Tag: matt thalman

REIT ETFs May Be Better Than Equity ETFs

Posted on by Matt Thalman

A report issued last year called the “Historical Returns of the Market Portfolio,” looked at the performance of worldwide financial assets for the modern era, from 1960 to 2015. The researchers Laurens Swinkels of Erasmus University, Rotterdam, Trevin Lam of Rabobank, and Ronald Doeswijk, found that during the observed time frame global stocks returned 5.45% a year, non-government bonds returned 3.5% a year, and government bonds returned 3.06% a year. But, shockingly the best assets class from 1960 until 2015 was actually real-estate investment companies and trusts, which produced a yearly return of 6.43%.

The difference of a Real-Estate Investment Trust portfolio and a global equity portfolio for a period of 20 years would mean the REIT portfolio would have beaten the global stock portfolio by nearly 30%. Furthermore, the REITs performed very well when looked at on a per decade basis. The 1990s was the only decade in which REITs didn’t perform, as returns were just above zero. But that decade following the 1980s when things were booming. This all while stocks performed poorly in the 1970s, which just barely producing positive returns, and from 2000 until 2010 when global stock returns were actually negative.

In addition to performing better than stocks on a per-decade basis, real-estate’s worst year was never as bad as stocks worst year but its best year was better than global stocks best year. More so, it had fewer years in which it fell more than 10% than the number of years in which stocks fell 10% or more. Continue reading "REIT ETFs May Be Better Than Equity ETFs" →

Treat Yourself To An Early Christmas Gift

Posted on by Matt Thalman

The Christmas season can be a time that makes or breaks a retailer's entire year. With that being said, most investors already know this information. It's not typical for a retailer's stock to experience a major pop or drop around the holiday season just because of revenue and earnings were three times that of the previous quarter.

But most reports currently indicate the American Consumer is healthy and feeling good. Which would indicate this holiday shopping season could be a record-setting year regarding the amount of money spent buying holiday presents. And a record-setting year is the type of event that would make a retailer’s stock pop. A large year-over-year revenue and earnings beat is the type of performance that Wall Street likes and rewards with a higher share price.

One report, in particular, the University of Michigan Consumer Sentiment Index was unchanged in November and remained higher thus far in 2018, at a 98.4, then in any prior year since 2000. Furthermore, the report indicates "income expectations have improved, and consumers anticipate continued robust growth in employment." "The renewed strength in nominal income expectations is critical to overall spending prospects. Among the working age population, those between the ages of 25 and 54, the anticipated annual gain in nominal household income was 3.6% in November, the best in the past decade" per the November report.

If the University of Michigan Consumer Sentiment Index is correct, we could be in for some really big number this holiday season. That being said, to fully realize the share price increase, it is best to buy the retailers before early holiday shopping reports are released. Obviously, by doing so, you take the risk of this year being an average or poor shopping season, but if you’re willing to take that risk, it could pay off nicely this year.

So, let's take a look at a few of the Exchange Traded Funds that you could purchase if you want to attempt to ride the retail waved this holiday season. Continue reading "Treat Yourself To An Early Christmas Gift" →

Do Not Buy A Mortgage-Backed Security ETF

Posted on by Matt Thalman

I know what you are thinking, mortgage-backed securities, aren’t those what caused the financial crisis in 2008? The answer, in a nutshell, is, well yes! But, despite these products causing all that destruction just a decade ago, they have never really disappeared. Some investors have been using ever since and will likely continue using them in the future.

But, just because your neighbor jumps off a bridge, doesn’t mean you should follow along.

Besides just ‘blindly’ following your neighbor, there are a number of reasons why these MBS ETFs can look appealing. The first and foremost is certainly their high yield. The iShares MBS ETF (MBB) currently offers a yield of 3.73%, while the Vanguard Mortgage-Backed Securities ETF (VMBS) is offering a yield of 3.47% and the First Trust Low Duration Opportunities ETF (LMBS) currently yields 3.5%.

Another is the fact that some of the MBS ETFs boast the idea that the mortgage’s they own are backed by Fannie Mae, Freddie Mac or Ginnie Mae, which are essentially offering insurance to MBS investors on the chance that a large number of mortgagors begin to default.

MBS ETFs offer a great yield and insurance to protect your investment, what is not to like? Continue reading "Do Not Buy A Mortgage-Backed Security ETF" →

It's Still Not Time To Buy A Marijuana ETF

Posted on by Matt Thalman

The month of October was terrible for the marijuana Exchange Traded Fund MG Alternative Harvest ETF (MJ). After some months in which we witnessed the share price of the marijuana ETF climb higher, we saw it drop like a rock following the October 17 date for the legalization of marijuana in Canada. For October, MJ was down just slightly more than 27%.

MJ rose and fell due to some big winners followed by big losers in the marijuana industry. But the problem is, the moves we have seen by these stocks have for the most part been based solely on speculation and rumors. We have not received an earnings report indicating profits from Canada were going through the roof; we receive any real meaningful information from the companies themselves that would have indicated now was the time to buy because the stock prices were just going to run higher. It was all just speculation and hype that was causing stock prices to move higher. I recently warned investors that now was not the time to jump on the MJ train, back when the ETF was at loftier levels, but now that is has fallen, you should remain on the sidelines and see how things play out in the industry.

The first reason of why is because of the recent decline the industry has gone through. The majority of the drop has been due to nothing more than profit-taking after the boom, ‘hype cycle’ played out leading up to the October 17 legalization of marijuana in Canada. Common sense would say the marijuana stocks would climb higher after the law went into effect. But all too often, the opposite happens because the ‘hype’ over the recent change dies off after the actual event takes place, and no new information comes available to keep the ‘hype train’ rolling. Savvy investors bought shares of the marijuana stocks ahead of the legalization date, road those stocks higher due to the “hype” and then sold them after the October 17th date when the catalyst for the move higher played out.

Which leads us to reason two of why you should stay on the sidelines. Continue reading "It's Still Not Time To Buy A Marijuana ETF" →

Amazon's October Drop Hurting ETFs

Posted on by Matt Thalman

Most recent data shows 246 different Exchange Traded Fund’s owned more than 24.7 million shares of Amazon.com (AMZN). But, the companies recent 20.9% decline in the month of October alone, (Amazon opened October trading at $2,021 per share and closed the month trading at $1,598 per share, or a 20.9% decline) has certainly had an effect on not only those 246 different ETFs and their investors, but also those investors whom may have directly purchased shares of the company. Furthermore, due to its market capitalization, it was a very heavily weighted stock in some large ETFs, which makes its recent decline even more painful.

Some of the hardest hit ETFs over the last month was the SPDR S&P 500 ETF Trust (SPY) because Amazon was its second, now third, largest holding and SPY was the single largest owner of Amazon stock. ProShares Online Retail ETF (ONLN) had 22% of its assets in Amazon as of late, while the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR Fund (XLY) both had more than 20% of their assets in Amazon.

Throughout the ETF world, there where eight different ETFs which had more than 10% of their assets in Amazon in recent weeks. Most were in the consumer discretionary sector, but a few internet focused ETFs such as the Invesco QQQ ETF (QQQ), and the First Trust Dow Jones Internet Index ETF (FDN) had more than 9% of their assets in Amazon. Continue reading "Amazon's October Drop Hurting ETFs" →