Sunday Morning Coffee

This week’s Barron’s featured the final installment of the Barron’s roundtable which included Marc Faber’s picks. I find his commentary in this event to be most useful for what I’m trying to do in terms of learning about new (to me) niches or maybe learning a little more about a niche I’ve already started to study. Faber touched on two areas of interest to me. The first was publicly traded exchanges with his pick of Oslo Børs which appears to trade in Norway with ticker OSLO and on the US pinksheets with ticker OSBHF. The reason I say appears is that Yahoo Finance which has Norwegian stock quotes on the home market doesn’t have a listing, it does for the pinksheet shares, I also could not find it on the Oslo Børs site. BigCharts does know the Norway listing and I would think Faber would know whether or not he did own shares, BTW he said it yields 10%. I was able to find a page on the company site with financial information that I will try to look at later today. Zooming out a little bit, I’ve banged the drum a few times about an ETF devoted to global, publicly traded exchanges, such a fund would be heavy in the US exchanges I imagine–there are funds with exchange exposure but they also take in other parts of the sector like asset managers. Broad financial exposure will be unattractive on a fundamental basis, in my opinion, for a long time. Given the severity of the meltdown and the factors causing it I think it will be years before things...

The Big Picture for the Week of January 30, 2011

After a week or so of lead time things in Egypt obviously escalated on the ground in Cairo which appeared to have a meaningful impact on equity prices in Friday’s session. Of most interest to me was that despite the slide in gold this year, at the point of genuine political uncertainty gold went up. As I’ve noted before we own gold because no matter the price today I expect it will go up tomorrow should there be some sort of external shock. I think the current events in Egypt would count as an external shock. Gold going up in this circumstance is a matter of relying on the markets “working” they way they are supposed to which cannot be perfect but it is a little reassuring that to see gold react this way. We got an even larger pop from our holding in Suncor (SU) as anything that remotely threatens middle east oil makes the Canadian oil sands look more attractive. Not surprisingly most everything else went down a lot on the day including our exposures to Chile, Israel, Brazil and a couple of thematic ETFs. I’m not terribly concerned with how long this takes to play itself out so much as understanding (and reiterating for clients) that for as long as the Egypt story does go on there will be certain market segments in a diversified portfolio that struggle. It is also useful to remember that if this were to turn into something that lasts a couple of weeks taking 10% out of the market (not my expectation) that there would be nothing unprecedented about it. And...

The Big Picture for the Week of January 30, 2011

After a week or so of lead time things in Egypt obviously escalated on the ground in Cairo which appeared to have a meaningful impact on equity prices in Friday’s session. Of most interest to me was that despite the slide in gold this year, at the point of genuine political uncertainty gold went up. As I’ve noted before we own gold because no matter the price today I expect it will go up tomorrow should there be some sort of external shock. I think the current events in Egypt would count as an external shock. Gold going up in this circumstance is a matter of relying on the markets “working” they way they are supposed to which cannot be perfect but it is a little reassuring that to see gold react this way. We got an even larger pop from our holding in Suncor (SU) as anything that remotely threatens middle east oil makes the Canadian oil sands look more attractive. Not surprisingly most everything else went down a lot on the day including our exposures to Chile, Israel, Brazil and a couple of thematic ETFs. I’m not terribly concerned with how long this takes to play itself out so much as understanding (and reiterating for clients) that for as long as the Egypt story does go on there will be certain market segments in a diversified portfolio that struggle. It is also useful to remember that if this were to turn into something that lasts a couple of weeks taking 10% out of the market (not my expectation) that there would be nothing unprecedented about it. And...

Well, The Market Is Up 95%

The US stock market is up 95% in less than two years. No matter anything else in terms of perceived fundamentals, Fed action, ongoing threats the fact remains that the market is up 95% from where it was in March 2009. Whether or not people should feel better it is also true that many people do feel better about the market. I’ve never believed that a lot of people sold out at the bottom and missed the entire rally, I don’t believe it is that cut and dried, and so seeing your portfolio come back by some large chunk, even of not 95%, is going to make you feel better one way or another. Against this backdrop it is somewhat surprising how many new defensive ETFs have recently come out or have been filed for. There has been the WisdomTree Managed Futures ETF (WDTI) which an absolute return product, RBS has come out with two ETNs that are essentially long the index when it is above the 200 DMA and out when it is below (there is a large cap version and more recently a mid cap version), iShares filed for minimum volatility ETFs and after coming out with the Cambria Global Tactical Allocation Fund (GTAA) AdvisorShares is coming out with the the Active Bear ETF (HDJE) which will sell short individual stocks. Frequently new products come based on the short term sentiment of the market as evidenced by past debuts of certain commodity and metals ETFs throughout the commodity bull market, and the number of traditional mutual funds that promised to hedge the downside after the bear market...

Well, The Market Is Up 95%

The US stock market is up 95% in less than two years. No matter anything else in terms of perceived fundamentals, Fed action, ongoing threats the fact remains that the market is up 95% from where it was in March 2009. Whether or not people should feel better it is also true that many people do feel better about the market. I’ve never believed that a lot of people sold out at the bottom and missed the entire rally, I don’t believe it is that cut and dried, and so seeing your portfolio come back by some large chunk, even of not 95%, is going to make you feel better one way or another. Against this backdrop it is somewhat surprising how many new defensive ETFs have recently come out or have been filed for. There has been the WisdomTree Managed Futures ETF (WDTI) which an absolute return product, RBS has come out with two ETNs that are essentially long the index when it is above the 200 DMA and out when it is below (there is a large cap version and more recently a mid cap version), iShares filed for minimum volatility ETFs and after coming out with the Cambria Global Tactical Allocation Fund (GTAA) AdvisorShares is coming out with the the Active Bear ETF (HDJE) which will sell short individual stocks. Frequently new products come based on the short term sentiment of the market as evidenced by past debuts of certain commodity and metals ETFs throughout the commodity bull market, and the number of traditional mutual funds that promised to hedge the downside after the bear market...