Author: Matt Thalman

One ETF to Play the European QE

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


While the worlds investing community continues to concentrate on what is happening in Europe, due to the recent quantitative easing recently announced by the European Central Bank, you may be wondering how you can play the situation.

What is Going on in Europe?

But before we get to how you may be able to profit, let's look at what is happening. Last week the European Central Bank announced they would buy 60 billion Euro worth of bonds each month until the end of September 2016. This will essentially put 1.1 trillion euro into the European economy in an effort to help it get moving again. The quantitative easing process injects cash into an economy (increasing the money supply) which keeps interest rates low, making it easier for consumers and businesses to borrow, in the hope they will do so and boost economic growth. Continue reading "One ETF to Play the European QE" →

Sometimes Keeping it Simple is the Best Way To Invest

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


Now that 2014 is officially over, it is a good time to review your portfolio's performance. Whether you are a stock picker, day trader, mutual fund investor, commodities or currency guru; understanding how much you made or lost in the markets during the year is extremely important. But, just knowing whether or not you made money isn't enough; you need to know whether or not you outperformed the market itself or else all the time and money you spent researching, buy and selling, or paying an advisor was simply a waste.

In order to determine whether your complicating things and throwing money away you should be comparing your total portfolio returns to that of a specific index such as the S&P 500 or more specifically the SPDR S&P 500 ETF (SPY). By using the SPDR S&P 500 ETF as a benchmark, you can determine whether you beat or were beaten by the market. This information will then allow you to make a better financial decision about how and with whom you invest your money moving forward.

Let's get started

First let's start with how your portfolio performed? To get total portfolio return you need to calculate if your investments increased or decreased. Take all the individual stocks, bonds, mutual funds ETF's you own, add up the total value of the investments at the start of 2014 and subtract that by what they were worth at the end of the year. (That figure should include all dividends, capital gains from investments sold.) For example, if you started with $90,000 in investable assets on January 1, 2014 and on December 31, 2014 those assets were worth $104,500. Therefore the return would have been $14,500 for the year or a 16.1%.

Now compare that number with the SPDR S&P 500 ETF which rose 11.4% in 2014 pre-dividend or 13.27% with dividends calculated into the total return. The example above certainly would have beaten the SPDR S&P 500 ETF, meaning you didn’t waste time or money during 2014. Continue reading "Sometimes Keeping it Simple is the Best Way To Invest" →

Falling Oil Prices Presents Opportunity

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


With the recent decline in the price of oil, many investors are wondering, where the opportunity is to make money from the decline? As I have stated before, my investing motto is always to keep it simple; which in this case would mean "simply buy oil stocks."

Over the past few months, the price of oil has unexpectedly fallen from over $100 a barrel to the $50 range. Neither economist, market analysts, or oil industry experts saw this decline coming. So I believe it is safe to say that no one, certainly including myself, knows were the price of oil is going in the near future. But with that being said, I think most would agree the use of oil is not going away in the near future. Oil is and will be the most widely used form of energy in the coming years, despite the rise of natural gas, solar or any other form of energy which currently exists.

The fall in the price of oil has caused oil stocks to decline. For example, Exxon Mobile (XOM) is down more than 8% over the past six months while Chevron (CVX) is off by nearly 14%. Smaller players like Anadarko Petroleum (APC) is off by nearly 22% and Pioneer Natural Resources (PXD) is off by 32% as the price of oil has fallen during the second half of the year. These types of declines have been felt throughout the industry.

One of the first and most common antidotes we are taught as investors is "buy low, sell high." When stocks fall, their price is low or at least lower than it was, which means if you believe in the company, or in this case the industry, then now is the time to buy. Continue reading "Falling Oil Prices Presents Opportunity" →

3 Reasons ETFs Are Better Than Mutual Funds

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


For good and bad, Wall Street is constantly finding new ways for investors to attempt to grow their money. But, with all these products available for investors to choose from and a massive amount of information being presented to the average investor, it is easy to understand why so many investors still ignore ETFs and stick with mutual funds.

In most cases the average investor does not have a choice between a mutual fund and ETFs when it comes to their 401(K) plans through their employer. But for those investors who decide they want to put more money to work than just their 401(K) contributions, plowing more money into mutual funds is a bad idea for three reasons: truly knowing what your buying, performance, and cost.

Knowing What You Actually Own

Walk into any retail store in the US and pick up a any product; find the tag if it's a piece of clothing, the label if it's a drug or grocery item, or even the new Christmas toy you purchased, and you can find out exactly what was used to make that product. Depending on what the product is, there are different laws that have been put in place to protect the consumer which require the manufacturer to inform the customer of exactly what they are getting at all times.

Flip to the world of finance, unfortunately knowing what you are buying at all times is not always the case. While mutual funds are required to disclose their holdings to the public, these disclosures don't typically happen more than on a quarterly or semiannual basis. So what that means is that although you think you have purchased a large-cap growth mutual fund and that the manager must have at least 90% of the fund's assets in large-cap growth stocks, you essentially have no way of finding out if that's really were your money is invested. All the mutual fund manager needs to do is sell whatever doesn't meet the large-cap growth requirement the day before the fund's disclosure statement is put together and to investors it looks like the manager is doing exactly what he is supposed to be doing.

So why would a mutual fund manager not keep the funds in exactly what the fund's prospectus says they will do? Continue reading "3 Reasons ETFs Are Better Than Mutual Funds" →

Befriend The December Volatility!

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


As we roll through the second week of December, the markets seem to be going a little crazy as the year comes to an end. From January 1st until November 28th of this year, the Dow Jones Industrial Average had gained 7.02% while the S&P 500 was up 10.6%. But, over the first week and a half of December, the Dow has lost 1.68% while the broader S&P 500 has fallen 2.04%.

Furthermore, the bulk of those declines came earlier this week when the markets closed lower Monday, Tuesday and Wednesday. And not only did the major indexes end the sessions off the mark, but their intraday lows put the indexes down by more than 1.25% on two of the three trading sessions.

The downward pressure being felt earlier this week could easily be blamed on a number of things which I am sure they were by many of the pundits out there; oil prices falling, oil prices rising, issues in Europe and Draghi not doing enough, slowing growth in Asia, weak growth numbers here at home, a poor start to the holiday shopping season, the list could go on and on. But, I personally don't believe any of those reasons are why the market has recently been falling.

The December Dive

Continue reading "Befriend The December Volatility!" →