Tuesday, June 3, 2008

Future History - an Oxymoron V

Finalising a Theme

A song called “Day got t’a come” from the Sinner Man album by Brendan Quinn has a certain resonance for investors at this time. The song, as you can imagine from the title, is to do with the future and the Lord’s judgement. In this and other songs while we suspect that we will all be judged on our last day we don’t have a clue what might hit us in the intervening period.

So it is with markets and as investors we should be really clued in to understand where the real markets are right now.

Volatility is the current trend.

• The Irish market fell by 40% in 2007,
• The FTSE fell by 20% between July 07 and March 08. From its low point it subsequently recovered by 13% to time of writing.
• The S&P 500 moved from a low of 1273 on 10th March 2008 to a high of 1426 on May 19th - a movement of 12% in just over two months.
Shanghai fell by 36% in the last five months.
• Conversely the Brazilian index was up 40% in the last year.

If that’s not volatility - then I don’t know what is!

In my previous post I said I would talk about specific ETFs – so here goes.


While many stockbrokers have information on their sites one of the most informative I have found is on Wikipedia. Specialist blogs like the ETF Expert, Trade Radar, and ETF Trends are also an excellent resource.

The advantage of ETFs as a market tool is that you can be a Bull or a Bear; you can track markets, sectors, countries, currencies, commodities and precious metals. New EFTs come to the market frequently and you can add leverage if you are really a risk taker. But beware, like any market tool, these have their small print so read before you dive.

Two institutions that provide ETFs covering a wide spread of sectors and indices are

• iShares See ishares.com
• Powershares See powershares.com

Others such as Streettracks and Vanguard are sources for specific products.

Zignals do not provide investment advice so I can only express my personal preferences when contemplating investment in the current climate. I would preface this by saying that, as a contrarian the credit crunch, and its fall out, is far from over while the continual debasement of currencies is likely to continue way into the future.

On this basis my preference is for investment in

• Precious metals (Gold and silver) – Physical and shares
• Energy – in general, with a bias towards gas and uranium producers while not ignoring the Solar and Geothermal sectors.
• Food producers and food producing economies

That should provide some choice for you.

Robert Mooney, contributor to Zignals.com the free stock alerts, market alerts, and stock charts website