ETF Investors Back Rogers' Global Outlook

In the battle of Roubini versus Rogers on the future of the global economy, it seems ETF investors are standing behind Rogers.

Roubini believes that by excessive borrowing of the cheap U.S. dollar, investors are fueling an enormous asset bubble. When the dollar eventually reverses its downward path and appreciates, this bubble will explode and bring nearly everything down with it. Fearing this predicted explosion, Roubini has explained that he is not buying stocks, but may hold more gold.

Rogers, on the other hand, does not feel that this global bubble exists. He notes that, although many asset classes have seen a lift as of late from the dollar's weakness, emerging markets and commodities are still well off their all-time highs. Rogers recently explained to Bloomberg News that, "It is not a bubble if something is up 100% this year, but down 70% from its high. That's not a bubble, that's a good year." Therefore, rather than buckle down for the devastation of a bursting bubble, the investor still feels comfortable and optimistic holding commodities and emerging markets.

Looking at the October 2009 NSX data, there were massive net inflows to the Vanguard Emerging Markets ETF (VWO - commentary - Trade Now) and the iShares MSCI Emerging Markets ETF (EEM - commentary - Trade Now), amounting to $2,204 million and $1,766 million, respectively. SPDR Gold (GLD - commentary - Trade Now) was another big asset gainer in October, with $272 million in net inflows.

Because of the dollar's weakness, I currently have PowerShares DB U.S. Dollar Bearish Fund (UDN - commentary - Trade Now) in my ETF Action portfolio , but I also have PowerShares DB USD Bull (UUP - commentary - Trade Now) on my ETF Action watch list.

At the time of publication, Dion was long UDN.

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At the time of publication, Dion was long UDN.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.