A Few Good Resources You Should Use
The Dynamic Wealth Report
December 11, 2009
by Corey Williams, Editor
If you’re anything like me, the end of year holiday season’s for
spending time with friends and family. But it’s also when I take a look
at my investing strategies.
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What worked or didn’t work this year? And more importantly, what am I
going to do next year?
I’ve got a few ideas I think will be monsters in 2010. I’ll get to those
in another article. But here’s a hint… it involves ETFs (exchange traded
funds).
If you’re not already using ETFs in your portfolio, I recommend adding
them into the mix in 2010.
There’s a reason they’re the fastest growing investment vehicle with
more than $744 billion in assets. ETFs are attracting dollars previously
invested in stocks, commodities, bonds, currencies, or mutual funds.
I see four big reasons ETFs are growing so quickly.
ETFs provide instant diversification with a single purchase. Similar to
a mutual fund, an ETF traditionally holds a basket of stocks. You’re able
to buy a piece of every stock in the market, a style of stock, or a
sector or industry.
Unlike mutual funds, ETFs are traded throughout the day like stocks. This makes ETFs a better vehicle for active traders than mutual funds.
You’re able to buy and sell at specific prices throughout the day
instead of waiting for the markets to close. And since ETFs are traded
like stocks, you can often buy and sell options on them.
Another advantage is ETFs are tax friendly. Unlike mutual funds, the only
time you’ll have a capital gain or loss is when you sell the ETF. Mutual
funds, on the other hand, pass along capital gains from the fund’s
transactions throughout the year.
Lastly, management fees for ETFs are much smaller than mutual funds. The
expense ratio for most ETFs is small because they’re passively managed. They’re set up to track an index and the holding of an index rarely
change.
The question I’m often asked by new ETF investors is where do I get my
information?
The truth is, there’s no one-stop-shop for all ETF information. But I’ll
give you some of the best resources on the internet I use.
First, let me say as the editor of the Sector ETF Trader, I’ve written a
few free reports available to subscribers. This is always a great place
to start your education.
Another place to begin is Yahoo! Finance. The
website is finance.yahoo.com/etf. The yahoo finance ETF education center has a
number of good articles. They cover everything from how ETFs work, their
tax advantages, and even trading options on ETFs. There’s also a nice
glossary of terms you’ll see when using ETFs.
Another good site to look at is ETF MarketPro.
The website is etfmarketpro.com. The investor center provides several useful articles
much like Yahoo! Finance. But they have a great feature… The ETF list.
With over 700 ETFs available and new ETFs being launched all the time, it
can be hard to keep up. Their ETF list is updated frequently and breaks
down ETFs into several useful categories. They list them by sponsor,
management, category, asset class, exchange, weighting, and position.
Once you’re comfortable with how ETFs work, another great resource is an
ETF sponsor’s website.
The biggest ETF sponsor is iShares. They’re the king of the hill in
terms of market share. Nearly half of all ETF assets are managed by iShares. Their website is iShares.com.
On their site, you’ll find the iShares fund finder classifies their ETFs
in an easy to use format. By selecting a specific ETF, you can view an
overview of the ETF, its performance, the current holdings, and a
history of distributions. You’ll find similar information on most of the
other sponsor’s sites too.
Take a look at adding ETFs into your investing mix in 2010. They’re an
easy to use tool for beginning and seasoned investors alike.
• Micros Systems (MCRS) was upgraded by Wedbush Morgan this week.
They now have an outperform rating on the stock. The analyst sees
industry headwinds subsiding and strong growth opportunities ahead.
• Eli Lilly (LLY) was downgraded to average by Caris & Company. Analysts
are concerned about their ability to overcome revenue losses from
expiring patents.
• Bernstein started coverage on AOL (AOL) this week with an outperform
rating. The onetime king of dialup internet was recently spun off from
Time Warner Cable.
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