Whenever the market is rallying, there is always someone trying to call the top. There is a bit of pride in saying "I was the first to call the top" or "I told you it was going down."
The latest such prophet of doom is Mark Hulbert. Citing work by former ValueLine research director Sam Eisenstadt, he notes that there is no more upside in the market. Eisenstadt did indeed predict that the S&P would reach 1460, and it has! That does not mean it cannot go higher (nor, when he made the prediction, did it mean that it would hit 1460). While Eisenstadt does anticipate a slight pullback (which happen, literally, all of the time) the aim of Hulbert appears to be cheered for being the first to call the top over.
SPY is only about a percent off its highs (two days ago) and is 39% up from its 52 week lows. I don't care to call the short term direction or destination of the market, so I will just keep this as one to watch.
As Mark Twain once said "The report of my death was an exaggeration."
Independent, Fee-Only Financial Advisor
Tuesday, September 18, 2012
fixed income ETFs
BlackRock CEO Larry Fink is super positive about fixed income Exchange Traded Funds. The cynic in me says of course he is - he sells them. ETFs have done a lot to transform the way people invest in stocks, and hopefully will have some interesting effects on fixed income as well.
The fixed income market can be very opaque. While the stock exchange exists to bring together everyones offers to buy and sell a stock, bonds are often sold dealer to dealer - you have to search around for a good offer. While the US treasury market is the most liquid in the world, there are plenty of lower quality corporates that don't trade frequently.
ETFs can be traded quickly and frequently. This may help bring some liquidity to the underlying markets, especially where they can open up new exposure. Stock funds allow easy access to all sorts of stocks - foreign and emerging stocks, small cap stocks - that can be hard to reach individually. Fixed income funds are similarly opening up more areas for investors (local currency denominated emerging high yield corporates, anyone?). Bringing money and light to these areas should be positive for the markets, improving liquidity, pricing and transparency.
While we do make much use of fixed income ETFs here at New Perspectives, we are monitoring the space for potential, while using active, open ended funds right now.
Disclosure - author is long PCY, ELD, JNK.
The fixed income market can be very opaque. While the stock exchange exists to bring together everyones offers to buy and sell a stock, bonds are often sold dealer to dealer - you have to search around for a good offer. While the US treasury market is the most liquid in the world, there are plenty of lower quality corporates that don't trade frequently.
ETFs can be traded quickly and frequently. This may help bring some liquidity to the underlying markets, especially where they can open up new exposure. Stock funds allow easy access to all sorts of stocks - foreign and emerging stocks, small cap stocks - that can be hard to reach individually. Fixed income funds are similarly opening up more areas for investors (local currency denominated emerging high yield corporates, anyone?). Bringing money and light to these areas should be positive for the markets, improving liquidity, pricing and transparency.
While we do make much use of fixed income ETFs here at New Perspectives, we are monitoring the space for potential, while using active, open ended funds right now.
Disclosure - author is long PCY, ELD, JNK.
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