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13 comments:
A menu of bond ETFs targeting both traditional and non-traditional fixed income groupings is good news for investors, indeed. These products will give individual investors and financial professionals the opportunity to avoid higher cost bond mutual funds and enhance flexibility to invest in precise sectors of the national and international bond markets. When the more eclectic income products hit the ETF market investors had better look under the hood, as with other ETFs, and actually see if the contents fit appropriately in their diversified portfolio.
I wonder if it would make more sense for Macroshares to create a single long-short oil ETF. If they used futures they could also use Deutch Bank's technique of "optimizing" roll over to the most favorable contract (least in contango) rather than the next in sequence (I noted that DB didn't do that originally when DBC came out and not only suffered reduced roll-over yield but got picked off by front runners because their roll-over timing was predictable).
Thank you. You answered most of my question about energy at this juncture. I was most interested in your opinion about building a long term position at this point, which was left some what up in the air. If you could address this that would be great. thanks
FWIW, folks looking to pick up some over corrected energy sector stocks should look at oil service sector (SLB and HAL) and offshore drillers (NE and GSF).
Should be a nice 6-8 month trade for a 15% target return.
There is still under capacity for the next 2-3 years in the sector. The key is that they trade highly correlate to the oil prices but in fact are more capex cycle related...
(biggest risk is global recession)
However, as with all investments, do your own DD.
AI
is it Cramer or Kramer?
how about this outlandish theory on oil. I filled my tank for $0.98/gallon in the late 90's, and oil was under $20. Unlike faithful Limbaugh listeners, i do not believe that the global demand exploded as Bush took office driving the oil up many times over. I also do not believe that the global demand miraculously shrunk 30% in the last 4 months.
Maybe Bush's energy and foreign policies and wars drove the price of oil through the roof. When it became apparent that his wings will get clipped in the elections, the Bush premium started coming out of oil.
my guess is that oil goes back to 2001 levels unless W invades Iran to prop it up.
T, couldn't agree more but I would emphasize moderation too. I am hoping we get foreign bond ETFs. My average client is 70/30 stocks/bonds. I would probably max out 10% of the fixed income portion in one of these which is obviously 3% overall. Assuming I liked what I saw under the hood.
RW your ida exists with DBO and DBE, two of the new DB commodity ETFs.
to the 9:08 anon; i have touched on this several times. I have not shied away from implementing normal portfoolios with any sector.
Al, that 6-8 months could be a good trade seems reasnable to me but I do not closely follow the names you mentioned.
Sami it is Kramer like the TV show. I can't say your theory is impossible, it does have some legs. I don't think it will play out that way. I don't think demand shot up as much as some think nor do i think it is decling by that much either. The corrections in the last commodity run were huge, bigger than what we've had so far more so WRT to gold.
Models this week:
Timing Model = 0.5
60% long, 40% cash
Global Allocation of long positions
MSCI EAFE Index 30%
MCCI Emerging Markets Index 30%
Russell 3000 Index - U.S. 40%
Top U.S. Sectors
U.S. Consumer Services 5.5
U.S. Telecommunications 5.5
U.S. Financials 4.5
U.S. Technology 4.0
U.S. Real Estate 4.0
Top Intl. ETFs
MSCI Spain Index Fund 3
MSCI Mexico Index Fund 3
MSCI Singapore Index Fund 3
MSCI Sweden Index Fund 3
FTSE/Xinhua China 25 Index Fund 3
MSCI Malaysia Index Fund 3
S&P Latin America 40 Index Fund 2
MSCI Emerging Markets Index Fund 2
MSCI Germany Index Fund 2
MSCI Hong Kong Index Fund 2
Top Regions & Asset Classes
FTSE/Xinhua China 25 Index 4.0
MSCI Hong Kong Index 4.0
S&P Latin America 40 Index 3.0
MSCI Pacific Free ex-Japan Index 3.0
MSCI European Monetary Union Index 3.0
Dow Jones Wilshire REIT index 3.0
S&P Europe 350 Index 2.0
The biggest development this week is the weakening of Emerging is starting to show up in my technicals. The timing model is still stuck in a deadlock between the trend indicators (up) and the sentiment indicators (excessive optimism or retracting).
I took a smallish position in UCPIX Friday as a hedge. I rarely take bets against equities because the odds of winning are small, but I believe we're in a high risk juncture, at least on a short term basis. We'll see how this trade pans out.
Roger,
Probably worth a look at SLB and HAL and NE since earning start at the end of next week and i beleive with be the catalyst for the sector.
Of course, another NOC is PBR from Brazil... I think you like either CNOOC or PTR but they very richly valued... also, can have a 15%+ pop in the next 6-8 months! I would consider adding PBR to compelement the Major oils you have...
The CEO has said that they would be fine with 35$ oil...
AI
BTW, if you do look at these names please let me know what you think. would love to see how you see things
PBR?
I owned for two clients a while back and sold into the Bolivean news which turned out to be a lucky sale.
while I have not gone back in, I will say I have unyielding faith in the company but wonder, from the top down, if adding beta and emerging in the sector is the right trade right now.
I have disclosed elsewhere that SNP is the China name I own for clients.
PBR - fantastic company. But wow, brazil plus energy, hope you have a barf bag handy for when it gets a little bumpy.
LMAO
Pabst Blue Ribbon?
Roger,
FYI, Beijing just cut gas prices by 4%...
This should be fine for SNP at current prices but if oil rebounds, SNP's margin will suffer.
Regarding PBR, this is a name I like long term, so a correction would mean adding to the position. (Of course, a global recession would be mean cut and run).
To Anon,
I like Brazil from a macro call as well. Got to love natural resource rich countries with relatively less political risk. (I stress relative!!!)
AI
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