The WSJ picked up on the new preferred stock ETFs in the works from PowerShares and iShares. While I may change my mind when these list I am skeptical that these are needed. If it turns out that they will own a bunch of AA and higher credits of companies everyone has heard of, there may not be much utility.
Very few companies have trouble with their debt, very few. The notion of avoiding single stock risk in this part of the market is not as great as other parts. However if these funds will have exposure to lower quality, as a segment of the market, there could be some utility. It seems like most high quality preferreds yield in the sixes. A fund that reaches for yield in lower quality issues could be worth a look at a time in the cycle when lower quality makes sense. We'll have to stay tuned on these.
A reader left a comment asking about liquidity issues with ETFs and whether or not it matters. I think I am in the minority on this. For someone looking to make an investment, not a trade, of a few hundred shares I don't think it matters much. If the spread seems wide you can try a limit order in the middle for a while to see what happens. A point of caution would be that if you try a limit order for, say, 400 shares, get a fill on 200 and then the market moves away, at some brokerage firms (maybe all of them?) you might have to pay a second commission to get a fill, offsetting the couple of pennies per share you might have saved at the original limit.
Adam Warner has some interesting thoughts on a Monday gap up.
I stumbled across an article from the Fool about an OEF that is NASCAR themed (SCARX). According to Yahoo finance it is up 1.02% YTD. Oops.
My very short post this morning with the picture of George Costanza drew a lot of comments. The debate, if that's what it is, about the market is good stuff. Both arguments seem plausible. It is these points of confusion where big mistakes happen. I have tried to be clear about my expectation and my position; small but noticeable decline coming but still mostly invested.
Wikinvest Wire
3 comments:
Your opinion on the Asian Appreciation
Basket warrents described in this week's BARRONS (options column)
I thought, for sure, no kidding, that was your picture on the post. So much for my astute observations.
short:no
bald:no
stocky:no
dim-whitted:I am guilty
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