I just saw an ad that Investor’s Business Daily is having a “free pass” for the next week (Feb 26 to? March 4) on their online subscriber services.? I haven’t been dying to read IBD, but if it’s free I might look around a bit…

I know John has subscribed to IBD in the past…? what’s your take, what’s worth using, and does anything justify the subscription price when it stops being free?

We probably all know about the CRB index, and it’s use as an index of commodities, and how it can be watched as a gague of the general level of commodities… Most importantly, the CRB index has been falling quite a bit since last August:

CRB Index

With the falling CRB, quite a few people have hopped on the commodity-bear bandwagon, claiming that commodities are falling because (insert your favorite reason here). Everything from a slowing economy to “this time it’s different”. (more…)

Here’s a quick, bearish article on REITs from Bloomberg

Shares of U.S. REITs are the most expensive in more than two decades compared with Treasury notes after the five-year property boom. Real estate stocks have led the Standard & Poor’s 500 Index higher this year on speculation takeovers will increase after Blackstone agreed to buy Sam Zell’s Equity Office Properties Trust for $39 billion in the biggest-ever leveraged buyout.

“Sam Zell is probably the shrewdest operator in this field that there is,” said David Dreman, who oversees $21 billion at Dreman Value Management LLC in Jersey City, New Jersey. “If he’s selling, I don’t think I want to be a buyer.”

Remember when I suggested IGR for international REITs? I don’t think I emphasized the volatility enough… it was down over 5% yesterday, 11% in the last few days. It’s not a smooth ride… though the discount on the fund has gone up to almost 5% again.

Is it time to sell REITs? Hard to say… but so far we’ve only had 3 down days since a 52-week high (in the DJR). While losing 4% in 3 days is rough, it’s not that significant. We’ll have to wait and see how the sector continues to perform over the next few weeks…

In case you’ve been missing volatility, according to Profunds’ website, they now offer ultra and ultrashort sector ETFs.? These are funds that aim to return either 2x or -2x the underlying sector’s return thanks to the use of leverage.? (You’d choose the -2x ultrashort funds when you think a sector will go down.)

Included in the new short funds, the Ultra (URE) or Ultrashort (SRS) Real Estate Fund, Ultra (DIG) or Ultrashort (DUG) Oil and Gas, Ultra (USD) or Ultrashort (SSG) Semiconductors…

Those crafty bookmakers over at TradeSports have decided to put the odds making to the probability of a US Recession in 2007… and here’s the result of the betting on their website:


A long time ago, John pointed me to the ETF Investing Guide.? It was originall published at Tech Uncovered before the author founded Seeking Alpha…? but the guide was preserved and is now hosted on the new site.

The ETF Investing Guide provides a sound argument for a simple asset allocation strategy using index ETFs.? It goes into detail on why you should avoid full-service brokers, index mutual funds, and other mainstream financial services.? Ditch all that, and manage your investments using index ETFs, take advantage of tax-loss selling, and enjoy the ride.

While I would argue with a few of the author’s points (e.g., staying away from all actively managed funds), it is a good guide for those who want a low-maintenance investment plan and are happy to earn average returns.

We talked about the Currency Harvest Fund from PowerShares a while back, but PowerShares and Deutsche Bank are teaming up for even more interesting funds… Just launched:

PowerShares DB Energy Fund (DBE)
PowerShares DB Oil Fund (DBO)
PowerShares DB Precious Metals Fund (DBP)
PowerShares DB Gold Fund (DGL)
PowerShares DB Silver Fund (DBS)
PowerShares DB Base Metals Fund (DBB)
PowerShares DB Agriculture Fund (DBA)

These would be added to the DBV (Currency Harvest) and DBC (Commodity Select) funds that have been out for a while…

One would have to ask — why are they re-inventing the wheel? Why would they launch DBO (Oil) when the USO ETF has been out since mid-April? One good reason — USO has consistently underperformed the actual price of oil since the fund’s launch. The case is less clear when you look at the gold/silver and precious metals funds.

The real gem though is the DBA fund for Agriculture. The fund is splitting the investment evenly across Corn, Wheat, Soybean, and Sugar. This is the first chance for people to invest directly in these commodities without opening a futures account or trying to find a company that produces the commodity.

Here’s a different look at the current rally in the Dow Jones Industrial Average, thanks to The rally being measured by the “you are here” dot is the Dow’s ascent since 2002.

On the x-axis, we have the length of the rally in days since the rally began.? On the y-axis, we see the percentage change during the rally.

Dow Rallies...

The thing to note is that while the current bull market has lasted longer than all but three bull markets, it pales in the returns offered compared to previous bull runs.

The returns from traditional investments (stocks, bonds, etc.) have been lower in the last several years compared to historical norms. This fact could be easily used by the bullish crowd as an explanation for why more upside is possible from here, but I side with the bearish / cautious… Current returns are being suppressed by an oversupply of credit/money chasing return, and it will take several years for earnings to catch up with valuations. It’s the old story of oversupply and waiting for the oversupply to be worked off…

Here’s another unique and compelling ETF… the Claymore/Sabrient Stealth Fund (STH). The stated purpose:

The objective of the [fund] is to actively represent a group of stocks that are ?flying under the radar screen? of Wall Street?s analysts, but which have displayed robust growth characteristics that give them the potential to outperform on a risk-adjusted basis the Russell 2000? Index and other small-cap-oriented benchmark indices.

So they shop for small, good companies that have no Wall Street coverage. The fund is only three months old, but they have a sister index that back-tests the idea several years back.

If you’re an active trader and want some good ideas in the mid-cap range, they also list the ETF’s holdings and update it every day.

PowerShares has recently released a new ETF called the G10 Currency Harvest Fund and it trades under the symbol DBV. Their website has a pretty good description of the fund; the fund tracks the Deutsche Bank G10 Currency Harvest Index. Despite tracking a very passive index, the fees are around 0.8% per year, which is not bad, but not low either.

The general strategy is to capture a carry trade without leverage. The index goes long the three highest yielding major currencies and short the three lowest yielding currencies. Right now the index is long the US Dollar, New Zealand, and Australia. It is short the Japanese Yen, the Swedish Krona, and the Swiss Franc.

DBV is not as sophisticated as the Uberman Portfolio Quicksilver has developed, but it’s available to retail investors today via a traditional brokerage account.

This one should be worth watching to see how well it performs, as well as how well it tracks the index. I’m curious if one could beat their performance by simply opening up an account at OANDA and following the index yourself…

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