John Wasik

Will you get burned by following the hot money in ETFs?

Jul 21, 2014 16:26 UTC

CHICAGO (Reuters) – All too often, I see investors heading in the wrong direction en masse. They buy stocks at the top of the market or bonds when interest rates are heading up.

Occasionally, though, active investors may be heading in the right direction. A case in point has been the flow of money into certain exchange-traded funds in the first half of this year.

Reflecting most hot money trends, billions of dollars moved because of headlines. The Energy Select SPDR exchange-traded fund, which I discussed three weeks ago, gathered more than $3 billion in assets in the first half, when crude oil prices climbed and demand for hydrocarbons remained high.

The Energy SPDR, which charges 0.16 percent for annual management expenses and holds Exxon Mobil Corp, Chevron Corp and Schlumberger NV, has climbed 22 percent in the past 12 months, with nearly one-third of that gain coming in the three months through July 18. Long-term, this may be a solid holding as developing countries such as China and India demand more oil.

“We think the Energy Select SPDR is a play of oil prices remaining high and supporting growth for integrated oil & gas and exploration and production companies,” analysts from S&P Capital IQ said in a recent “MarketScope Advisor” newsletter.

U.S. transportation stocks for the long haul

Jul 7, 2014 17:44 UTC

CHICAGO (Reuters) – As North Americans hit the highways, airports and rails for vacations this summer, it’s not hard to believe that some of the most robust stocks are in the transportation industry – particularly in an improving economy. Transportation stocks have proven to be long-haul winners and essential cogs in any growth portfolio.

Transportation company performance is generally a bellwether of an economy’s health. When consumer and industrial demand is rising, the greater the need to ship raw materials and finished products from various points of the globe.

On the retail side, a combination of higher demand and the conflict in Iraq ratcheted up U.S. gasoline prices to the highest level in six years this past Fourth of July weekend, according to the American Automobile Association. Despite the higher prices, some 35 million Americans hit the road during the holiday weekend for trips of 50 miles or more.