Opinion

John Wasik

Hot 2014 investing tip: Don’t chase 2013

Dec 23, 2013 18:48 UTC

CHICAGO, Dec 23 (Reuters) – This year, the stock market has
been glowing as brightly as the seasonal lights that now bedeck
holiday streetscapes.

But if you want your investments to keep doing well in 2014,
look away from the shiny stuff. If the winners of 2013 follow
historical patterns, they won’t sustain their market-beating
performances next year.

Consider the most stellar performer of 2012.

As housing rebounded, the iShares U.S. Home Construction ETF
was the place to be in 2012. It led the pack with a nearly 80
percent return for the year, as companies like PulteGroup Inc.
, Lennar Corp. and D.R. Horton, Inc. made up for
time and big money lost to the housing crisis.

This year, the housing market was even stronger than it was
in 2012, but investors in the iShares ETF didn’t share the
wealth.

The hot, institutional money had moved onto other sectors
and the fund returned 11 percent to investors through Dec. 20 -
less than one-third of the 36-percent returns investors in
consumer cyclical stocks saw, according to Morningstar.

Burn Notice: Watch out for leveraged ETFs

Dec 16, 2013 17:40 UTC

CHICAGO, Dec 16 (Reuters) – If you buy insurance on your
home, you know that most of your losses would be covered in a
catastrophe. Can you do the same with your portfolio?

There are lots of ways to buy portfolio insurance, but you
have to be careful with leveraged exchange-traded funds (ETFs),
which may offer protection, but carry a huge downside risk.

Leveraged ETFs have exploded in popularity in recent years
as institutions and individuals are looking for ways to
speculate and hedge positions after the 2008 meltdown. There are
now more than 700 short or leveraged ETFs, topping $50 billion
in assets, up from under 300 products and $28 billion in 2008,
according to Boost, an independent exchange-traded product
provider based in Britain.

Three ways for investors to catch the global tailwind in 2014

Dec 9, 2013 17:58 UTC

CHICAGO (Reuters) – There is a growing consensus that U.S. stocks, as well as stocks around the world, are going to catch a tailwind going into 2014.

Expanding economies and continued central-bank stimulus are the bellows behind this expected growth. If you do not have international stock exposure, now is the time to broaden your portfolio with these three exchange-traded funds (ETFs).

One of the best vehicles to grab growth around the world is a global stock ETF. The Vanguard Total World Stock Index ETF owns more than 5,000 stocks, but has its top holdings in mega-cap American companies like Apple Inc, Exxon Mobil Corp and Google Inc.

Is it too late to jump on the stock buyback bandwagon?

Dec 2, 2013 18:01 UTC

CHICAGO (Reuters) – Public companies share the wealth with shareholders in a number of ways. Sometimes they channel profits into quarterly dividends. They can also buy back their own shares.

Corporations have been on a buyback binge in recent years. S&P 500 companies purchased $118 billion of their stock in the second quarter of this year, up 18 percent from the first quarter, according to S&P Dow Jones Indices. (During the second quarter of 2012, companies bought back $111 billion.)

Although the merits of buybacks are hotly debated among analysts, they often can be beneficial for investors. A small group of exchange-traded funds are capitalizing on this trend. In a bull market, companies that buy their own stock on the cheap can benefit when the overall market is rising.

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