Where To Hide Your Money

NEWS: One of the worst days of the year in terms of percentage loss, but arguably the worst day as far as action. The Dow traded below the January low and hit levels not seen since September 2006. When the dust settled the Dow was down 358 points or 3.0% and a fresh yearly low. The S&P 500 fell 38 points or 2.9%. The index is above the 2008 closing low (1276) and intraday low (1256). The NASDAQ took a really bad hit today, falling 79 points or 3.3%. Its large-cap cousin, the NASDAQ 100 fell to the tune of 4.0%.

THE BOTTOMLINE: The selling began yesterday afternoon after the bulls could not hold onto the rally generated from the Fed announcement. Disappointing earnings guidance from Research In Motion (RIMM) and Oracle [[orcl]] last night did not help matters and things only got worse this morning. Goldman Sachs [[gs]] added GM [[gm]] and Citigroup [[c]] to their infamous “Conviction Sell List”, pushing Citi to a nearly 10-year low as GM hit levels not seen in 50 years! Honestly, where the heck was Goldman 6 months ago? I do not put much into analyst comments and this is another time I will overlook the downgrade as a last ditch effort by the firm. If anything I believe the comments by Goldman are more of a bottoming indication than anything. As they say, better late than never.

THE DAILY ETF UPDATE - WHERE TO HIDE

NEWS: On a day in which the market falls 3% there are not many places you can find solace. In the ETF world you can turn to the short or commodity-based ETFs.

THE BOTTOMLINE: After the rash of ultrashort and short ETFs, the next wave of winners was the ETFs that invest in commodity futures. With oil up over $5, ETFs such as OIL and USO had big days. The gold ETF (GLD) rallied 3.7% today and was joined in the “safe zone” by niche ETFs that invest in agriculture commodities, heating oil, natural gas, grains, and so on. If you do not have exposure to the areas mentioned above, it would be in your best interest to do some research for what may lie ahead this summer. At worst, they could be considered hedging vehicles against your equity portfolio.

McCALL’S CALL - REAL STORY BEHIND GOLD AND OIL?

NEWS: Both gold and oil surged today as the US Dollar weakened. Well at least that was the headline from most news sites. Granted the US Dollar Index was lower by 0.6%, it was not the only reason oil gained over $5 and hit $140 for the first time ever. Or why gold exploded for a gain of $32.80 to close at $915.10.

THE BOTTOMLINE: I cannot be certain as to why the two commodities attracted so much attention today, but when both rally in unison as they did all session, it is usually related to geopolitics. May there be something brewing between Iran and Israel? I have no idea and am the farthest thing from a conspiracy theorist, however I did find the action interesting today.

The silver lining today for investors would be their exposure to the commodities. The gold stocks had a great session, the Philadelphia Gold & Silver Index (XAU) rose 4.4% to close at a new one-month high. The energy stocks did not do as well, but if you had exposure to an ETF that invests in the energy futures it was a slimmer of green in a red blood bath. A day like today is the reason we have held onto our commodity stocks and ETFs for our clients. It is unrealistic to believe we would make money in the stock market on a day like today; that being said, the goal is to soften the blow as much as possible with diversity and hedging techniques.

Subscribe by RSS Subscribe by Email