Jobs Report Bolsters Appeal of 'Low Vol' ETFs
There are those who have angrily dismissed my suggestion to pare back on emergers, foreign developed ETFs and high beta segments. They labeled it "selling low." The truth is, I am simply controlling the outcome by selling assets for a big gain, small gain or a small loss. What some view as "selling low," I view as avoiding the unnecessary risks associated with watching certain assets travel a great deal lower.
Similarly, I have advocated raising cash and rotating into safer opportunities. Those who have been reading me for years or listened to me as a national talk radio host in the late 90s know better. Cash is not "trash" when you are patiently putting money to work in areas that pull back to levels that you are comfortable entering. You can also employ stop-limit loss orders on new purchases. Equally important, when you sell a high-risk asset, you do not need to rotate immediately into a lower risk asset. You can wait in cash for corrective activity to give you the entry point that you desire.
For example, if you have sold your exposure in PowerShares NASDAQ QQQ Trust (QQQ), you do not need to immediately rotate into one of the many "faves" I have discussed. Unless you already have an ample cash buffer, it makes sense to wait for the desired asset to come to your price point, whether it is WisdomTree Equity Income (DHS), iShares U.S. Minimum Volatility (USMV) or GlobalX Super Dividend (SDIV). The latter (SDIV) is near a 50-day support and could provide a reasonable entry point for those with cash on hand.
You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. Follow @etfexpert This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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