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GLD – Time to buy Gold?
06 months ago
by Advisor
in ETF's & Mutual Funds
I’ve been a gold bull since late 2005 when it was about $450 an ounce. Now with gold pushing $2000, that proves to be a good investment considering the market turmoil since. But what about now? Is it the time for an entry position in gold??
As you can see, an investment in gold (or GLD, my preferred ETF) 5 years ago gives you a very nice return today. The S&P 500 is still negative, however.
The chart below illustrates this
After briefly touching $2,000 an ounce, gold has pulled back (a little) to around $1,750. I like this price as a entry point for anyone thinking about starting a position. Even a 5% portfolio allocation is a good start with GLD. This can be used as a hedge against inflation or a spreading crisis in Europe. If stocks do well in 2012, gold will probably lag a bit. If that’s the case, buy more next year. In any case, gold isn’t going back down to $1000 an ounce.
**Disclosure – I have no positions in physical gold or GLD at the time of this article.
Summer 2011 Investment Ideas – How did we do?
06 months ago
In May, we posted our summer 2011 investment ideas. Now that fall has arrived let’s see how we did vs the market.
Here’s our original investments and allocations -
Investments for 2011
Here’s how we did.
More details and analysis to follow. Although we lost money, we still beat the market. Not bad in my mind!
Summer 2011 Investments – Part 5 – VWO
110 months ago
An international presence is essential in any portfolio. While the US economy could be stagnant other parts of the world could be booming. Just look at 2008-2009. While the financial crisis sent shockwaves through the world economies – international funds actually outperformed US equities. The ETF I’d like to feature today is VWO – or the Vanguard Emerging Markets ETF Fund.
Except a small window in late 2008, VWO outperformed the S&P 500 by almost double digit percentage gains.
International stocks and indexes are still very risky assets to own, however. One year you’ll see a 70% gain, the next year you’ll see a 40% drop. That’s the nature of the beast. This is why you only want to allocate no more than 10% of your portfolio to an international fund or ETF. Obviously, I am a bit convserative and you can adjust this up if you have a longer time-frame to retirement. People in their 20′s could invest up to 15-20% internationally depending on their risk tolerance.
Here is VWO’s profile
The Fund seeks to match the performance of the MSCI Emerging Markets Index. The Fund employs a passive management or indexing investment approach by investing substantially all (normally about 95%) of its assets in the common stocks included in the Index.
You may notice I’ve been recommending a lot of Vanguard ETF’s. They are by far any away the best in my opinion. They have absolutely the lowest fees, period. And fees can add up.
Let’s say you have $100,000 of VWO. The yearly expense ratio of VWO is .22%. That’s roughly $220 per year. Now let’s look at a competitor. iShares Emerging Market ETF – EEM charges .69% – or almost triple the fee for roughly the same exact fund. Multiply that times 10 years of investing and that’s some serious cash you’re saving.
Some specifics on VWO:
VWO S&P
| 1 Year | 27.01 | 27.34 |
| 3 Years | 11.97 | 7.72 |
| 5 Years | 70.34 | 11.25 |
These are crazy returns – don’t expect this every year. The 5 year obviously includes the 2008 financial disaster.
Top 10 Holdings |
||
| Company Name | % of Total Portfolio |
Dollar Value (in thousands) |
| Gazprom OAO DR | 1.88% | $915,037.36 |
| America Movil SAB De CV ORD | 1.42% | $691,145.24 |
| Samsung Electronics Co Ltd DR | 1.40% | $681,410.80 |
| China Mobile Ltd ORD | 1.38% | $671,676.36 |
| Industrial And Commercial Bank of China Ltd ORD | 1.25% | $608,402.50 |
| CNOOC Ltd ORD | 1.12% | $545,128.64 |
| China Construction Bank Corp ORD | 1.12% | $545,128.64 |
| Petroleo Brasileiro SA Petrobras DR | 1.08% | $525,659.76 |
| Vale SA DR | 1.00% | $486,722.00 |
| Itau Unibanco Holding SA DR | 0.96% | $467,253.12 |
| Total: | 12.61% | $6,137,564.42 |
Summer 2011 Investments Part 4 – NLY
011 months ago
Part 4 of our summer 2011 investments features a real estate investment trust or REIT. Annaly Capital Management Inc, or NLY, is one of the best for a shorter term investment. This stock is currently trading near its 52 week high at $18.50. As you can see by the chart – the stock has been trading between 17 and 18.50 in the past 52 weeks.
From NLY’s profile
Annaly Capital Management, Inc. is a Maryland corporation that commenced operations on February 18, 1997. It owns, manages, and finances a portfolio of real estate related investment securities, including mortgage pass-through certificates, collateralized mortgage obligations (or CMOs), agency callable debentures, and other securities representing interests in or obligations backed by pools of mortgage loans. The Company’s wholly-owned subsidiaries offer diversified real estate, asset management and other financial services. The Company’s main business objective is to generate income for distribution to its stockholders, mainly from the net cash flows on its investment securities. RCap is its wholly-owned broker dealer taxable REIT subsidiary which generates fee income. It is mainly engaged in the business of investing, on a leveraged basis, in mortgage pass-through certificates, collateralized mortgage obligations and other mortgage-backed securities representing interests in or obligations backed by pools of mortgage loans issued or guaranteed by Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae) and the Government National Mortgage Association (Ginnie Mae) (collectively, ‘Mortgage-Backed Securities’). It also invests in Federal Home Loan Bank (FHLB), Freddie Mac and Fannie Mae debentures. The Mortgage-Backed Securities and agency debentures are collectively referred to herein as Investment Securities.
There are some risks with NLY. The fat 14% dividend is very appealing. With the inevitable rise in interest rates the stock and dividend is surely to go down. NLY basically makes it’s money by borrowing near zero percent and keeping the difference. As rates rise the spread gets smaller. This is still a stock I’d like to own for the rest of 2012. I have been long NLY since around $17.90.
Summer 2011 Investments Part 3 – CVY
111 months ago
CVY, or the Guggenheim Multi-Asset Income ETF, was a good find by a friend in 2010. I’ve owned this since late 2010 with about an 11% gain (plus dividends). This ETF is a well diversified basket of stocks, bonds, preferred stock, ADR’s, REIT’s, MLP’s, and royalty trusts. Quite a basket of investments all into one ETF. The fund tracks the “Zacks Multi-Asset Income Index” for its investments. CVY pays a nice dividend of around 4.7%.
The expense ratio of 0.60% is a bit higher but still in line with most ETF’s. I’ll pay a little higher expense ration for higher returns any day.
Top Fund Holdings
SEADRILL LTD 1.48 %
CONOCOPHILLIPS . 1.38 %
CHEVRON CORP . 1.34 %
LINN ENERGY LLC . 1.29 %
WELLS FARGO & COMPANY 1.12 %
EATON VANCE LIMITED DURATION INCOME FUND 1.10 %
ALLIANCEBERNSTEIN GLOBAL HIGH INCOME FUND INC 1.07 %
PROVIDENT ENERGY LTD 1.06 %
ANNALY CAPITAL MANAGEMENT INC . 1.03 %
AMERICAN CAPITAL AGENCY CORP 1.03 %TOP FUND SECTORS
SECTOR WEIGHTING
Finance 20.50 %
Oils/Energy 18.12 %
Consumer Staples 13.06 %
Utilities 12.53 %
Closed End Funds 9.66 %
Computer & Technology 6.83 %
Medical 6.02 %
Aerospace 2.93 %
Basic Materials 2.56 %
Consumer Discretionary 2.31 %
Industrial Products 1.46 %
Construction 1.37 %
Retail/Wholesale 1.00 %
Transportation 0.85 %
Business Services 0.79 %
As you can see, the fund is leveraged heavily into energy and financial services. Another economic downturn could hit this fund quite hard. But with just a 10% portfolio allocation like I recommend, you aren’t betting the farm on this either. I believe this ETF is also one to keep for a while. Energy isn’t going anywhere and financial services will pick back up. There may be some short term speed bumps though.
**disclosure – I am long CVY
Summer 2011 Investments Part 2- VIG
211 months ago
This is one to buy and hold FOREVER! VIG is quite possibly the best investment anyone can own. Why is this? Let’s take a look at VIG’s profile.
The Fund seeks to track the performance of the Dividend Achievers Select Index that measures the investment return of common stocks of companies that have a record of increasing dividends over time.
In other words, it only invests in the best high quality stocks that have consistently increased their dividends year over year.
http://www.mergent.com/news-2006-10.html
Dividend Appreciation Index Fund will track the performance of the Dividend Achievers Select Index™, an index created exclusively for Vanguard by Mergent. A unique dividend-growth investment tool, the index is a subset of Mergent’s Broad Dividend Achievers Index™ which follows U.S.-listed companies that have increased their annual regular dividends for at least the past 10 consecutive years and have met specific liquidity screening criteria. The Dividend Achievers Select Index uses additional proprietary methodology to focus on approximately 200 stocks, and offers investors access to companies with consistent earnings growth and bolstered diversification across securities, sectors and investment styles.
Again, this is one to own and hold forever. Even though it only yields about 2% this is very misleading. These are companies that are very strong financially. These companies are almost zero risk for losing large amounts of money.
Top 10 Holdings as of 4/30/11… quite a list! Buy this one and forget about it. You’ll thank me in 20 years!
| 1 | Chevron Corp |
| 2 | ConocoPhillips |
| 3 | Exxon Mobil Corp |
| 4 | United Technologies Corp |
| 5 | Coca-Cola Co/The |
| 6 | International Business Machines Corp |
| 7 | McDonald’s Corp |
| 8 | PepsiCo Inc/NC |
| 9 | Procter & Gamble Co/The |
| 10 | Caterpillar Inc |
| Ten largest holdings = 40.0% of total net assets | |
Summer 2011 Investments – CSJ
112 months ago
The first investment I’ll cover is the largest piece of my portfolio. Again, this is a very conservative portfolio and you could change the allocation any way you want.
CSJ is the iShares Barclays 1-3 Year Credit Bond ETF. It currently yields around 2% and is a relatively safe investment.
From CSJ’s information page:
The Fund seeks investment results that correspond to the investment grade credit sector of the U.S. bond market as defined by the Barclays Capital 1-3 Year U.S. Credit Index. The Index includes investment grade U.S. credit securities that have a remaining maturity of 1 to 3 years.
The reason I like CSJ so much is that it invests in short term corporate bonds. Almost all holdings mature in less than 3 years. This keeps interest rate risk to a minimum (but it is still there). As rates start to rise we will see a pullback on security price. But on the long term this should still be a fairly safe income investment. This is especially useful for someone looking to diversify out of US Treasury bonds.
The expense ratio only knocks off 0.20% off your return.
Summer 2011 – What will the stock market do?
11 year ago
If anyone could answer this question – we’d all be rich! Keep in mind… this is my own opinion,. For every person that tells you the Dow is going to 15K I’ll find you someone it’s going to 5.
Here’s my opinion on what to own in summer 2011. I am a more conservative investor during big run-ups like we’ve seen since 2008 (100% gain!!).
Here’s what I like.
Investments for 2011
More details to come on each stock and why I like it…
CSJ – Online Investing Advisor Notes
VIG – Online Investing Advisor Notes
CVY – Online Investing Advisor Notes
Who Needs Stocks or Bonds, When This Will Yield at Least 8%
11 year ago
Sound like I’m nuts?? We’ll I’m not. Let me introduce you to investing 2.0. It’s called Lending Club. Believe me – I was skeptical too. But with no minimum investment I figured I would give it a shot. I’ll tell you I was pleasantly surprised. Below is my review.
LendingClub’s homepage claims a 9.5% annualized return as of 09/05/2010. They also report a mere 2% default rate on their total number of loans. How in the world can that happen was my first question… how can make 9% in this economy? The answer is pretty ingenious. Makes me wonder why I didn’t think of it first…
After signing up and making my first cash deposit (paypal was offered at signup) you are then able to buy notes. Below is a sample of what you can search for. You can filter by interest rate, length of note, or keyword (ie. credit card).
Everything a bank would use to lend money is available for you to see. Within each loan is a detailed look at the profile of the requester. Employment history, gross income, number of delinquencies, bankruptcies, etc. If you see a red flag in the profile – don’t invest! Very easy. You are also able to ask the member questions if you decide to. For instance – if you were on the fence because of his high revolving credit balance you could ask them how they plan on using this loan. Please note: much of this info is unverified. Members who are requesting loans are encouraged to get their income and employment verified. This at least give lenders a better idea of their financial situation.
So how has my experience gone? I signed up for LendingClub in April and so far I’ve been very impressed. One BIG limitation for me is that I was not able to lend directly in new loans. LendingClub loans are only allowed in 17 states (check the terms for list). That doesn’t mean you can’t buy the notes from other lenders though. LendingClub has a trading platform to buy and sell your notes before they reach maturity. I actually bought most of my notes at a 1-2% discount. You have to watch out though, there are people on there trying to dump worthless default notes so make sure you only by notes that are current on payment. As you can see below, you can filter by interest rate, term, etc and also sort the columns.
You are also able to view the original listing thru the trading platform so you’re still able to see all of the original Q&A’s, financial information, and notes from the member.
So now I have my account … How do I make money?
Great question! Most of the loans are structured as 36 month notes. 60 month notes came out a few months ago but i haven’t really looked at those much. As you can see, it’s all about risk and reward. Want to take a chance on a less than steller credit score? Then you could make up to 20% interest on your investment. But even the top credit scores will earn you over 8%. And with credit scores in the 700+ range… your risk of default is next to zero. In today’s volatile stock market – I’ll take that!
I picked a wide range of notes from the A grade (top credit) to the G grade (bottom). Below is my portfolio of notes.
So far I’ve only had one note go late (the G grade) but they’re on a payment plan so I am still getting paid. All of my others have been on time. As you can see I am making just under 14% with my allocation of notes. I went a little on the risky side just to see what the collection process was if a note went late. Lending Club does all of the collections, payment plans, payment reminders, etc. You sit back and collect the interest and late fees. Not bad at all.
Overall, I think Lending Club is great for an investment. If you are looking for a semi-liquid investment I think you’ll find Lending Club is perfect for you. I believe the only drawback is the amount of time it takes to research your potential loans.
Retirement Investment Options – It’s not like the old days…
01 year ago
Anyone who has money in a 401k or any retirement account knows that 2000-2010 was the “lost decade”. In this 10 year period stocks basically stayed flat after the big booms and busts.
