks and ETF Funds in the market now. There are some great bargains out there, several even listed on this blog. Be patient, make the investment in your education and learn the most powerful methods of trading ETFs, do this and you will be rewarded handsomely. The timing is perfect right now. There is a heap of profit on the table for anyone who wants it!

Two Top ETF Securities to Buy Now (as at 19.05.2010):

 ULTRA INDUSTRIALS ETF (UXI)

- Buy Up To: $37.00

ULTRA SEMICONDUCTOR ETF (USD)

- Buy Up To: $33.00

Both These ETF are at bargain basement prices now that the market has corrected. However once the nervous nellies move on from the concerns over Europe and wake up to the fact the U.S. economy is improving rapidly, these ETF Securities are set to explode!

Consumer spending is now on the increase, consumer confidence is heading north, and there are some retail and consumer index ETF Securities that are sitting at their bottom, waiting to rocket once the nervous Nellie’s in the market wake up and snap out of their panicked-induced-coma.

Here are 5 strong consumer-related ETF Funds to consider:

1. (XRT) – SPDR S&P Retail ETF

Retail ETF will be a strong play for investors bullish on a continued increase in consumer spending.  XRT is one of the best – so far for this year it has logged a 20% return.

Companies forming this Retail ETF include: 

Netflix Inc (NASDAQ: NFLX), Gamestop Corp (NYSE: GME), Jos A Bank Clothiers Inc (NASDAQ: JOSB), Anntaylor Stores Corp (NYSE: ANN), and Caseys Gen Stores Inc. (NASDAQ: CASY).

2. (VCR) – Vanguard Consumer Discretionary ETF

This consumer discretionary index fund has tallied returns of 17.5% since January 1 2010.

Top holdings include :

McDonald’s Corp (NYSE: MCD), Amazon.com Inc. (NASDAQ: AMZN), The Home Depot Inc. (NYSE: HD), The Walt Disney Co. (NYSE: DIS), and Comcast Corp. (NASDAQ: CMCSA).

3. (PMR) – PowerShares Dynamic Retail Portfolio

Another pure retail play for index fund investors. This index fund has returned approx 20% year to date.

Top retail stocks in this index fund include:

Bed Bath & Beyond Inc. (NASDAQ: BBBY), Limited Brands Inc. (NYSE: LTD),  Nordstrom, Inc. (NYSE: JWN),  The TJX Companies Inc. (NYSE: TJX), Gap Inc. (NYSE: GPS) and

4. (PEJ) – PowerShares Dynamic Leisure & Entertainment Portfolio

This ETF is designed to capitalize on consumer trends.

Top companies include:

Yum! Brands, Inc. (NYSE: YUM) Starbucks Corp.  (NASDAQ: SBUX), Viacom Inc. (NYSE: VIA-B) , Marriot International Inc. (NYSE: MAR), and Scripps Networks Interactive Inc. (NYSE: SNI)

PEJ has gained 22% returns since the first of the year. It also carries momentum. 

5. (XHB) – SPDR S&P Homebuilders ETF

Think now is the right time to  play the real estate market? SPDR S&P Homebuilders ETF (XHB) is a great choice. 

Key companies include homebuilders and building supply stocks:

USG Corp. (NYSE: USG), Sherwin-Williams Co. (NYSE: SHW), Owens Corning (NYSE: OC), Lennar Corp. (NYSE: LEN) and Simpson Manufacturing Co Inc. (NYSE: SSD).

Running hot in 2010, climbing 25% so far. If housing prices have in fact hit rock bottom as I suspect, then it’s only a matter of time before  buyers start buying again. 

All ETF Securities listed above have had good growth year to date…. but the better news is that I expect continued ’Strong Grrowth’ for these these 5  index ETFs.

Sample Graph Of ETF Options

Have you ever wanted to trade Options? Do you like the profit potential that trading Options can provide?

Are you cautiously nervous about the downside risk that can come from trading Options??

Well today I have a great solution for you. ETF Options!

For those that aren’t familiar with Options, basically they are just the right to buy (called a call) or to sell (called a put) a stock at a certain price before a certain date. These rights have value and are bought and sold on stock exchanges at changing prices that reflect the fortunes of the underlying stock or ETF and the time remaining in the contract. The upside potential is tremendous yet they are also considered to be one of the riskier investment vehicles and better suited to more aggressive traders and investors.

Exchange traded options (also called “listed options”) are a class of exchange traded derivatives.

Exchange traded options have standard contracts, and are settled through a clearing house with fulfillment guaranteed by the credit of the exchange. Due to the fact that options contracts are standardized, its often easy to find accurate pricing models.

Exchange traded options include: 

• stock options,
• commodity options,
• bond options and other interest rate options
• stock market index options or, simply, index options and
• options on futures contracts

ETF Options if used properly can actually reduce the risk in a trade while at the same time maintain the leverage on the upside. ETF Securities investors in particular can exploit the use of these options to protect their holdings in an entirely conservative manner. 

Would you like to lock in profits from a recent run-up in an ETF without selling and triggering those nasty taxes? 

Maybe you would like to buy insurance against a possible drop in a volatile market? 

These and many other other defensive strategies can be obtained with the nearly 70 ETF Options available to trade right now. Whilst many large stocks do also offer options, trying to trade in many at once becomes very expensive, and time consuming trying to keep up with all the  tracking and paperwork.

ETF Securities make defensive options easy and are something you should consider if you like the sound of Options and would like to reduce your risk. Trading options is not for everyone, but combining them with ETFs is a great way to dip your toe in the water and try them out.