There is no shortage of disappointing news during this festive season, and this is reflected in our top-rated ETFs for November. We have seen a flight to quality, driven by risk aversion, into such securities as U.S. Treasuries and, to a lesser extent, municipals.
The most highly rated ETFs were dominated by foreign funds as recently as early 2008 and leveraged short funds just a few months ago. That has completely changed. The uncertainty of the depth of this downturn gives little transparency for 2009 company earnings. This, in turn, has affected the perception of risk in the marketplace, leading to one of the most powerful of emotions, fear, dictating investment decisions.
There may be undervalued stocks out there, but all bets are off until some form of order is restored to the financial system. Despite massive government spending, there need to be signs that unemployment is stabilizing. We now have a vicious cycle that is feeding on itself and likely to get worse with further "shoes to drop" in the new year, such as increased defaults in construction loans and credit cards, the possibility that falling commodity prices will trigger collapses in the farming sector, taking rural banks with them, and the ever-present danger for the stock market of hedge-fund repatriations, especially in the light of the alleged Madoff fraud.
This month's list shows that the flight to U.S. government securities has been across maturities, ranging from three- to seven-year issues via the iShares Lehman 3-7 Year Treasury Bond Fund (IEI) to 10- to 20-year bonds via the iShares Lehman 10-20 Year Treasury Bond Fund (TLH). Note that the shorter-term securities have already experienced considerable price appreciation this year and, hence, investors have started to bid up the prices of longer-dated securities, leading to the 11.89% return for TLH in November, as opposed to the 3.68% return for shorter-dated issues. This has resulted in a flattening of the yield curve.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV