9 ETFs And Sectors To Watch In 2009
By Tom Lydon on January 8, 2009 | More Posts By Tom Lydon | Author's Website
The last year has been hectic one for stocks, exchange traded funds (ETFs), other securities and the overall market. We can only hope that 2009 will be a lot shinier. Where can we look for some potential surprises - good or bad?
Brett Arends of The Wall Street Journal gives us some areas to keep a close eye on in 2009, for better or for worse.
- Municipal Bonds: Some are paying as much as three times as much as Treasuries, on a taxable basis; they will either be a gold mine or a huge money pit. Take a look at the iShares S&P California Municipal Bond Fund (CMF), which has crossed both its 50- and 200-day moving averages.
- GAP (GPS) is a cheap retailer with a solid balance sheet, it is trading around six times cash flow and yielding 2.6%. Perhaps take a look at Retail HLDRs (RTH) if you’d like exposure. GPS is 2.6%, and it has crossed its 50-day moving average.
- Long Treasury: Many investors have rushed into treasuries for their safety, but a 30-year yields a measly 2.63%; everything but Depression-style deflation will hurt these bonds. Keep an eye on the Vanguard Extended Duration Treasury ETF (EDV), which is above its 50- and 200-day moving averages.
- Precious Metals: Governments are borrowing and printing money like crazy, which is terrible for paper money and great for precious metals. Take a look at silver, a bit cheaper than gold, more specifically, the iShares Silver Trust (SLV), which has crossed over its 50-day moving average.
- Homebuilder stocks: If there is any recovery in the housing market, it may start with the homebuilders, which are still down 85% from their 2005 peaks, which history has shown as a good indicator to buy. Still - watch the trends. Recent history has shown that recent history doesn’t always apply. Take a look at the iShares Dow Jones U.S. Home Construction Index (ITB), closing in on its 50-day moving average.
- CGM Focus Fund (CGMFX): Fund legend Ken Heenber’s fund tanked this past year and it will be interesting to see how it performs over this new year. Mutual funds have taken a beating overall in 2008. Can they come back? Will investors want to go back? Keep an eye on this industry.
- US Geothermal Inc. (HTM): A leveraged alternative energy play that is high-risk and speculative; it has plenty of cash and is trading at about $0.70 per share. President-elect Barack Obama wants to make alternative energy a priority, which could benefit ETFs related to the sector. Market Vectors Global Alternative Energy (GEX) is a diversified play, and it has crossed its 50-day moving average.

- iShares MSCI EAFE Small Cap Index Fund (SCZ): some believe that the bargains can be found in small Japanese and European companies and it has crossed its 50-day moving average.
- Yen: Japan has been running a massive trade surplus and saving wads of cash, generally good things for a currency. Keep an eye on the CurrencyShares Japanese Yen Trust (FXY) to see what it does this year. It’s above both its 50- and 200-day moving averages.
These are all great companies, sectors and funds to watch; unfortunately, no one can read into the crystal ball and tell us exactly how the market will play out. But this year could be an interesting one.
Disclaimer: Tom Lydon is a board member of Rydex Funds.
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