I’ve been finding interesting investing opportunities out there. Let’s start with income ETFs. A couple of the best of breed investments I see available right now are HTE (Harvest Energy Trust), PCN (Pimco Corporate Income Fund), and AGD (Alpine Global Dynamic Dividend Fund).
I recommend buying these ETFs on days when the market is weak and using limit orders to make sure you lock in a good price. They aren’t very liquid, so the bid/ask spread can be wide. Throwing in a GTC (good ’til canceled) limit buy order at a reasonable price is probably the best bet. I wouldn’t take more than a 5% position from the entire portfolio in any single income ETF.
I’m also looking at some ETFs to provide a diversified global portfolio. Here’s some of the best emerging markets ETFs that I feel comfortable dipping in to: LDF (Latin America Discovery Fund), RNE (Morgan Stanley Eastern Europe Fund), EZA (iShares South Africa), EWS (iShares Singapore), EWT (iShares Taiwan), EWA (iShares Australia), EWK (iShares Belgium) and GII (Global Infrastructure 10) .
These ETFs provide the best fundamentals for some of the emerging market opportunities that I still think hold growth potential.
I recommend buying these ETFs on pullbacks with GTC limit buy orders, too. Remember to diversify. Don’t put all your money in a single ETF. Try to balance your investments based on the markets you find have the best fundamentals and potential for growth.
On a technical note, the US S&P 500 index is nearing the top end of the trading range between the 100 and 200 day moving averages. If it can break above 1450 decisively, we may see a nice rally to last October’s highs, but it is more likely to see strong resistance before a sustained rally can occur. A retest of the March lows is also not out of the range of possibilities.
I am still bearish on the US market overall because I think the weak US consumer is the next big shoe to drop. The consumer represents 70% of US GDP and a sizable portion of global GDP. A weak consumer will be a very negative catalyst.
The US Federal Reserve’s stimulus has been helpful in easing credit market turmoil, but fueled the inflation fires which combined with rising foreclosures and low credit availability have created a potentially serious constraint in future consumer discretionary spending.
This may be a good reason to buy some puts against the ETFs you are investing in or to buy some ultrashort ETFs (such as SDS, SRS, QID, SKF, etc) if you consider any taking equity positions. This put/short strategy ensures that downside is more hedged than being long “naked”.
Remember that these opinions are only my own and don’t necessarily represent the best strategy for your portfolio. Do your homework and research what will work for your income and growth needs and modify these suggestions as necessary or use them as a basis for how you may invest in this environment. Good luck and thanks for reading!