Tag: matt thalman

IPO ETFs A Better Way To Play Lyft, UBER, And Other Hyped Listings

Posted on by Matt Thalman

The IPO market is back on fire and investors are once again falling over each other trying to get a piece of the newest publicly traded companies. The recent initial public offering of Lyft (LYFT) is a perfect example of why investors really should avoid getting caught up in the hype of a big IPO. To see why all you need to do is look at the stock chart of Lyft and see how it has fallen after its amazing ‘pop’ on its first day of trading.

The stock has a high of $88.60 per share, but is currently trading below the $60 per share range and has fallen as low as $54 per share. Lyft is not the only example of this flawed IPO process. Facebook (FB), Snap (SNAP), Blue Apron (APRN), DropBox (DBX) are just a few of the other bigger name IPOs that have had lots of hype surrounding them and nice jumps on the first days of trading but soon fell out of favor with investors. With Facebook, while it may have taken some time to gain traction, the stock did come back from its post IPO fall and has performed well for investors, but the others have yet to do so.

The issue with heavily hyped IPOs is that the companies rarely live up to the hype and the stock soon falls below IPO prices as investors realize growth and actual fundamentals of these companies don’t match the pre-IPO hype.

Now, this isn’t to say that all IPOs are failures. Roku (ROKU), DocuSign, (DOCU), BJ’s Wholesale Club (BJ) are all examples of recent IPOs that are trading higher than their initial public offering price and have rewarded shareholders.

So, you may be wondering how you filter out the IPO winners and loser? Continue reading "IPO ETFs A Better Way To Play Lyft, UBER, And Other Hyped Listings" →

A Few New Retail ETF Investing Options

Posted on by Matt Thalman

Recent data reports and economic indicators have been mixed when it comes to the health of the American consumer. This has led some investors to think retail stocks are undervalued, while other investors believe they are overvalued. So whether you fall into the camp that thinks the next recession is “just right around the corner” or that the poor retail sales figures reported in December were not a sign the economy is struggling, but simply a blip in the data caused because of the government shutdown; there are a few newer Retail ETFs which give you the option to invest regardless of the way you think the market is headed.

The first place to start looking if you want to be long retail is with the SPDR S&P Retail ETF (XRT). The XRT would be most investors first choice if you are looking for plain vanilla long Retail ETF investing. XRT has been around since 2006; it has a lower than average expense ratio, when compared to others on this list, at 0.35%. IT has $250 million in assets, 96 holdings and is equally-weighted and draws stocks from the S&P Total Market Index, not just the S&P 500. It also invests in both e-commerce retailers and brick-and-mortar retailers.

Since most people would agree retails future is more online, the most basic ‘online’ Retail ETF is the Amplify Online Retail ETF (IBUY). IBUY has an inception date of April 20th, 2016, and offers equally weighted, well-diversified exposure to global online retailers. Firms must derive 70% of their revenues from online sales and can be any size in terms of market-cap (subject to the standard typical minimum size and liquidity constraints). The fund has 75% of its assets in US-based companies and 25% in foreign stocks. IBUY has an expense ratio of 0.65%, which is on the ‘high’ side, but considering the exposure the fund offers, it is not unreasonable. IBUY currently has $275 million in assets spread out over its 42 different holdings, which have a weighted average market cap of $52 billion. Wayfair (W), Etsy (ETSY), eBay (EBAY) and PayPal (PYPL) are four of the funds top 10 holdings, with none representing more than 5% of the fund. Continue reading "A Few New Retail ETF Investing Options" →

ETF 'Fee War' Could Help You Realize A Larger Portfolio Balance

Posted on by Matt Thalman

With more than 2,200 Exchange Traded Funds available to investors, fund managers are now finding that the lower they go in terms of fee’s, the more money they can attract. This isn’t a new idea as it was first spearheaded by the great late Jack Bogle, best known for his work at Vanguard and the man who is largely credited with the first index fund.

Bogle’s idea back then was that if he could get fund fee’s lower, he would be able to attract more money to the fund and therefore, in the long run, make more money for both his clients and his firm. Even decades after Jack changed the game for investment managers by slashing fee’s; Vanguard is still pushing the envelope on how low they can go. Recently the company filed regulatory documents showing that they were cutting the expense ratio on a number of ETFs; Vanguard Total Bond Market ETF BND (BND), Vanguard FTSE All-World ex-US VEU (VEU), Vanguard FTSE Europe ETF VGK (VGK), Vanguard FTSE Pacific ETF VPL (VPL), Vanguard Tax-Exempt Bond ETF VTEB (VTEB), Vanguard FTSE Emerging Markets ETF VWO (VWO) and Vanguard Total International Stock ETF VXUS (VXUS).

The move is the latest in what many have dubbed the ‘fee war’ which is taking place between fund managers. There is currently a handful of ETFs that have expense ratios as low as 0.03% two of which are managed by State Street Global Advisors and another two which are managed by Charles Schwab. There are three times as many ETFs with fees of 0.04%, and more than 150 with fees at or below 0.10%.
Continue reading "ETF 'Fee War' Could Help You Realize A Larger Portfolio Balance" →

Micro and Macro Investing Using ETFs

Posted on by Matt Thalman

Most people wouldn’t think that investors could use Exchange Traded Funds to invest from both a macro standpoint and from a micro point of view, but due to the increasing number of ETFs now available to investors, this is possible.

First off, what is micro or macro investing?

Macro investing is when you take high-level data points and base your investment strategy on that information. A few examples of high-level data points would be gross domestic product, unemployment stats, US Home Sales stats, current interest rates, consumer confidence, business confidence, the purchasing manager's index, and so on. These data points highlight certain aspects of the economy from the ten-thousand-foot level. The macro picture will tell you how an economy is doing from a very general aspect.

The opposite side of that is micro investing or taking information from much smaller sample sizes and making investment decisions based on that information. A microdata point could be something as small as Apple’s (AAPL) revenue from their most recent earnings report or Amazon.com’s (AMZN) number of Prime Members subscribers. This very small, very direct and specific information will not tell you how the overall US economy is doing, but it would give you a better idea about how Apple or Amazon are faring as opposed to just knowing that the US GDP grew by 3.0% last quarter.

So how would you take macro investment data and put it to use with ETFs? Continue reading "Micro and Macro Investing Using ETFs" →

Should You Own ETFs In A "Stock Pickers Market"

Posted on by Matt Thalman

Most Wall Street participants believe 2019 will be a “stock pickers” year; So how will that affect Exchange Traded Fund investors?

Well first off, what is a “Stock Pickers” market or year? That is a market in which to make a decent return; investors will need to pick individual stocks, not just buy the market as a whole or an index such as the S&P 500 or Dow Jones. At this point, most Wall Street analysts believe the major market indexes will end the higher just slightly higher. In mid-February, Goldman Sachs analyst posted a note indicating they think the S&P 500 will only climb to 3,000 by the end of the year, but the next few months could be flat.

Vanguard went a little further and said it believes the market will only return roughly 5% median annualized return over the next 10 years. Vanguard’s opinion paints an even worse picture than Goldman’s and hints at the idea that investors will need to be “stock pickers” for the next decade if they want to see returns greater than 5% annualized.

So, the experts are telling us that investors need to cherry pick individual stocks if they want to make a real-return greater than a few percent over the next year or maybe more. But what if they don’t know how to find and pick market-beating stocks, they need not worry because that is why actively managed ETFs where created. Continue reading "Should You Own ETFs In A "Stock Pickers Market"" →