NEW YORK (
) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his
blog, anticipating which ETFs will be in play next.
Here are three of his blogs from the past week.
Invest in the Smart Shopper
Published 6/15/2010 11:06 AM EDT
Times are tough and shoppers are smart. Instead of just ducking into the neighborhood
to buy a flat-screen TV, shoppers are hitting the Internet to compare prices and find the best deal. As unemployment remains high and increasingly confident consumers remain frugal, investors should bet on this newer, tech-savvy shopper with shares of the
First Trust Dow Jones Internet Index ETF
While FDN has been
a favorite of mine as well as a holding in the
for some time now, this theme's worth reexamining in light of mixed retail results. (See my earlier piece on the subject, "
Playing the Retail Chasm.")
Recent data may show that
consumers are becoming more confident, but they certainly haven't gotten cocky. Comparison shopping sites like
and bargain-basement retailer
have been raking in traffic as consumers search for the best price from the comfort of their living rooms. According to a recent report from Channel Advisor, Google Product Search now accounts for a 26% share of comparison shopping. A ComScore-conducted study showed that Google Product Search is now the largest comparison shopping site with 18 million users (+64% year over year). Google is the largest holding in FDN's underling portfolio, comprising 8.53% of the fund.
Amazon, FDN's second-largest holding, is the world's largest online merchant and a haven for bargain shoppers. Just yesterday, Consensus Advisors gave Amazon the top spot in an annual survey of the healthiest U.S. and Canadian retailers for a second year in a row.
FDN's portfolio also includes
, top sites for consumers looking to compare prices and find the best value.
While Best Buy's results may not have lived up to
expectations, there are other retail angles worth checking out. FDN offers exposure to a unique group of Internet retailers and shopping portals benefiting from cost-conscious shoppers. Don't miss out on this unique fund.
At the time of publication, Dion Money Management was long FDN.
Use Gold, Don't Chase It
Published 6/17/2010 5:15 PM EDT
Gold hit new highs today as investors fled the uncertainty of the equity market and flocked to the precious metal. The physically backed
SPDR Gold Shares
iShares Comex Gold
climbed 1.30% and 1.29% respectively. The equity-backed
Market Vectors Gold Miners ETF
jumped 2.52%. Both GLD and GDX gave back some of their gains in after-hours trading after the equity market finished higher.
I keep addressing the issue of
in this blog, as investors use them as a safety blanket. More than $4 billion in net assets flowed into GLD last month. GLD is the second-largest ETF listed in the U.S., if that tells you anything about the interest in gold.
With gold prices breaching record highs, expect to see more headlines about the safety of gold ETFs as commentators stir the pot. Since both GLD and IAU are physically-backed gold ETFs, commentators love to ask if the gold that backs them really exists. I addressed the issue of "
" in a
. Some gold ETFs are certainly safer than others.
Having seen the commotion over ETFs like
United States Natural Gas
United States Oil
, I wouldn't be surprised to see more questions about the impact that gold ETFs have on the market for gold. I believe the most scrutiny will fall on derivative-based ETFs that track gold futures contracts, like
PowerShares DB Gold Fund
I'm just going to keep saying it: Don't chase gold prices. Physically-backed gold ETFs like GLD and IAU are great tools for portfolio diversification, but they shouldn't be used in short-term plays. I don't see gold's popularity dying down anytime soon, so investors should definitely learn how to trade gold ETFs properly.
At the time of publication, Dion Money Management owned IAU.
Europe's Problems Aren't Over
Published 6/14/2010 1:30 PM EDT
As investors conquer initial shock and fear over the European debt crisis, global markets are moving higher. With a better-than-expected European industrial-production report and a new austerity pledge from France, investors can expect European ETFs to trek higher in the short term. While investors should take advantage of this pop, they also shouldn't lose sight of the serious, long-term problems facing the European Union.
After European debt concerns sucked up investor attention in May, contributing to a dismal month for U.S. markets, I began to prepare for a short-term bounce. After purchasing both the equity-backed
iShares MSCI EMU ETF
and the currency-tracking
ETF Action portfolio, I'm as happy as anyone that the pressure is letting up.
While the doomsday-contagion theories and overall negativity was certainly overdone, deep-seeded issues remain. The austerity measures take time to implement and, as Greek protestors have shown the world, they won't be popular or easy to execute. While global contagion may be far-fetched, it's still hard to tell how deep the sovereign-debt problems run.
I'm not predicting doomsday, but I am sure that the negative news from Europe hasn't run its course. While I don't advocate using a leveraged ETF such as the
UltraShort Euro ProShares
to bet against the rally, investors should consider playing the euro rally, but from a position of safety.
If you'd like to use an ETF, such as EZU or FXE, to track the recent euro rally, it doesn't hurt to hedge a little by owning a position in the
SPDR Gold Shares
PowerShares DB US Dollar Index Bullish
, which has short exposure to the euro and other currencies.
The only thing you can be sure of: When it comes to Europe's economy and the euro, uncertainty is bound to continue. Try to avoid making short-term currency bets unless you've got a well-balanced portfolio to lean on, and proceed with caution.
At the time of publication, Dion Money Management owned FXE and EZU, though positions can change at any time.
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Don Dion is president and founder of
, 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.