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Posts Tagged ‘assets’

Why Changes In Tax Law Will Devastate Our Economy

November 20th, 2012

Michael Snyder: If you have a farm or a small business, would you like to pass it on to your children when you die?  Well, unless Congress does something, it is going to become much, Read more…

Economy, Government, Markets

The Fraud Of Negative Gold/Silver Lease Rates

September 16th, 2012

Jeff Nielson: Experienced precious metals investors are familiar with the topic of “negative lease rates” for gold and silver bullion. However, even novice investors can infer Read more…

Commodities, Gold, Precious Metals, Silver

Don’t Put Your Entire Nest Egg in One Basket

April 26th, 2011

Nilus MattiveEvery year, Easter is one of those gentle reminders that spring is finally here for real, and that summer is waiting around the corner.

Of course, professionally speaking, all the seasonal references to eggs and baskets also spark me to issue a gentle reminder of my own: Namely, that it’s wise to spread your money around rather than piling it all into that one “next great thing.”

I probably don’t have to go into great detail about why this is. So instead, today I’d like to just talk about three of my favorite ways to get more diversification into an income portfolio …

Diversifier #1: Mixing Up the Assets You Invest In!

I continually sing the praises of dividend stocks in this column. And for plenty of good reasons:

  • They offer market-beating yields …
  • They give you the chance for substantial capital gains …
  • They offer reasonable downside protection …
  • Plus, their effective yields can continually rise as companies hike their dividends!

Of course, that doesn’t mean you should ignore other assets in your overall income portfolio. Adding investments like bonds can give you additional income streams and help minimize the damage from temporary stock market declines.

The problem right now is that most bond categories look fairly unattractive to me.

I say that because the prospect for a strong interest rate jump continues to get stronger and stronger. That spells bad news for bonds, especially given the fact that Treasuries have rallied so sharply over the last few years

Fortunately, there are ways to mitigate the risk of adding bonds to your portfolio. For example, you can create a “ladder” as I outlined in a previous column. You can also use bond mutual funds for additional diversification … so that you’re not just holding instruments tied to a single maturity date or a few particular issuing companies.

And even with today’s slim pickings, I still think select categories are reasonable buys. In fact, I’ve already given my dad instructions to target a particular type of government bond for his personal income portfolio. Plus, there’s nothing wrong with adding very short-term Treasuries even at today’s interest rates.

I should also note that even bonds are just one of the other asset classes now available to income investors. There are niche areas like preferred shares and currency-denominated CDs, too.

Speaking of which, the plethora of overseas investments available has created a whole ‘nother opportunity to diversify …

Diversifier #2: Consider International Investments!

There are the aforementioned currency CDs, foreign bond funds, and plenty of other ways to ensure that your portfolio isn’t completely tied to growth here in the U.S.

Of course, personally speaking, my favorite international investments are foreign dividend shares — especially the many that trade right here on U.S. exchanges as ADRs.

Heck, in my Income Superstars newsletter, I’m currently recommending no less than five separate foreign dividend payers — from places as diverse as the U.K., China, Japan, and Canada.

Many of these foreign dividend stocks are quality blue chip companies in their home countries, just like the biggest conglomerates here in the U.S. but they are typically far less dependent on the American economy.

And with the U.S. dollar coming dangerously close to a new all-time low against the world’s other major currencies, I think diversifying into foreign investments is only getting MORE important … especially since you get not only protection but additional profit potential should the greenback keep sliding.

Reason: Your shares — and the dividends being paid — are originally priced in the foreign company’s home currency. So by default, when the dollar goes down your shares and dividends GAIN in value.

Obviously the opposite is also true … but that’s precisely the point of diversifying in the first place!

Which brings me to the third important way to further diversify both your domestic and foreign stock holdings …

Advertisement

Diversifier #3: Always Spread Your Stocks Across Different Sectors!

Sure, spicing up your income portfolio with foreign shares and bond funds will go a long way toward giving you higher safety overall.

But I also think you should make sure that you’re not investing in just stocks tied to one or two particular sectors. After all, look what happened to the folks who were loading up on tech shares back in the late 1990s!

The good news is that — even if you stick solely to dividend stocks — you can find solid buys in just about every sector out there. Heck, in the latest issue of Income Superstars I just recommended a dividend-paying tech company!

And here again, if you don’t want to have to pick individual companies or worry about what sector each belongs to … you can simply employ some of the many low-cost mutual funds and ETFs that are now available out there.

The bottom line is that there are no longer any excuses for not having a diversified portfolio. So if you haven’t taken a look at your allocations in a while, I encourage you to do a little “spring cleaning” before beach season arrives in full force!

Best wishes,

Nilus

Read more here:
Don’t Put Your Entire Nest Egg in One Basket

Commodities, ETF, Mutual Fund, Uncategorized

Major Moves Mar: Active ETFs Assets Jump 20% To Cross $4bn

April 1st, 2011

March was a shaky month for the markets, with the equity markets dipping and then rebounding just as quickly to end the month nearly even. The Nasdaq Composite was at one point more than 6% off its February end close, before bouncing strongly to close the month down only 0.63%. The S&P500 and Dow Jones Industrial were able to recover enough to end slightly up for the month.

The active ETF space saw some interesting developments during the month as well. March saw the launch of one more new actively-managed ETF from WisdomTree, the Asia Local Debt Fund (ALD: 50.98 0.00%), which became the 12th active ETF from WisdomTree to hit the market. PIMCO also made the headlines as its premier active ETF, the Enhanced Short Maturity Fund (MINT: 100.93 0.00%), got some spotlight by crossing an important landmark to join the billion-dollar club. Another important development during the month was BlackRock iShares receiving SEC approval to launch actively-managed ETFs in the US. iShares had a pending filing with the SEC requesting exemptive relief to launch two active ETFs, one an equity focused fund and another a fixed-income fund. If iShares takes advantage of the approval and moves ahead to bring its own active ETFs to market, it could give the entire active ETF space a big push forward thanks to the marketing prowess of the world’s largest ETF issuer.

Despite the strong percentage growth in active ETF assets month-on-month, the absolute amount of investors assets held by active ETFs is still paltry compared to the broader trillion-dollar ETF industry. We explore three big hurdles that continue to hold back actively-managed ETFs.

Fund Flows:

(Click table to enlarge)

Active ETF assets in the US jumped by 20% in March to cross the $4 billion mark, ending the month strong at $4.2bn in assets. Unlike other months, the gains were quite well spread out and came from many different funds and issuers.

AdvisorShares appears to have found a “blockbuster” fund in its Cambria Global Tactical ETF (GTAA: 26.21 0.00%) which has rocketed to $145mn in assets since its launch in Oct 2010. This puts GTAA a fair distance ahead of any other fund from AdvisorShares, in terms of assets. GTAA is managed by Mebane Faber and Eric Richardson, both authors of popular book The Ivy Portfolio. AdvisorShares earlier launches though appear to have stagnated and some actually appear to be losing assets. Assets managed by the Mars Hill Global Relative Value Fund (GRV: 22.36 0.00%) have dropped drastically from $43mn in Nov 2010 to under $18mn at the end of this month. Cumulatively though, AdvisorShares now manages in excess of $250mn in assets as it continues its success as a platform for managers to launch active ETFs.

As mentioned above, PIMCO’s MINT also crossed the $1bn mark during March and closed the month close to $1.2bn in assets. Investors have clearly warmed up to well to this money-market alternative, thanks to its relative outperformance versus other money market funds and also thanks to the strong brand name of PIMCO behind the fund.

WisdomTree also saw encouraging investor response for its recent new launches. The Emerging Local Debt Fund (ELD: 51.91 0.00%) has continued to gather investor assets relentlessly, crossing the $700mn mark to become the second largest active ETF in the US. At this rate, ELD should become the second to join the billion dollar club in a few months. It’s recently launched funds – the Managed Futures Strategy Fund (WDTI: 52.10 0.00%) and the Dreyfus Commodity Currency Fund (CCX: 26.85 0.00%) – also continued to impress, with WDTI gaining another $30mn in assets and CCX ending the month at $131mn. Its latest launch, the Asia Local Debt Fund (ALD: 50.98 0.00%), hit the market on March 17th and has been quick to attract interest with the fund having gathered $173mn in assets in no time.

For a complete listing of actively-managed ETFs, head to our Active ETFs Database.

(Click table to enlarge)

In Canada, Horizons AlphaPro launched another new fund called the Enhanced Income Equity ETF (HEX), which designs a portfolio of equally-weighted Canadian large caps, combined with a covered call writing program to generate income. AlphaPro’s assets have now gone beyond the $500mn mark, however, assets continue to be concentrated in its Corporate Bond Fund (HAB), which has in excess of $300mn in assets.

New Entrants, Filings and Closures:

1. AdvisorShares details Meidell Tactical Advantage ETF (MATH) – direct link

2. Russell withdraws active ETF application, terminates trust – direct link

ETF

Major Moves Mar: Active ETFs Assets Jump 20% To Cross $4bn

April 1st, 2011

March was a shaky month for the markets, with the equity markets dipping and then rebounding just as quickly to end the month nearly even. The Nasdaq Composite was at one point more than 6% off its February end close, before bouncing strongly to close the month down only 0.63%. The S&P500 and Dow Jones Industrial were able to recover enough to end slightly up for the month.

The active ETF space saw some interesting developments during the month as well. March saw the launch of one more new actively-managed ETF from WisdomTree, the Asia Local Debt Fund (ALD: 50.98 0.00%), which became the 12th active ETF from WisdomTree to hit the market. PIMCO also made the headlines as its premier active ETF, the Enhanced Short Maturity Fund (MINT: 100.93 0.00%), got some spotlight by crossing an important landmark to join the billion-dollar club. Another important development during the month was BlackRock iShares receiving SEC approval to launch actively-managed ETFs in the US. iShares had a pending filing with the SEC requesting exemptive relief to launch two active ETFs, one an equity focused fund and another a fixed-income fund. If iShares takes advantage of the approval and moves ahead to bring its own active ETFs to market, it could give the entire active ETF space a big push forward thanks to the marketing prowess of the world’s largest ETF issuer.

Despite the strong percentage growth in active ETF assets month-on-month, the absolute amount of investors assets held by active ETFs is still paltry compared to the broader trillion-dollar ETF industry. We explore three big hurdles that continue to hold back actively-managed ETFs.

Fund Flows:

(Click table to enlarge)

Active ETF assets in the US jumped by 20% in March to cross the $4 billion mark, ending the month strong at $4.2bn in assets. Unlike other months, the gains were quite well spread out and came from many different funds and issuers.

AdvisorShares appears to have found a “blockbuster” fund in its Cambria Global Tactical ETF (GTAA: 26.21 0.00%) which has rocketed to $145mn in assets since its launch in Oct 2010. This puts GTAA a fair distance ahead of any other fund from AdvisorShares, in terms of assets. GTAA is managed by Mebane Faber and Eric Richardson, both authors of popular book The Ivy Portfolio. AdvisorShares earlier launches though appear to have stagnated and some actually appear to be losing assets. Assets managed by the Mars Hill Global Relative Value Fund (GRV: 22.36 0.00%) have dropped drastically from $43mn in Nov 2010 to under $18mn at the end of this month. Cumulatively though, AdvisorShares now manages in excess of $250mn in assets as it continues its success as a platform for managers to launch active ETFs.

As mentioned above, PIMCO’s MINT also crossed the $1bn mark during March and closed the month close to $1.2bn in assets. Investors have clearly warmed up to well to this money-market alternative, thanks to its relative outperformance versus other money market funds and also thanks to the strong brand name of PIMCO behind the fund.

WisdomTree also saw encouraging investor response for its recent new launches. The Emerging Local Debt Fund (ELD: 51.91 0.00%) has continued to gather investor assets relentlessly, crossing the $700mn mark to become the second largest active ETF in the US. At this rate, ELD should become the second to join the billion dollar club in a few months. It’s recently launched funds – the Managed Futures Strategy Fund (WDTI: 52.10 0.00%) and the Dreyfus Commodity Currency Fund (CCX: 26.85 0.00%) – also continued to impress, with WDTI gaining another $30mn in assets and CCX ending the month at $131mn. Its latest launch, the Asia Local Debt Fund (ALD: 50.98 0.00%), hit the market on March 17th and has been quick to attract interest with the fund having gathered $173mn in assets in no time.

For a complete listing of actively-managed ETFs, head to our Active ETFs Database.

(Click table to enlarge)

In Canada, Horizons AlphaPro launched another new fund called the Enhanced Income Equity ETF (HEX), which designs a portfolio of equally-weighted Canadian large caps, combined with a covered call writing program to generate income. AlphaPro’s assets have now gone beyond the $500mn mark, however, assets continue to be concentrated in its Corporate Bond Fund (HAB), which has in excess of $300mn in assets.

New Entrants, Filings and Closures:

1. AdvisorShares details Meidell Tactical Advantage ETF (MATH) – direct link

2. Russell withdraws active ETF application, terminates trust – direct link

ETF

Why 2011 Won’t be Much Better for the Housing Market

January 13th, 2011

Home prices have now fallen farther from their peak than happened during the Great Depression.

Sorting through the news this morning, we detect a common thread: IOUs gone bad and the inevitable response – a search for tangible wealth.

Since 2006, the average home price has fallen 26%, according to Zillow.com. That’s a greater percentage than the 25.9% drop registered from the plunge that helped kick off the Great Depression from 1928-1933.

And for the record, home prices have now fallen for 53 straight months. They fell 0.78% in November, the fastest pace since February 2009.

Still, that trend remains in the works. Look for a 20% increase in the number of foreclosure filings this year, says RealtyTrac.

The real estate forecasting firm says 2.87 million homes got a notice of default, auction or repossession last year – up only 2% from 2009. The foreclosure pace slowed briefly during Q4 2010 following the “robo-signing” scandal.

But the pace is already picking up again: Foreclosures grew 4% between November and December. “There are 5 million seriously delinquent loans not yet in foreclosure,” says RealtyTrac’s Rick Sharga. “They’ve got to eventually get in the pipeline unless the homeowners cure the defaults.”

That ultimate in paper promises, the US dollar, is taking a severe hit today. The dollar index has tumbled to 79.1, its lowest level so far in 2011.

Ordinarily, this would put some wind in the sails of gold, but not today. The spot price sits at $1,384. No doubt this will give cheer to the “gold-is-a-bubble” crowd…but overnight Byron King sent us a compelling pie graph that tells us how gold still pales in comparison to other assets:

Gold vs. Financial Assets

That’s impressive enough… But when you look at it historically, it’s simply staggering. Here’s a chart sent our way by Gold Switzerland’s Egon von Greyerz, showing gold and gold stocks as a percentage of global assets:

Gold and Gold Mining Shares as a Percent of Global Assets

Dare we point out that all four of those larger bars happened to mark major stock market bottoms?

Addison Wiggin
for The Daily Reckoning

Why 2011 Won’t be Much Better for the Housing Market originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Why 2011 Won’t be Much Better for the Housing Market




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Real Estate, Uncategorized

Is This the Biggest Worry for 2011?

December 30th, 2010

Is This the Biggest Worry for 2011?

Precious metals are skyrocketing.

An ounce of gold, selling for less than $300 a decade ago, now changes hands at more than $1,400. Investors of all types are worried that the Federal Reserve is putting us on the road to currency devaluation and soaring inflation. Their response is to buy hard assets like gold and silver.

So when I asked my Market Advisor readers to send me their investing questions for my first issue of 2011, I was expecting one or two about the dollar, gold, and inflation.

But judging by the amount of questions on the topic, I might have underestimated just how antsy investors are.

Now I've been around long enough to know if one reader has a concern, there are dozens more wondering the same thing. So I've decided to reprint here what I recently wrote my readers about the future for inflation, the dollar, and hard assets.

I hope you find the answer illuminating…

I have read reports from economists about the trillions [of dollars] being printed by the American government and the possible skyrocketing inflation that could result. What do you see happening to the American dollar over the next 5 years? Should we be 100% invested in gold and precious metals?
– Peter B.

I would stop short of sinking my entire net worth in gold and other precious metals — if for no other reason, trying to buy groceries with gold krugerrands can be tricky.

But in all seriousness, I do think that everyone should have a sizeable portion of their assets denominated in something other than shaky U.S. dollars.

In my July issue of Market Advisor I shed light on some disturbing statistics. For example, even if we froze every penny of spending and immediately began tackling the debt by $10 million per day, it would still take 5,753 years to pay the whole thing off. Of course, that's not going to happen. The government is spending well beyond its means and sinking $163 million deeper in the hole each and every hour.

Just since that issue was published, the debt has increased by a staggering $811 billion. Not coincidentally, the fund I recommended to counter this alarming situation, Jefferies CRB Global Commodity (NYSE: CRBQ), has jumped 27% since then.

We're currently issuing new Treasuries to pay off maturing Treasuries, essentially kicking the can down the road. But with the deficit widening, the national debt will steamroll toward $20 trillion over the next decade, at which point the interest payments alone would be almost too much to handle. And keep in mind, Uncle Sam won't always be able to borrow money for less than 2% — rising rates will make the burden that much heavier.

The other path is to implement strict austerity measures like those Europe is now facing, which could bring economic growth to a standstill (that doesn't exactly paint a pretty picture for equities either).

Door number three is to take the easy way out and simply deflate the debt by intentionally devaluing the dollar. So when that dollar is repaid to creditors, it won't be worth quite what it was before. This has the added benefit of quashing any threat of deflation.

Unfortunately, it's you and me who shoulder the burden of this silent tax. Watching a crumbling dollar only buy $0.75 worth of goods and services isn't any better than paying a 25% upfront income tax.

Here's a sobering thought: When the Fed was established in 1913, it took one $20 bill to buy an ounce of gold. Now, it takes about 70 $20 notes to buy the same ounce. In other words, the good old greenback is only worth 1/70 of what it used to be relative to gold.

If you're nervous about losing purchasing power, just think of the bankers in Beijing. China holds around $2 trillion worth of dollar reserves. And they have complained loudly about destructive dollar policies.

I think the dollar will remain the world's reserve currency, largely because there are no viable alternatives. But we're likely to see further erosion over the next few years, particularly if central banks continue dumping their stake in favor of gold, yen and other currencies.

Action to Take –> Fortunately, there are ways to safeguard your assets and even turn a nice profit. Gold is the obvious hedge, but there are other options (whose prices are also supported by strong emerging market demand).

Instead of complaining about gas prices at the pump, buy oil producers like ConocoPhillips (NYSE: COP). Tired of paying more for milk, cereal, and bacon at the grocery store? Fight back with PowerShares Global Agriculture (Nasdaq: PAGG).

In other words, convert your dollars into hard assets.


– Nathan Slaughter

P.S. I think inflation is a serious threat, and like I mentioned above, I see it as nothing more than a tax on your money. That's why I call it the “Hidden Inflation Tax” — or “Hi Tax” for short. To read about what could be in store with this hidden tax, I invite you to read this memo.

Nathan Slaughter's previous experience includes

OPTIONS, Uncategorized

Investing in Gold: Finding Comfort in the Economic Downturn

August 25th, 2010

Most of the time, I am so freaked out that I spend most of the day in the Mogambo Bunker Of Paralyzing Fear (MBOPF), scared out of my mind at catastrophic ramifications of the economic stupidities that are being foisted upon us, like, for instance, increasing taxes in a recession! Gaaahhhhhh!

And then people ask mem, “Why are you screaming your head off in fear, you irritating little moron?” Naturally, I answer, with a voice tinged in scorn and loathing, “Because taxes are being raised in a recession, and so screaming in fear and outrage is the only appropriate public response, while buying gold, silver and oil is the only appropriate private response. So, ha! Who’s the moron NOW, you moron?”

Reportedly, there are 20 new taxes in the new ObamaCare sweeping takeover of the healthcare industry alone! Yikes!

At this kind of onslaught of Bad, Bad News (BBN), I instinctively seek the kind of comfort that only Mozart’s piano concertos, large-caliber weaponry, lots of gold, silver, oil stocks and yummy pizzas can provide, especially when I am faced with the twin macroeconomic disasters of huge expansions in the money supply and vast enlargements of a bankrupted, suffocating, enormous, parasitical system of incestuous governments.

In response, I am also keeping, hopefully, far away from the individual idiots running around loose in my neighborhood because I recently discovered that none of my neighbors – to this day! – are smart enough to answer a simple question, despite years – years! – of me constantly reminding them, “Hey! Moron! You had better get gold, silver and oil, because your idiot government is continually deficit-spending the excess money being created by the Federal Reserve so that inflation in consumer prices is guaranteed!”

So, the end results of all my generous labors to educate these halfwits? I recently asked them, “Have you bought any gold, silver or oil to save yourself, and make a lot of money, as the dollar continues to be destroyed? Or are you still acting like some ignorant bozo and keeping all your money in dollars and dollar-denominated assets so that you will end up broken and destroyed, your ruination causing misery and suffering for your spouse, your children and your grandchildren so that they all, periodically pausing from digging in the dirt for grubs and roots to eat, look up at you with raw contempt in their dry, sunken eyes, and ask you, ‘How come you didn’t buy gold when the government was deficit-spending so much money and the evil Federal Reserve was creating all that new money? You must be really stupid, because even The Mogambo could see it from a mile away, and he is one Really Stupid Guy (RSG)! And now he is so rich that when he saw me yesterday, he asked me if I was your kid, and I said I was, and then he laughed at me and offered me $100 if I would dance like a chicken in the middle of the street for 5 minutes so that he could make fun of the mutant offspring of a first-class idiot like you, and I willingly did it! Boo hoo hoo! I am so ashamed! We are ruined because you are so stupid, and now everyone knows that I am stupid, too! I hate you! I hate you! I hate you!’”

Well, it seemed like an easy question to me, but everybody I asked turned around, ran into their stupid house and locked the stupid door, which proves that they are idiots because most people run into their houses and lock the door when they first see me coming from a block away, long before I even get within earshot! Hahaha! Morons!

They have no idea how embarrassing it is to me, The Mogambo, to have my own neighbors be So Freaking Stupid (SFS) as to still believe that the authorities can, somehow, engineer an economic miracle to save us from too much government spending and over-regulation, too much debt, and too much creation of too much new money and credit by the loathsome Federal Reserve.

And, even more embarrassing, they think the government and the banks can perform this marvelous, magical feat with a brilliant strategy of Much, Much More (MMM) government deficit-spending and regulation, plus Much, Much More (MMM) new money created by the Federal Reserve to pay for it all!! Hahahaha!

Naturally, I sum it up as, “We’re Freaking Doomed (WFD), you morons!”

Casey’s Daily Dispatch is not so brutally honest and scathing in its condemnation of idiots, and tones down my exact same message to the less confrontational, “Today we face the prospect of prolonged economic stagnation, and most governments are administering grossly abusive monetary policy as a remedy. While some of the consequences are already being felt, the full ramifications have not hit your wallet yet. But they will.”

And before the consequences start biting, Casey’s Dispatch says to buy gold “If you don’t have at least 10% of your investable assets in physical gold, or at least two months of living expenses.”

On the other hand, the Magnificent Mogambo Portfolio (MMP) thinks 10% gold is too low, as it means that the other 90% of your assets not in gold will be destroyed. MMP contains 100% of its invested assets in gold, silver and oil, and suggests that all others do so, too, mostly because it means that 100% of your assets will grow, which even an idiot like me can see is better than having 10% of my assets grow!

And that is why I, a happy idiot, say, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Investing in Gold: Finding Comfort in the Economic Downturn originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Investing in Gold: Finding Comfort in the Economic Downturn




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

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