Tag Archives: EEM

More on Emerging Markets and Brazil ETFs

1 Apr

Well, what a difference three days makes!  Since my post earlier this week there have been some reportable changes in both emerging markets  and Brazil-focus ETFs.

I had a clipping pulled from IBD, on I think, March 30th, that in my opinion partially explains the movements in the Emerging Markets — funds flow.  $3.71Bn in February into overseas funds following $8.26Bn in January.

Be that as it may, Emerging Markets funds are back.  The ubiquitous EEM – iShares MSCI Emerging Markets ETF has been on a tear since March 17th.  All trade triangles are green, and it’s scoring +100 on Marketclub’s trend score.  EEM is trading at a $0.34 premium to net asset value.  My preferred Emerging Market ETF, Vanguard Emerging Markets VWO, also took off on March 17th, has three green trade triangles and scores +90  on Marketclub’s trend score.  It is trading at a $0.14 premium to net asset value based on the close today. (Vanguard reports a $2.46 discount on their website, so perhaps I need an updated NAV score).  Volume’s not high historically but it is trending up.

By the way, the reason I like VWO over EEM is that it’s fee is one-third that of EEM, and with enough dollars invested these things add up over time.   I am visualizing a buy order for VWO  on Monday.

This is Marketclub’s chart.  If you would like to see how their trade triangle technology works, pick a free two-week trial from the sidebar, or click on the hyperlink if you receive this post by e-mail.

But what of our old friend EWZ, the iShares Brazil large-cap ETF?  The darling of all, it has languished for quite a while.  Is it ready for a come-back?  It’s certainly on fire the last three days, leapfrogging its small-cap sibling BRF.  It’s picked up a green weekly and a monthly trade triangle in three days and scores +100.

I am a little more skeptical of EWZ than I am the broader emerging markets so I would be looking for one more positive close over what I see as resistance at $79 before I become seriously interested.

Interesting doings in the international markets.

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Emerging Markets back on watchlist? EEM, VWO (and BRF?)

29 Mar

 

We haven’t heard much from the Emerging Markets lately, have we?  Interestingly, both EEM and VWO have both triggered a green weekly trade triangle from Marketclub this week.  They are both still under a red Monthly trade triangle, which means I’m not ready to buy back in.  However, they are certainly back on my radar screen. We’ll have to see if this new short and intermediate uptrend is a flash in the pan, or a longer uptrend forming.  Ultimately, Emerging Markets will again be where the action is, the main question is when?

Oh, and speaking of emerging markets — the Brazilian small-cap ETF is behaving similarly.  BRF has been building a base since early February, and is doing much better than its large-cap equivalent EWZ. Eventually it’s reasonable to expect the impact of hosting both the World Cup and the Olympics will show up in Brazilian shares, and my sense is BRF will benefit more than EWZ.

This might be  a good time to pick up a free two-week trial to Marketclub to review their indicators for yourself.  See our sidebar for a clickable link.

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Caution’s in order

24 Jan

We had a great day in the market today.  Dow up 109 points with the NASDAQ up over 1% and the S&P up 0.58%.  But, gains aren’t being spread evenly throughout the market, and, I’m not sure one day’s reversal is going to break the negative trend we’re in at the moment.

I had two red weekly trade triangles hit today from Marketclub.  One in KOL (Market Vectors Coal ETF) and another in EEM (iShares MCSI Emerging Market ETF)  KOL left me with a 7% loss since 1/13, so it’s definitely time to get out of this position for now.  William O’Neil (the publisher of Investors’ Business Daily) has it right when he says that your stops on new positions should be HARD at 7-8% to the downside.  Let’s remember that part of our Paladin philosophy is to limit losses so they don’t outweigh our gains.  So, I’ve set up limit orders on KOL and EEM  to sell at the open.  I will replace KOL when market conditions look right, EEM too.

I also had a repeat  red weekly in IWM ( iShares Russel 2000 Index ETF).  Actually this trade triangle first popped up on 1/20, don’t know how I did but I missed the alert.  As today’s close was above the trade triangle alert price I’ll just be keeping an eye on this ETF.  I have to say the MACD is not looking too encouraging and I may just set a Trade Trigger to sell at the trade triangle price on TDAmeritrade.  I’m sitting on a nice profit in IWM and I don’t want to see it whittled away.

OK, so Marketclub is slinging some red trade triangles my way.  What’s Vectorvest’s point of view?  VV is also calling for caution.  Their composite price on the stocks they track is down over the last week, so as VV puts it, the primary wave is down.

What does this mean to you?  Even if you don’t use stock services like Marketclub or Vectorvest, you should be seriously thinking about your stop positions to protect profits or limit losses.  If you’re not sure how stops work, we’ll review them in an upcoming post.

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Do ETF charges matter?

23 Jan

Good question, isn’t it?  I wonder how many of us even think about fees and expenses when we review ETFs to invest in.  If I’m honest, it isn’t something that’s been on my mind but I’m going to start thinking about it.

I’m on the sidelines in the gold market right now and have been since Marketclub issued a red weekly trade triangle for GLD on January 14th 2011 @$133.10.  I liquidated my GLD positions in all my portfolios. Currently,  I’m waiting for a good signal to get back in.  I’m watching the MACD line for a turn; maybe I’ll get back in before a new green weekly trade triangle, but the green weekly will be my default re-entry point.

However, I will probably not buy back into GLD.  There are three physical gold ETfs that I know of, GLD, SGOL and IAU.  If you plot them together on a chart over a year I defy you to see any difference in performance.  However, their expense charges are not the same:  GLD, 0.40%; SGOL, 0.39%; IAU, 0.25%.  OK, so the difference between GLD and IAU over the course of a year on a $100,000 investment will only be $150, however I will take that towards my investment newsletter and website fees.  So when I go back to gold, it will be with IAU, not GLD.

The difference doesn’t only show in show gold ETFs either.  Emerging Markets draw a huge chunk of change too.   EEM, from iShares has a 0.69% expense ratio.  VWO, from Vanguard has an expense ratio of 0.27%.  That’s $420 a year on a $100,000 investment.  Now that’s a good donation to my newsletter and website fees!  Put them together on a one-year chart in Google Finance and you may notice VWO is the better choice, too.

How about the broader markets like the S&P500?   The ubiquitous State Street SPY has an expense charge of 0.09%, whereas Vanguard’s VOO charges only 0.06%.  Well, it’s only $30 but I’d rather have it in my pocket.  Long story short? Why not take  a few minutes to check alternatives and fees before pushing the trade button?  I can’t say I’d liquidate an existing position based on fee differentials, but I’m certainly going to take account of it when I buy a new position.

Disclosure: Long EEM, VWO, SPY

 

 

 

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How much to double?

22 Jan

If you know your rule of 72, the answer’s easy, but just to put things into perspective here’s a simple chart showing how much our portfolio rolls up at compound rates of 5, 10, 15 and 20 percent a year:

So, over 14 years to double at 5%, 7.2 at 10%, 4.8 at 15% and 3.6 at 20%.

I point this out to you not to encourage you to seek gains by adopting risk that doesn’t fit your profile, but to point out that you can’t afford to ride extended downtrends in a buy-and-hold strategy if you mean to make your money grow.  This is one of the reasons we use Marketclub’s trade triangles in our model portfolios and in a lot of our examples — they keep you out of trouble.  If you trade the weeklies like me, you might end up with a few losing trades, but you won’t be in the market when it falls off a cliff like it did in 2008. Continue reading →

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