The Tasgall Group

A long time ago, John pointed me to the ETF Investing Guide.? It was originall published at Tech Uncovered before the author founded Seeking Alpha…? but the guide was preserved and is now hosted on the new site.

The ETF Investing Guide provides a sound argument for a simple asset allocation strategy using index ETFs.? It goes into detail on why you should avoid full-service brokers, index mutual funds, and other mainstream financial services.? Ditch all that, and manage your investments using index ETFs, take advantage of tax-loss selling, and enjoy the ride.

While I would argue with a few of the author’s points (e.g., staying away from all actively managed funds), it is a good guide for those who want a low-maintenance investment plan and are happy to earn average returns.

We talked about the Currency Harvest Fund from PowerShares a while back, but PowerShares and Deutsche Bank are teaming up for even more interesting funds… Just launched:

PowerShares DB Energy Fund (DBE)
PowerShares DB Oil Fund (DBO)
PowerShares DB Precious Metals Fund (DBP)
PowerShares DB Gold Fund (DGL)
PowerShares DB Silver Fund (DBS)
PowerShares DB Base Metals Fund (DBB)
PowerShares DB Agriculture Fund (DBA)

These would be added to the DBV (Currency Harvest) and DBC (Commodity Select) funds that have been out for a while…

One would have to ask — why are they re-inventing the wheel? Why would they launch DBO (Oil) when the USO ETF has been out since mid-April? One good reason — USO has consistently underperformed the actual price of oil since the fund’s launch. The case is less clear when you look at the gold/silver and precious metals funds.

The real gem though is the DBA fund for Agriculture. The fund is splitting the investment evenly across Corn, Wheat, Soybean, and Sugar. This is the first chance for people to invest directly in these commodities without opening a futures account or trying to find a company that produces the commodity.

I have mentioned the closed-end fund IGR before, and now is a good time to bring them up again… IGR is the “ING/Clarion Global Real Estate Income Fund”. While the full name is a mouth-full, it is quite a good fund, and a good fund to know about.

If you like REITs but think that the US based REITs are a bit overpriced or at least late in a bull cycle, you might want to consider diversifying some or all of your holdings into an internationally based fund like this. (more…)

I just read this interesting blurb from Stratfor…

…Today, for mining companies seeking to expand capacity, the ocean floor is emerging as a focus of attention. Particularly in the eastern Indian and western Pacific oceans, the ocean floor contains a number of boulders rich in minerals like gold, nickel and copper — a tempting prospect for those who think they can develop the technology to bring those rocks to the surface. (more…)

As the year winds to a close, it is worth reviewing how the different asset classes performed this year… Thanks to the nifty tools at ETF Screen.com, it’s pretty easy to look at the 1 year performance of the myriad of sector ETFs out there…

To start, here are the high-level categories and their returns (yes, I’m rounding):

• IVV (S&P 500) – up 14%
• TLT (US Bonds) – up less than 1%
• EFA (International Stocks) – up 25%
• VNQ (REITs) – up 35%
• GLD (Gold) – up 23%

Amazingly, according to the screener, only 7 of the 240 ETFs are down for the year. (I’m not including funds like SLV that did not exist on 1/1/06.) There are 340 ETFs included in the list, 120 created since January!

Maybe 2006 will be remembered as the year when everything went up at the same time… (more…)

Here’s a different look at the current rally in the Dow Jones Industrial Average, thanks to www.chartoftheday.com. The rally being measured by the “you are here” dot is the Dow’s ascent since 2002.

On the x-axis, we have the length of the rally in days since the rally began.? On the y-axis, we see the percentage change during the rally.

The thing to note is that while the current bull market has lasted longer than all but three bull markets, it pales in the returns offered compared to previous bull runs.

The returns from traditional investments (stocks, bonds, etc.) have been lower in the last several years compared to historical norms. This fact could be easily used by the bullish crowd as an explanation for why more upside is possible from here, but I side with the bearish / cautious… Current returns are being suppressed by an oversupply of credit/money chasing return, and it will take several years for earnings to catch up with valuations. It’s the old story of oversupply and waiting for the oversupply to be worked off…

Today’s trading took the Dow Jones Industrial Average past the 12,500 mark. There’s nothing significant about this fact other than the fact that our society uses base-10 numbers and we add significance to round numbers that are divisible by 10 or 100.

That aside, the ascent of the Dow since mid-July is quite breathtaking… nearly a 15% rise since the low point of the year with nary a dip along the rise. There’s not much to add that we haven’t said before, but I figured I’d say it again as we go into the last two days of 2006.

The start of January should be interesting as it is the end of “tax-loss-selling” season and we will see if market participants are eager to buy in the new year or if the enthusiasm is lacking…

What happened to my mutual fund holding OAKIX? It’s down 13% today!

(more…)

Here’s another unique and compelling ETF… the Claymore/Sabrient Stealth Fund (STH). The stated purpose:

The objective of the [fund] is to actively represent a group of stocks that are ?flying under the radar screen? of Wall Street?s analysts, but which have displayed robust growth characteristics that give them the potential to outperform on a risk-adjusted basis the Russell 2000? Index and other small-cap-oriented benchmark indices.

So they shop for small, good companies that have no Wall Street coverage. The fund is only three months old, but they have a sister index that back-tests the idea several years back.

If you’re an active trader and want some good ideas in the mid-cap range, they also list the ETF’s holdings and update it every day.

Starting in April, the Internet search company will let rank-and-file staff auction off their stock options to the highest bidding institutional investor, the company said Tuesday. [MarketWatch]

It seems like the Googleplex has found another way to work the markets for every last cent…? By selling stock options in the open market, employees can collect the current value available from exercising stock options, and also collect a time premium for the remaining life of the options.

I’m curious how the SEC will interpret this…