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Time Will Tell Whether Apple Watch Sends Mutual Funds On Buying Spree

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5 Market-Based ETFs Your Broker Forgot to Mention (HDIV, OFF, PDP)

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If Apple Inc. (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) investors were hoping that the announcement of the firm&#39;s new wearable timepiece would send the stock sharply higher, they were disappointed.

	Following Apple&#39;s Monday extravaganza where CEO <a href="http://www.benzinga.com/topic/tim-cook">Tim Cook</a> revealed the <a href="http://www.benzinga.com/topic/apple-watch">Apple Watch</a>, the stock ended the session at $127.14, with a gain of $0.54, or 0.43 percent.

	It gave back some gains from earlier in the session. Trading volume was 54 percent higher than average, not necessarily a good sign when a stock rallies and reverses lower.
<h3>
	Lackluster Response</h3>

	Not surprisingly in this age of snark and negativity and cynicism, the announcement was also followed by a boatload of articles with the general theme of &quot;Why you shouldn&#39;t buy Apple watch.&quot;

	Fortunately, the snark won&#39;t affect share price, either way.
<h3>
	Why Snark Doesn&#39;t Matter All That Much</h3>

	Institutional owners, such as mutual funds, hedge funds, banks and insurance companies are behind share price movement. Monday&#39;s action in Apple suggests that institutional money managers greeted the news with a collective, &quot;Meh.&quot;

	However, that doesn&#39;t suggest that they would abandon any ongoing Apple-buying plans. The large institutions don&#39;t amass a position in a stock all at once. Instead, managers often add to positions over weeks, months and even years. If the watch &ndash; or any other product &ndash; ends up boosting the bottom line, fund managers will take note.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/opinion/15/03/5310808/apple-watch-50-shades-of-meh">Apple Watch: 50 Shades Of &quot;Meh&quot;</a></bzrelatedlink>
<h3>
	A Closer Look At Mutual Funds</h3>

	Many of the mutual funds with the largest positions in Apple are funds that track the Standard &amp; Poor&#39;s 500 or other popular indices. They include the Vanguard Total Stock Market Index Fund Investor Shares (MUTF: VTSMX), the Vanguard 500 Index Fund Investor Class (MUTF: VFINX), the Schwab(R) S&amp;P 500 Index Fund (MUTF: SWPPX) and the Fidelity Spartan(R) 500 Index Fund Investor Class (MUTF: FUSEX).

	Apple&#39;s pending addition to the Dow Jones Industrial Average won&#39;t directly affect mutual funds, at least not in the sense that Dow indexed funds will have to buy shares. That&#39;s because the most popular funds tracking the Dow are the SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>) and the iShares Dow Jones U.S. Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>).

With nearly 1,500 exchange-traded products on the market today, investors have plenty of options when it comes to finding market-based funds. Market-based funds do not track a specific sector or country. Rather these ETFs, also known as broader market funds, are designed to offer exposure to a large slice of or the entire U.S. equity market. 

Familiar examples would be the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>), the iShares Russell 2000 Index Fund (NYSE: <a class="ticker" href="/stock/iwm#NYSE">IWM</a>) and the iShares Dow Jones U.S. Index Fund (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>). 

Those are all fine funds that do exactly what the names imply: Grant investors exposure to a broad swath of U.S. equities. However, investors that are willing to look off the beaten path can be rewarded with more obscure broader market ETFs. Here are a few that performing well that brokers probably have not been touting much.

ETRACS Fisher-Gartman Risk Off ETN (NYSE: <a class="ticker" href="/stock/off#NYSE">OFF</a>)
Plenty of new ETFs and ETNs fall victim to a "right idea, wrong time" scenario. That is to say the premise behind the new ETF is good, but the market environment when that fund debuts is not conducive to success. That has not been the case for the ETRACS Fisher-Gartman Risk Off ETN. 

Fisher-Gartman Off debuted in November, and while investors were quite ebullient in late 2011 and early 2012, they have remained pensive for most of OFF's short lifespan. Fisher Gartman Off is a long/short product with value-based target weightings for the long and short positions of 150 percent and 50 percent, respectively. The index is rebalanced quarterly to return the weightings to these target levels, according to the ETRACS Web site.

As of Thursday, Fisher Gartman Off<a href="http://www.ibb.ubs.com/mc/etracs_US/hybrid/fgr-off.shtml">was more short than long</a> with short positions in familiar ETFs such as the iShares MSCI Brazil Index Fund (NYSE: <a class="ticker" href="/stock/ewz#NYSE">EWZ</a>) and the Market Vectors Russia ETF (NYSE: <a class="ticker" href="/stock/rsx#NYSE">RSX</a>), among others. 

With an annual expense ratio of 1.15 percent accrued on a daily basis, OFF is not cheap. However, it cannot be ignored that OFF has jumped 6.6 percent in the past 90 days.

PowerShares DWA Technical Leaders Portfolio (NYSE: <a class="ticker" href="/stock/pdp#NYSE">PDP</a>)
The PowerShares DWA Technical Leaders Portfolio is based on the Dorsey Wright Technical Leaders Index. PDP is home to just 100 stocks, a total that is somewhat small for a market-based ETF, but what is not small about this ETF is the returns. Year-to-date, PDP is up 11.4 percent compared to 7.9 percent for the S&amp;P 500.

PDP focuses primarily on large-cap and mid-cap names and consumer discretionary names dominate the fund's sector weight with an allocation of 31.1 percent. Top holdings include American Tower (NYSE: <a class="ticker" href="/stock/amt#NYSE">AMT</a>), Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) and Priceline.com (NASDQ: PCLN). PDP charges 0.7 percent and has almost $554 million in AUM.

Guggenheim Defensive Equity ETF (NYSE: <a class="ticker" href="/stock/def#NYSE">DEF</a>)
Like PDP, the Guggenheim Defensive Equity ETF is home to just 100 stocks, however the fund is true to the defensive nature it claims to have. Utilities and consumer staples names account for over 45 percent of DEF's weight and those have been fine places to hideout in recent months.

Guggenheim Defensive Equity, which has a beta of 0.58, has lagged the S&amp;P 500 year-to-date, but as volatility and anxiety have increased in recent months, Guggenheim Defensive Equity has beaten SPY over the past 30 and 90 days. No stock receives a weight larger than 1.22 percent in DEF. Top holdings include Wal-Mart (NYSE: <a class="ticker" href="/stock/wmt#NYSE">WMT</a>), Verizon (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>) and Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>).

Guggenheim Wilshire 5000 Total Market ETF (NYSE: <a class="ticker" href="/stock/wfvk#NYSE">WFVK</a>)
The Wilshire 5000 Total Market ETF will not win any volume contests with average daily turnover of just 850 shares. Nor does the ETF hold 5,000 stocks, its constituency is closer to 1,200. WFVK is small with just $5.9 million in AUM, but it is cheap with an expense ratio of 0.12 percent. The ETF is cap-weighted so Apple is its top holding, Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>) is number two, etc.

Russell High Dividend Yield ETF (NYSE: <a class="ticker" href="/stock/hdiv#NYSE">HDIV</a>)
Another new dividend ETF, the Russell High Dividend Yield ETF came to market in March and has thus far hauled in $15.4 million in AUM. Home to 75 stocks, HDIV has a 30-day SEC yield of almost 3.7 percent. 

Russell High Dividend isn't the biggest or most heavily traded dividend ETF on the block, but it must be noted that over the past three months, the Russell fund has handily outperformed the Vanguard Dividend Appreciation ETF (NYSE: <a class="ticker" href="/stock/vig#NYSE">VIG</a>) and the SPDR S&amp;P Dividend ETF (NYSE: <a class="ticker" href="/stock/sdy#NYSE">SDY</a>).

Russell High Dividend's top holdings included Merck (NYSE: <a class="ticker" href="/stock/mrk#NYSE">MRK</a>), Verizon, Conoco-Phillips (NYSE: <a class="ticker" href="/stock/cop#NYSE">COP</a>) and Kimberly Clark (NYSE: <a class="ticker" href="/stock/kmb#NYSE">KMB</a>).

Top 10 U.S. Large & All Cap Sector ETFs

When it comes to the stock market in 2012, given issues with unemployment in the US, debt problems in Europe, and tension in the Middle East, it is as if we find ourselves waiting for the other shoe to drop. <a href="http://www.marketwatch.com/story/us-stocks-face-jobs-data-iran-tensions-2012-03-03">MarketWatch's Carla Mozee reported Saturday</a> that "investors may find a reason to book gains next week if labor-market figures prove a disappointment." According to the article, "jobs will dominate" the action on Wall Street the week of March 5. The US Labor Department's February unemployment report will arrive on Friday. Mozee: "'[W]hisper numbers' that suggest a poor report is in the pipline, soft figures from weekly jobless claims or discouraging data from ADP's report on private-sector hiring could trigger a pullback in equities." It is significant to note that <a href="http://www.gallup.com/poll/152753/Unemployment-Increases-Mid-February.aspx">Gallup reported on Feb. 17, 2012</a> that the US unemployment rate increased to 9 percent in mid-February while underemployment is up to 19 percent. 
	With recent gains in the stock market as the S&amp;P 500 is now up near 9 percent since the beginning of 2012, Mozee's analysis portends a pullback; "people are going to take profits." Even aside from labor market concerns, Mozee noted that "[c]onsumer spending remains a concern for Wall Street, particularly as retail gasoline prices have climbed each day for more than 30 past days." As consumers get squeezed by rising prices at gas stations and grocery stores, we may be on the "precipice of changing consumer spending habits". As such, "weaker consumer confidence and spending 'could derail this market.'" High gas prices and rising grocery bills could make for another long, hot summer in the US. <a href="http://www.marketwatch.com/story/long-hot-spring-on-the-way-for-gas-prices-2012-03-02?link=home_carousel">MarketWatch's Howard Gold</a> has gone so far as to say that gas prices are going to make for a "long, hot spring". Gold: "Continued high gasoline prices could but the kibosh on the economic recovery, which has been picking up steam in recent months. Whereas gas prices are related to consumer spending habits and the flow of business, Gold suggested that gas prices "could be a dark cloud over the economy in the months ahead." Gold concluded that when it comes to the stock market, "bulls seem to have blithely ignored the gathering storm." <a href="http://www.thestreet.com/story/11441605/1/constant-craving.html">In an article for TheStreet.com</a>, Doug Kass recently suggested that economic headwinds could bring a pullback in the stock market. Kass: "My 'fair market value' calculation for the S&amp;P is around 1345 -- so we are now in the overshoot area... Besides the aforementioned secular headwinds [of fiscal imbalances and economic, political, and geopolitical problems], there remain ample near-term economic issues, both here and abroad, that go beyond a developing recession in Europe." With respect to the US economy, Kass discussed that both personal income and spending fell short of estimates. Kass: "As a result of 0.2% personal consumption inflation (Bernanke's favorite measure of inflation), real income was up by only 0.1% and actually dropped by 0.1% as measured by after-tax disposable income. Meanwhile, real spending was flat." Further, Kass noted that drops in the Institute for Supply Management reading and January construction spending were disappointing. With respect to the Chinese economy, Kass commented, "It remains unclear whether China's landing will be 'soft' or 'hard'." 
	For those who have been following the stock market recently, the prospect for a market pullback should come as no surprise. <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/02/2373046/doom-boom-and-gloom-waiting-for-a-market-pullback">On Feb. 26, 2012, I discussed how factors related to unemployment and gas prices "seem to suggest that a market pullback is coming."</a> With all the fear regarding gas prices and societal malaise surrounding the labor market, one might wonder why the stock market has rebounded as it has thus far in 2012. Regarding a rise in equities, in the <a href="http://www.gmo.com/websitecontent/JGLetter_LongestLetterEver_4Q11.pdf">quarterly GMO LLC newsletter</a>, Jeremy Grantham wrote, "Yes, there is more than our normal fair share of potential negatives lurking around, but on our data: a) most of the negatives are reflected in stock prices; and b) all fixed income duration is dangerously overpriced. This last situation is, of course, engineered by the Fed, which hopes to drive us all into taking more risk, notably by buying more equities. I hate to oblige, but at current equity prices it just makes sense to do what they want... Equities are also good long-term hedges against inflation." 
	Speaking of long-term hedges against inflation, gold is currently trading at $1,712 per ounce, up from $1,600 at the beginning of 2012. Meanwhile, silver is currently at $35.20 per ounce, up from $33.50 in mid-February and near $29 at the beginning of 2012. Speaking of silver, <a href="http://www.zerohedge.com/news/ron-paul-ben-bernanke-people-lose-trust-government-because-you-lie-them-about-inflation">in an exchange with Federal Reserve Chairman Ben Bernanke, Congressman Ron Paul recently brought up the comparable value of silver</a> in relation to the US dollar...while shedding light on the fact that Bernanke does his own grocery shopping. Paul suggested that inflation is discouraging US consumers owing to an increase in the money supply. Paul: "This ounce of silver back in 2006 would buy over four gallons of gasoline. Today, it will buy almost 11 gallons of gasoline. That is preservation of value, and that is what the market has always said should be money." 
	While Paul brought up the issue of gas prices, inflation, and grocery bills, the issue of unemployment seems to be an albatross around the neck of the struggling-to-recover US economy. On Feb. 29, 2012, Zero Hedge discussed how "only 54% of young adults [18-24] in America have a job." As such, this number is the "lowest in 64 years, and 7% worse" than when Pres. Obama took office. The jobless rate for young Americans may portend politically-charged "American Spring" protests as we approach the 2012 election. We will likely be hearing more on this issue and its socio-economic implications going forward as we make our way towards November. 
	Thus, as we find ourselves in the twilight of the winter season, it is as if we are currently in the middle of a lull and the economic environment seems to be getting colder.<a href="http://www.zerohedge.com/news/lull"> Mark J. Grant recently wrote an interesting article for Zero Hedge</a> arguing that we are in a lull "which has been caused by the injection of capital by the Fed and by the [European Central Bank]." Grant: "This is exactly, exactly, what took place, I remind you, during the weeks after the subprime mess exploded. Massive injections of capital, run-ups in equities, compression in bonds, higher prices for commodities and then the reversal, of course, took place." 
	Grant noted that in light of the end of Europe's quantitative easing, "when QE ended in America ... the stock market dropped approximately 50% in value so that as America ends its easing and Europe ends its easing the stock markets will not be such a great place to park money and this, coupled with a deepening recession in Europe, will play havoc with the world's equity markets in the next few quarters..." Per Grant's analysis, issues related to China, the end of QE in America and Europe, the threat of Iran, and other economic and structural factors portend that "we have been lulled into a state of lethargy by all of the printing of money, but long experience in the financial markets [teaches that] easy money has its consequences..." To say the least, Grant's analysis of Europe's prospects are quite bleak: "We are currently in the quantitative easing lull; nothing more." Grant's sentiments remind me of <a href="http://www.zerohedge.com/news/mike-krieger-asks-whether-september-11-2001-our-big-lie">Mike Krieger's words at the end of his article from Zero Hedge</a> on March 2: "Rest up this weekend everyone. I think things are about to get crazy." 
	Though the S&amp;P 500 is currently at 1,369.63 as the Dow Jones Industrial Average flirts with 13,000, in light of the formidable economic headwinds that approach us, it would seem that the market is gearing up for a pullback. And just when it was starting to look like the recovery was at hand. Just when we thought that the winter was over, that the winter had spared us, it's starting to look like the global economic climate is going to start getting colder in the near future. With various issues including (but not limited to) unemployment, Iran, gas prices, inflation, and the Eurozone, one cannot help but feel that market observers are waiting for the other shoe to drop.

ACTION ITEMS: Bullish: Traders who believe that inflation is rising owing to actions by central banks might want to consider the following trades: 

<ul><li>Check out gold and silver in physical bars, coins, and ETFs.</li></ul>

Bearish: Traders who believe that the stock market is going to experience a significant pullback in the near future may consider alternate positions: 

<ul><li>Short SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>), iShares Dow Jones US Index Fund (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>), SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>), and iShares S&amp;P 500 Index ETF (NYSE: <a class="ticker" href="/stock/ivv#NYSE">IVV</a>).</li></ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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Stock Market Pullback: Waiting for the Other Shoe to Drop

Will 2012 be a repeat of 2011 for the stock market? There is a fair chance that it could be. 
	With the tremendous volatility and uncertainty in the stock market in 2011, the stock market ended flat for the year.<a href="http://www.businessweek.com/ap/financialnews/D9RV2R583.htm"> Bloomberg Businessweek</a>: "The Standard &amp; Poor's 500 index closed 2011 a fraction of a point below where it started the year." Even so, in taking into account an annual inflation rate in the US of 3.4%, one might say that the markets technically ended in a loss for 2011. <a href="http://www.reuters.com/article/2011/12/30/us-markets-stocks-idUSTRE7AO0B420111230">As Reuters put it eloquently</a>, "2011 was a long wild ride to nowhere" -- a roller coaster of stagnation. <a href="http://www.reuters.com/article/2012/01/01/us-usa-stocks-weekahead-idUSTRE7BT11R20120101">Reuters</a> suggests that we might revisit the same themes in 2012. As the US struggled with unemployment, natural disasters, political uncertainty, and debt issues, the globe had its own issues to contend with including problems in the Middle East and the Eurozone debt crisis. According to Reuters, "[s]imilar events probably await investors in 2012." Thus, we may be in for another wild-ride roller coaster in 2012. 
	With all the volatility and uncertainty, it may be hard for some traders and investors to anticipate a substantial rally in 2012. <a href="http://www.thestreet.com/story/11359718/1/what-if-theres-a-bear-market-in-2012.html">TheStreet.com's Robert Holmes</a> recently asked a bold question in a very interesting article: "What if there's a bear market in 2012?" In the article, Holmes analyzed year-end targets for some of Wall Street's biggest firms. According to Holmes' article, Deutsche Bank (NYSE: <a class="ticker" href="/stock/db#NYSE">DB</a>) is expecting a rally of nearly 20 percent in 2012, an S&amp;P 500 target of 1500. Holmes: "Among strategists at major Wall Street banks, Deutsche Bank is the most optimistic about the S&amp;P 500's performance." Per Holmes' article, as the average of the 12 firms' year-end targets for the S&amp;P 500 is roughly 1348, it would appear that (in the wisdom of the Wall Street crowd) there is a somewhat bullish sentiment for investment firms. Nevertheless, Goldman Sachs (NYSE: <a class="ticker" href="/stock/gs#NYSE">GS</a>) forecasts the S&amp;P 500 ending 2012 at 1250 and HSBC (NYSE: <a class="ticker" href="/stock/hbc#NYSE">HBC</a>) forecasts the S&amp;P 500 ending at 1190. 
	While optimistic sentiment and hope may be growing, Holmes suggested that the market could face some considerable headwinds in 2012. According to Robert Pavlik, chief market strategist for Banyan Partners, "the market could be dealt a massive shock if the Eurozone countries don't ratify whatever proposal is offered." While some doomsday economists may fear a total market collapse in 2012, according to Holmes, each of the five investment managers interviewed for his article "said that while a 20 percent correction in the coming year is plausible, it's not likely". That being the case, Holmes later wrote that, "The ramifications of a 20 percent drop [in the stock market] are easy to outline" including a drop in investor confidence, political uncertainty &amp; tension, a rise in unemployment, and "more intervention by the Federal Reserve" among other things. 
	Holmes concluded in suggesting that if investors face a 20 percent drop in equities in 2012, a mass exodus from the stock market is possible. Weary investors and traders may begin to look elsewhere for profits. Holmes: "For investors, another collapse in 2012 could mean that many throw in the towel on the stock market." (Gold and silver, anyone?) Holmes went so far as to write, "Another drop in 2012 could result in a generational change in investing and spending habits". Given inflation, <a href="http://www.benzinga.com/general/entrepreneurship/11/12/2230929/doomsday-capitalism-should-you-prepare-for-market-collapse-in">one has to wonder what the implications of a generational change in investments and spending would look like</a>. 
	Even if some are optimistic about the stock market in 2012 right now, others are gloomy. <a href="http://www.marketwatch.com/story/in-2012-somethings-gotta-give-2011-12-30?pagenumber=1">MarketWatch's Brett Arends</a> recently warned, "Get ready for 2012. Because if the markets around the world are to be believed, this is the year when something's gotta give." According to Arends, investors and traders should be wary of US stocks if the global financial crisis gets worse. As for currencies, Arends is equally as ominous: "The euro will almost certainly come tumbling down." Arends commented that maybe everything could work out in the end, but even with that hope, "Something's gotta give". Given the state of the US economy, the something that's gotta give to give in 2012 may be the same something that had to give in 2011: the weary US taxpaying consumer. 
	If the investment firm strategists are correct in their assessment of what the stock market will do in 2012, 2012 may very well be a repeat of 2011. 
	If we take a look at the S&amp;P 500 for 2011, we can see a sort of wave pattern as stocks rallied to a peak in the first half of 2011 and descended into a valley in the latter half of 2011 while struggling to get back to even. Given global turmoil, market uncertainty, and political dysfunctionality, we may very well see a similar wave in 2012 where stocks either rally at the beginning and descend in the second half of 2012 or where stocks take a dive in the first half of 2012 (owing to Middle East warfare, currency issues, or natural disasters) only to work their way back to even at the end of 2012. In the alternative, the choppy, uncertain volatility could extend into 2012 making all of 2012 into a sort of stock market roller coaster. 
	Where it may be tempting to believe the investment firms' forecasts in Holmes' article, I am reminded of <a href="http://www.marketwatch.com/story/2012-stocks-up-10-or-doomsday-scenario-2011-12-27">the recent sentiments of MarketWatch's Paul Farrell</a>. In weighing the prospects of a 10 percent rally for the stock market in 2012, Farrell was highly critical of traditional establishment economists that work for banks, the government, and various corporations. Farrell: "They're more like speech writers, hyping short-term policy agendas, while dismissing long-term consequences." 
	Though Farrell's perspective may sound a bit cynical, investors and traders may want to be skeptical of investment firms' strategists' forecasts for 2012.<a href="http://www.benzinga.com/media/jim-cramer/11/12/2229669/vanguard-rising-occupy-wall-street-the-2012-elections-and-the-specter"> To echo the words of Jim Cramer</a>: "We know we've got an unstable market." Going along with Cramer's investment strategy, we cannot forget about gold. Whereas the stock market remained stagnant in 2011, <a href="http://www.reuters.com/article/2011/12/30/us-markets-precious-idUSTRE7AK1M520111230">gold had a 10 percent gain</a> -- an 11th consecutive year of gains. If the drumbeat of inflation in the US gets louder, traders and speculators can expect gold to rise in 2012. 
	Even aside from turmoil in the Middle East, the Eurozone crisis, and political uncertainty, one key to 2012's fate will be any possible actions by the Federal Reserve. One might say that inflation is a specter that is now haunting the market. If QE3 is in our future and a massive inflationary event hits the US economy, even if equities appear to remain flat in 2012, between taxes and inflation technically the year will end in a loss. 
	It is significant to note that Holmes' article, the Reuters article, and the Bloomberg Businessweek article above did not seem to mention inflation regarding stocks ending flat. Given the phenomenon of inflation, the $100 you hold today will not be worth $100 one year from now. If you give a loan to your friend for 5 percent interest with payment due in a year and if inflation is at 5 percent, then inflation is effectively eating up your profits. As economist Henry Hazlitt noted, inflation works as a kind of tax. Thus, with the prospect of inflation, if equities remain stagnant in 2012, they will effectively be at a loss for the year. As goes the old adage: If you're not growing, then you're dying. As daunting as economic stagnation may be for traders and investors, 2012 very well may end up looking like 2011. Something to keep in mind for the stock market in 2012.
ACTION ITEMS: Bullish: Traders who believe that the stock market will rally in 2012 might want to consider the following trades: 

<ul><li>Go long on SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>), iShares Dow Jones US Index Fund (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>), and SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>).</li></ul>

Bearish: Traders who believe that 2012 will leave the stock market flat just like in 2011 may consider alternate positions: 

<ul><li>Check out SPDR Gold Trust ETF (NYSE: <a class="ticker" href="/stock/gld#NYSE">GLD</a>) and iShares Silver Trust ETF (NYSE: <a class="ticker" href="/stock/slv#NYSE">SLV</a>).</li></ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Psychology

Is 2012 Going To Be a Repeat of 2011?

For the investor looking to skirt volatility and for the truly indecisive among us, a total market ETF might just be the way. Most total market ETFs feature two virtues longer-term investors: Exposure to myriad sectors through holdings that often number in the hundreds and low expense ratios.

Total market ETFs have another advantage: They're often less volatile than their sector or specialty ETF peers. So what's not to like? Well, total market ETFs aren't great short-term trading vehicles, but if that's the worst thing that can be said of an ETF, that's not so bad. 

So let's a have a look at five total market ETFs your broker may have neglected to tell you about.

Vanguard Total International Stock ETF (NYSE: VXUS):
As we've noted before, for a new ETF, VXUS is off to a stunning start having attracted nearly $57 billion in assets under management after debuting in January. With an expense ratio of just 0.2%, VXUS is home to over 6,600 stocks including BHP Billiton (NYSE: <a class="ticker" href="/stock/bhp#NYSE">BHP</a>), BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>) and Rio Tinto (NYSE: <a class="ticker" href="/stock/rio#NYSE">RIO</a>). This is an ideal ETF for the investor looking to get substantial emerging and developed markets exposure without a heavy bias to North America.

Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="/stock/vti#NYSE">VTI</a>):
Consider the Vanguard Total Stock Market ETF the U.S.-focused cousin of VXUS. VTI features a meager expense ratio of just 0.07% and has $157.3 billion in assets under management. Nine of the ETF's top-10 holdings are Dow stocks with Apple (Nasdaq: <a class="ticker" href="/stock/aapl#Nasdaq">AAPL</a>) being the exception. Overall, more than 3,200 stocks call VTI home.

WisdomTree Total Earnings Fund (NYSE: <a class="ticker" href="/stock/ext#NYSE">EXT</a>):
Like VTI, EXT is entirely devoted to the U.S. and Apple is also EXT's lone top-10 holding that isn't a Dow stock. Six sectors (information technology, financials, consumer staples, healthcare, consumer discretionary and energy) get double-digit weights and industrials are just below 10% of the fund's sector allocation. EXT has an expense ratio of 0.28%.

SPDR Dow Jones Total Market ETF (NYSE: <a class="ticker" href="/stock/tmw#NYSE">TMW</a>):
The SPDR Dow Jones Total Market ETF kind of flies under the radar when it comes to total market funds, but this fund is not to be taken lightly with a very nice expense ratio of just 0.2%. Home to about 940 stocks, TMW's top-10 holdings aren't much different than you'll get with EXT or VTI. Six sectors (IT, financials, consumer discretionary, healthcare, energy and industrials) receive double-digit allocations. 

iShares Dow Jones Index Fund (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>):
Everything being equal, IYY would make for an excellent rival to VTI. But everything isn't equal. IYY is home to “just” 1,356 stocks and an expense ratio of 0.2%. With nearly $509 million in AUM, IYY isn't going anywhere, but retail investors would do well to be involved with VTI over IYY.

Five Total Market ETFs Your Broker Forgot to Tell You About

In an interview with Der Spiegel in 1966, German philosopher Martin Heidegger said regarding the world's problems, "Only a god can save us." Heidegger: "I think the only possibility of salvation left to us is to prepare readiness, through thinking and poetry, for the appearance of the god or for the absence of the god during the decline." As we witness the global economy being driven to the brink, one cannot help but desire a "deus ex machina" to manifest itself and correct our common plight. 
	A deus ex machina (or "god out of the machine") is a plot device introduced to resolve a grave, desperate, and dire entanglement of issues in a storyline. The phrase deus ex machina hearkens back to ancient Greek and Roman drama where a poet would introduce a god at the climax of a play in order to bring resolution to a perceivably unsolvable web of conflicts; a god would manifest himself out of the "machinery" of stage equipment in order to save the day. An example of a deus ex machina is the unexpected virus that wiped out the extraterrestrial invaders in H.G. Wells' "War of the Worlds". 
	To say the least, if all the world is a stage, it appears that we are in need of a deus ex machina on a global scale. Nevertheless, the likelihood of a deus ex machina manifesting itself appears to be improbable. With world problems ranging from climate change, overpopulation, unemployment, energy crises, water crises, terrorism, and war, we could use a deus ex machina right about now. <a href="http://www.nytimes.com/2011/09/19/opinion/economic-bleeding-cure.html?ref=paulkrugman">Nobel Prize-winning economist Paul Krugman's column in the NY Times today highlighted the gravity of trying to find a cure to the globe's economic malaise</a>. 
	Today's headline on the Drudge Report, "Now IMF Needs Bailout!", also highlights the precariousness of our global economic situation. On the topic of economics and the desire for a deus ex machina, <a href="http://blogs.wsj.com/economics/2011/09/25/europe-on-their-minds/?mod=google_news_blog">former US Treasury secretary Lawrence Summers has been quoted as saying</a>, "If a generous sovereign from Mars paid off Greek debt, the fundamentals of Europe in crisis would not be altered." Furthermore, president of China Investment Corp. Gao Xiqing has said, "We can't just go save someone. We're not saviors. We have to save ourselves." Any hope for a dramatic saving intervention would thus appear to be in vain. 
	Even so, one possible deus ex machina to resolve a great deal of the world's current crises may be in the form of a new invention that would radically change the way we live. Perhaps an inventor like Dean Kamen could cook something up to revolutionize the planet. I think it would be nice if someone could invent the portal gun from the game "Portal". Or perhaps a Zefram Cochrane could develop a warp drive and fly it into space while some extraterrestrial intelligence is watching thereby changing the course of human history and opening a new era of spacefaring for mankind. Perhaps scientists can find a new element or chemical process that would make light-speed travel possible. 
	But even in taking into account future inventions like a portal gun or a warp drive starship, one cannot help but feel that many of the world's problems go back to inherent flaws in human nature. For instance, let us suppose that human inventors were able to create a transportation device as used in Star Trek where we could "beam" a person or thing from one place to another. As nice as it would be to have transporter rooms for the morning commute or shipping products, far from solving issues related to human energy consumption, transportation, and shipping, I fear that a transportation device would only move the problems we already have and bring with it new problems. As such, perhaps it is unlikely that a revolutionary new invention would bring resolution to the world's current problems. 
	A second option less favorable to humanity would be the intervention of a negative deus ex machina. One might say such a negative deus ex machina would take the form of a "Malthusian catastrophe" in the form of a plague or pandemic. If we think back to Wells' "War of the Worlds", were a virus to wreak havoc upon the world's population, it is likely that our contemporary approaches to many of the planet's current geopolitical and socio-economic issues would have to be reworked and reframed. A pandemic would be bad news for most of us and would most likely result in mass casualties, but on the flip side, perhaps such a catastrophic event as that of a plague or pandemic would help humanity bring life and the world into perspective. 
	In the book "Introducing Wittgenstein" by John Heaton and Judy Groves, the authors write that from the perspective of Ludwig Wittgenstein, modern times are a dark age and "only a change in our way of life would heal the sickness of our age -- and this is only likely to happen when disaster confronts us". Where Nature may have a major catastrophe in store for the planet and where a major catastrophe could result in humanity coming together, such a calamity is unlikely to be a viable source of hope for us in our current plight. The last thing we need right now is a pandemic; pestilence would only further compound our current problems. 
	Given the dramatic effect of a negative deus ex machina, one has to wonder whether a Malthusian catastrophe would be lead to humanity's story being an inevitable tragedy. Where a virus may be desirable against extraterrestrial invaders, a virus wiping out a considerable portion of humanity is not desirable. Again, a deus ex machina in the form of a plague would not solve the world's problems, but rather would merely move and/or add to the world's problems. 
	There is a third option that I would like to address on this subject: a literal "god" coming out of the machine of reality. This could take the form of an artificial intelligence "God" (AI God) or extraterrestrials descending down to Earth from the heavens above. 
	Arthur C. Clarke once said that, "Perhaps our role on this planet is not to worship God -- but to create Him." Given growth in human technology and the move towards posthumanism, some may with hope look to the future of a posthuman god rising up to redeem humanity. The so-called Shermer's last law states that "Any sufficiently advanced extraterrestrial intelligence is indistinguishable from God". In this light, one might suggest that humanity will evolve physically and mentally using technology to appear to have godlike abilities in comparison to contemporary humans. The idea of an AI God has been explored in Orion's Arm, a science fiction world-building project. In the Orion's Arm universe, "archailects" are AI Gods (derived from human intelligence) that exist in the universe. But again, given the limitations of human nature, it is difficult to see how human creations would ever be able to ultimately solve the planet's problems -- especially in our time period. And yet, God helps those who help themselves. Nevertheless, the hope that posthumanism will solve the world's problems centuries or millennia in the future does little for us today. <a href="http://www.benzinga.com/general/politics/11/09/1941920/krugmans-possible-solutions-to-the-financial-crisis-fake-space-aliens">I've mentioned previously how the arrival of benevolent extraterrestrials could prove to be a silver bullet for the world economy</a>. Arthur C. Clarke explored this idea in the novel "Childhood's End". The arrival of benevolent extraterrestrials would indeed be quite a deus ex machina for the storyline of humanity on Earth. 
	On the topic of extraterrestrials arriving to save humanity, to the annoyance of my significant other, I have recently been toying around with <a href="http://www.dark-stories.com/eng/was_jesus_an_extraterrestrial.htm">the idea of Jesus Christ having been some form of extraterrestrial intervention</a>. Were we to discover that Jesus was placed here by extraterrestrials, I think it would make sense of a lot of things. I think both believers and atheists would find a sense of solace in such a revelation; dare I say it, I think such an arrival would be enough to unite the world's religions. Like at the end of the novel "Lord of the Flies", perhaps the mere sight of a massive extraterrestrial vessel traveling across the firmament would lead the world's combatants to put down their weapons. To say the least, I find it a bit suspect that someone like Jesus has such a pre-eminent place in history in comparison to other figures like Baruch Spinoza, who (though having written perhaps the greatest philosophical text in the history of humanity) has for the most part been left to the history books. Or if we compare Jesus Christ to individuals like Moses or the Prophet Muhammad, who were both religious leaders and military leaders, why does Jesus take such precedence? 
	I mean, seriously, doesn't anyone else find it a bit strange and suspect that our yearly calendar is based on the life of a simple carpenter's son who lived in a backwoods region of the world 2000 years ago? I mean, even if you do not believe in God and/or do not believe that Jesus was the "son of God", you cannot discuss the history of humanity without mentioning the man from Galilee. (And he only preached for three years! To put it into perspective, that's almost as long as Pres. Obama has been president.) Even H.G. Wells said, "I am a historian, I am not a believer, but I must confess as a historian that this penniless preacher from Nazareth is irrevocably the very center of history. Jesus Christ is easily the most dominant figure in all history." Wells also said, "Christ is the most unique person of history. No man can write a history of the human race without giving first and foremost place to the penniless teacher of Nazareth." 
	I am still waiting for a credible theologian or religious cleric to explain to me why if God is omnipresent and exists everywhere Jesus nonetheless made it a point to ascend into the heavens -- and not only on a mystical or spiritual level. I mean, we're talking about a bright "cloud" descending and taking a person back up into the sky. Not only this, but an "angel" outside the "cloud" says that not only is Jesus going up to his home in heaven, but oh yeah, you're going to see him come back down to Earth the same way he went up. Where one can appreciate that ascension stories recur in mythological narratives, what really are the odds that such a story as Jesus' would survive intact after 2000 years? And think about it for a second -- if God is a spirit that exists everywhere in the universe, why was it necessary that Jesus ascended into the heavens where his "father" lived? Why was Jesus saying that he was the son of a father in heaven and that his kingdom was not of this world? Could it be that extraterrestrials had planted such a being in order to allow humanity to "grow up" and mature? What's really bizarre is that this prospect appears to sufficiently be in line with everything else in the Bible from Adam to Enoch to Abraham to Moses to Elijah to Ezekiel, et. al. There is this recurrent theme of physical beings coming down from the heavens in the name of God to influence the course of human civilization. Even with the angel Gabriel telling Mary about a virgin birth, it all begins to fit like some sort of cosmic jigsaw puzzle thereby raising the question, "What really is the moral of this story?" 
	It is enough to make one wonder if Jesus was merely the bearer of a philosophical and religious model of thinking that is akin to Spinoza's God, i.e. these extraterrestrials that our ancestors perceived as "sons of God" were really trying to teach us a conception of God akin to Spinoza's Deus. Perhaps the "gods" of our ancestors were merely emissaries attempting to relay their own conception of God to us. At the very least, given the time period, Jesus appeared to be centuries upon centuries ahead of his time; Jesus' message, to say the least, was and remains quite "alien" to the world. 
	Suffice to say, the story of Jesus and its ongoing implications are almost exactly what you would expect were a race of higher-evolved extraterrestrial beings to meddle with the affairs of humanity. That's sort of the humor behind the phenomenon. Take for instance the cargo cults in isolated island societies. The religious rituals of cargo cults are analogous to the religious rituals our society has. Heck, if extraterrestrials descended tomorrow for all the world to see and only stuck around for three days, I would venture to bet that we would be talking about it every day thereafter for the next 2000 years. People would be so excited; I wonder if that alone would be enough to cure the global malaise. 
	I should stop before I go too far as I can feel Occam's razor bearing down upon me. I do not want to go down too many rabbit trails on this topic (because we could go on for volumes), but I do want to say that with the prospect of global catastrophe on the horizon on sociological, geopolitical, and economic levels, it is difficult to see whether we could be in for a deus ex machina in our storyline. I think of the three options above of a new invention to revolutionize humanity, Malthusian catastrophe, and divine extraterrestrials, the third option is probably the most desirable and most favorable for us. Despite our grim outlook on the course of the world today, perhaps there is yet reason to have hope. Perhaps at that moment when it appears that all has been lost for the planet Earth, a deus ex machina will manifest itself. As Heidegger suggested, maybe only a god can save us now. 
	"There will be signs in the sun, the moon, and the stars, and on the earth distress among the nations perplexed by the roaring of the sea and the waves. People will faint from fear and foreboding of what is coming upon the world, for the powers of the heavens will be shaken." (Luke 21:25-26)
ACTION ITEMS: Bullish: Traders who believe that a deus ex machina may be right around the corner might want to consider the following trades: 

<ul><li>Those who believe a new invention may come that will change the world can go long on Orbital Sciences Corp. (NYSE: <a class="ticker" href="/stock/orb#NYSE">ORB</a>), Lockheed Martin Corporation (NYSE: <a class="ticker" href="/stock/lmt#NYSE">LMT</a>), The Boeing Company (NYSE: <a class="ticker" href="/stock/ba#NYSE">BA</a>), and Tesla Motors Inc (NASDAQ: <a class="ticker" href="/stock/tsla#NASDAQ">TSLA</a>).</li></ul>

<ul><li>Those who believe that humanity may have to face a pandemic in the near future may want to take a look at Pfizer Inc. (NYSE: <a class="ticker" href="/stock/pfe#NYSE">PFE</a>) and GlaxoSmithKline plc ADR (NYSE: <a class="ticker" href="/stock/gsk#NYSE">GSK</a>). </li></ul>

<ul><li>Those who think things will turn around for the market psychologically can go long on SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>) and iShares Dow Jones US Index Fund (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>).</li></ul>

Bearish: Traders who believe that there will be no deus ex machina in the near future may consider alternate positions: 

<ul><li>Short everything in sight.</li></ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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National Semiconductor Provides Good Funds in Their Retirement Plan

<div class="entry" style="margin: 0px; padding: 0px; overflow: hidden;">
<div class="posttitle" style="margin: 0px; padding: 0px;"><a href="http://portfolioist.com/2011/03/28/relax-arguments-for-doing-less-with-your-investments/">Doing Less With Your Investments</a> March 28, 2011 by <a href="http://portfolioist.com/author/nanettebyrnes/">Nanette Byrnes</a></div>
<div class="entry" style="margin: 0px; padding: 0px; overflow: hidden;">
 
In his latest<a href="http://www.behaviorgap.com/"> Behavior Gap</a> Newsletter, Carl Richards nails that feeling of confusion that comes when we learn first hand that “past performance is not a guarantee of future results.”
<a href="http://smarterinvesting.files.wordpress.com/2011/03/carlrichards-hot-funds1-591x456.jpg"><img src="http://smarterinvesting.files.wordpress.com/2011/03/carlrichards-hot-funds1-591x456.jpg?w=500&amp;h=385" alt="" /></a>
Investing isn't like hiring a basketball coach, Richards argues, but rather like planting an oak tree:“You never plant a tree and then pull it out every time the wind blows just to check the roots.”
He also quotes this gem from Warren Buffett: “Benign neglect, bordering on sloth, remains the hallmark of our investment process.”
<h3 style="margin: 2em 0px 0px; padding: 0px; font-family: Helvetica,Verdana,Arial,sans-serif; font-size: 1.2em; font-weight: bold; color: #333333;">Why We Should Do Less With our Investments</h3>
In his book <a href="http://www.amazon.com/Investing-Simpler-Second-Focus-Investor/dp/0976657457">Wise Investing Made Simpler</a> Larry Swedroe makes a similar point using a study conducted by a trio of academics. Edwin J. Elton and Martin J. Gruber of New York University, and Christopher R. Blake of Fordham University, examined 43 401(k) plans from 1994 through 1999.
Over those five years, the 401(k) plans added 215 new fund options for participants and dropped 45 funds from their plans. The funds added had a strong track record. Those that were dropped had poor recent performance.
The professors soon discovered that the new funds promptly underperformed those that had been given the heave-ho.
That brought the overall quality of the offerings down. Making matters worse, participants in the plans constantly chased performance by shifting money into last quarter's top performers, the study notes.
<h3 style="margin: 2em 0px 0px; padding: 0px; font-family: Helvetica,Verdana,Arial,sans-serif; font-size: 1.2em; font-weight: bold; color: #333333;">Give Your Money A Chance To Grow</h3>
The argument Richards, Swedroe, and others make is simple. Having put thought and effort into setting up their investments, investors need to give them a chance to grow. That doesn't mean you can't appreciate their beauty and even check in on their performance now and again, but successful long-term investing requires patience.
If you have ideas for setting the right balance between enlightened remove and dangerous neglect, <a href="http://portfolioist.com/2011/03/28/relax-arguments-for-doing-less-with-your-investments/">chime in</a>.
 
 
Symbols:<a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol= SPY&amp;count=001'> SPY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VTI&amp;count=0099'>VTI</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IYR&amp;count=00107'>IYR</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VNQ&amp;count=00104'>VNQ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=ICF&amp;count=0088'>ICF</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00141'>AGG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BND&amp;count=00151'>BND</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DBC&amp;count=0098'>DBC</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IVV&amp;count=0048'>IVV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IYY&amp;count=0040'>IYY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IWV&amp;count=0045'>IWV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VV&amp;count=0040'>VV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DLN&amp;count=0042'>DLN</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=RSP&amp;count=0044'>RSP</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SCHX&amp;count=0040'>SCHX</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=CLY&amp;count=006'>CLY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=LQD&amp;count=0067'>LQD</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BLV&amp;count=0010'>BLV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VCLT&amp;count=008'>VCLT</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol= DGL&amp;count=001'> DGL</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IAU&amp;count=004'>IAU</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DBG&amp;count=003'>DBG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=AGOL&amp;count=003'>AGOL</a>
<div class="sidebar_box_content">(SPY), (VTI), (IYR), (VNQ), (ICF), (AGG), (BND), (DBC), (IVV), (IYY), (IWV), (VV), (DLN), (RSP), (SCHX), (CLY), (LQD), (BLV), (VCLT),  (DGL), (IAU), (DBG), (AGOL)</div>
 
 
</div>
 
</div>
 
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AGOL

iShares Trusthen & Steers Realty Majors Index Fund

iShares Trust Dow Jones US Real Estate Fund Index

VCLT

Relax: Doing Less With Your Investments

<a href="http://portfolioist.com/2011/03/25/will-harry-brownes-permanent-portfolio-continue-to-work/">Portfolioist Article </a>March 25, 2011 by <a href="http://portfolioist.com/author/geoffc1/">Geoff Considine</a>
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I just published an article over at Advisor Perspectives that is titled <a href="http://www.advisorperspectives.com/newsletters11/What_Investors_Should_Fear_in_the_Permanent_Portfolio.php">“What Investors Should Fear in The Permanent Portfolio”</a> that looks at a very simple model portfolio proposed by Harry Browne.  This portfolio contains equal allocations to four elements: stocks, gold, long-term government bonds and cash.  Back in 1998 when Browne first proposed this portfolio in his book, <a href="http://www.amazon.com/Fail-Safe-Investing-Lifelong-Financial-Security/dp/031226321X/ref=sr_1_1">Fail Safe Investing</a>, it was decidedly harder to create your own version of this allocation model.  Today, you can easily implement this portfolio at fairly low cost using four ETFs. 
Harry Browne's <a href="http://portfolioist.com/2010/08/27/bernstein-bogleheads-and-the-permanent-portfolio/">Permanent Portfolio</a> has gotten a great deal of attention–and many new advocates–due to its solid performance in recent years when more traditional asset allocations suffered substantial losses.  However, the question that investors need to ask is whether this will be a successful way to invest in the future. 
I am not going to go through all of the analysis–but I will present three brief highlights here: 1) There is no question that the simple asset allocation in the Permanent Portfolio has done very well in the last decade and more.
2) The reliance on long-term bonds and gold has led to great performance but yields on long bonds are near historic lows and gold is near historic highs.
3) The Permanent Portfolio is not likely to fare well in a rising interest rate environment.
Ultimately, my conclusion is quite similar to that reached by William Bernstein, when he looked at this deceptively simple asset allocation.  The statistics suggest that the Permanent Portfolio does indeed capture elements that will do well in a wide variety of market conditions.  The danger for investors is piling into this strategy after a period that has been almost optimal for this approach vs. more conventional asset allocations.  For many of the latecomers to the Permanent Portfolio, there is a substantial risk that they are chasing performance and are thus setting themselves up for much lower future returns.
<span class="Apple-style-span" style="border-collapse: separate; color: #000000; font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; font-size: medium;">
Symbols:<a href ='../../../../LTISystem/f401k_symbols.action?symbol= SPY&amp;count=001'> SPY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VTI&amp;count=0096'>VTI</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IYR&amp;count=00105'>IYR</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VNQ&amp;count=00102'>VNQ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=ICF&amp;count=0086'>ICF</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00139'>AGG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BND&amp;count=00149'>BND</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DBC&amp;count=0096'>DBC</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVV&amp;count=0046'>IVV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IYY&amp;count=0038'>IYY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWV&amp;count=0043'>IWV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VV&amp;count=0038'>VV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DLN&amp;count=0040'>DLN</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RSP&amp;count=0042'>RSP</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHX&amp;count=0038'>SCHX</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=CLY&amp;count=004'>CLY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=LQD&amp;count=0065'>LQD</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BLV&amp;count=008'>BLV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VCLT&amp;count=006'>VCLT</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol= DGL&amp;count=001'> DGL</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IAU&amp;count=002'>IAU</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DBG&amp;count=001'>DBG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=AGOL&amp;count=001'>AGOL</a>,
<span class="Apple-style-span" style="border-collapse: separate; color: #000000; font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; font-size: medium;">Exchange Symbols:<span class="Apple-style-span" style="border-collapse: separate; color: #000000; font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; font-size: medium;">
<div class="sidebar_box_content">(NYSE: SPY), (NYSE: VTI), (NYSE: IYR), (NYSE: VNQ), (NYSE: ICF), (NYSE: AGG), (NYSE: BND), (NYSE: DBC), (NYSE: IVV), (NYSE: IYY), (NYSE: IWV), (NYSE: VV), (NYSE: DLN), (NYSE: RSP), (NYSE: SCHX), (NYSE: CLY), (NYSE: LQD), (NYSE: BLV), (NYSE:VCLT),  (NYSE: DGL), (NYSE: IAU), (NYSE: DBG), (NYSE: AGOL)</div>


</div>
 
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Will Harry Browne's Permanent Portfolio Continue To Work?

streetTRACKS Dow Jones U.S. Small Cap Value Index Fund

iShares S&P SmallCap 600 Value Index Fund

iShares Morningstar Small Value Index Fund

LSVEX

PTTRX

PowerShares Exchange Traded Fund Trust Dynamic Small Cap Value Portfolio

Rydex ETF Trust S&P Smallcap 600 Pure Value ETF

Accenture 401K Retirement Plan: High Quality and Low Cost Funds with Proper Diversification

Amazon.com (Ticker: AMZN) is the largest online book and goods seller. It was founded in 1994 and is headquartered in Seattle, Washington. It pioneered in online ecommerce and has been very successful in its aggressive business expansion. When it comes to its retirement plan investment choices, however, it provides a somewhat U.S. centric and old style plan.
The <a rel="nofollow">Amazon.com 401K Plan</a> consists of 12 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income. This is a very conventional retirement plan that has been clearly U.S. and developed countries centric.
<table style="width: 50%;" border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th align="left">Ticker</th>
<th align="left">Name</th>
</tr>
</thead>
<tbody>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="20%">RGAEX</td>
<td width="40%">American Funds Growth Fund of Amer R4</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="20%">VFINX</td>
<td width="40%">Vanguard 500 Index Investor</td>
</tr>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="20%">VFTSX</td>
<td width="40%">Vanguard FTSE Social Index Inv</td>
</tr>
<tr>
<td width="40%">LARGE VALUE</td>
<td width="20%">VWNFX</td>
<td width="40%">Vanguard Windsor II</td>
</tr>
<tr>
<td width="40%">MID-CAP BLEND</td>
<td width="20%">VSEQX</td>
<td width="40%">Vanguard Strategic Equity</td>
</tr>
<tr>
<td width="40%">SMALL VALUE</td>
<td width="20%">AVPAX</td>
<td width="40%">American Beacon Small Cp Val Plan</td>
</tr>
<tr>
<td width="40%">Small Growth</td>
<td width="20%">VEXPX</td>
<td width="40%">Vanguard Explorer</td>
</tr>
<tr>
<td width="40%">Foreign Large Blend</td>
<td width="20%">JIEIX</td>
<td width="40%">Artio International Equity I</td>
</tr>
<tr>
<td width="40%">Intermediate-Term Bond</td>
<td width="20%">PTTRX</td>
<td width="40%">PIMCO Total Return Instl</td>
</tr>
<tr>
<td width="40%">Retirement Income</td>
<td width="20%">VTINX</td>
<td width="40%">Vanguard Target Retirement Income</td>
</tr>
<tr>
<td width="40%">US EQUITY</td>
<td width="20%">AMZN</td>
<td width="40%">Amazoncom Inc</td>
</tr>
<tr>
<td width="40%">Money Market</td>
<td width="20%"></td>
<td width="40%"> </td>
</tr>
</tbody>
</table>
 
The list of minor asset classes covered: Foreign Large Blend: EFA, VEU, GWL, PFA Intermediate-term Bond: AGG, CIU, BIV, BND Large Blend: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX Large Growth: IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG Large Value: IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV Mid-cap Blend: IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV Retirement Income: Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK Small Value: IJS, IWN, JKL, VBR, DSV, PWY, RZV, UVT Us Equity: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX
<table border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th>Number of funds</th>
</tr>
</thead>
<tbody>
<tr>
<td>REITs</td>
<td>0</td>
</tr>
<tr>
<td>Balanced Fund</td>
<td>1</td>
</tr>
<tr>
<td>Fixed Income</td>
<td>1</td>
</tr>
<tr>
<td>Commodity</td>
<td>0</td>
</tr>
<tr>
<td>Sector Fund</td>
<td>0</td>
</tr>
<tr>
<td>Foreign Equity</td>
<td>1</td>
</tr>
<tr>
<td>Emerging Market Equity</td>
<td>0</td>
</tr>
<tr>
<td>US Equity</td>
<td>8</td>
</tr>
<tr>
<td>Other</td>
<td>9</td>
</tr>
<tr>
<td>Total</td>
<td>12</td>
</tr>
</tbody>
</table>
As of Mar 21, 2011, this plan investment choice is rated as below average based on MyPlanIQ <a rel="nofollow">Plan Rating methodology </a> that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:
Diversification -- Rated as average (43%) Fund Quality -- Rated as below average (19%) Portfolio Building -- Rated as average (38%) Overall Rating: 		below average (34%)
Since Amazon.com was founded in 1994, the world has gone through dramatic changes. Globalization has enabled countries like China, India and Brazil to emerge as strong economic powers in the world, partly due to the rapid development in internet and communication. Ironically, Amazon.com, while being aggressive to pursue its cutting edge business practice and technology, has provided its employees a very traditional retirement plan that lacks of other major asset exposure including emerging market stocks and real estate investments (REITs). This is reflected in the performance of the following model portfolios that adopt asset allocation strategies: strategic and tactical asset allocation strategies (<a rel="nofollow">SAA </a>and <a rel="nofollow">TAA </a>for participants in Amazon.com 401K Plan).
Strategic Asset Allocation is based on well known modern portfolio theory and its key features include: diversification, proper fund selection and periodically re-balancing.
Tactical Asset Allocation works on a diversified array of assets provided by funds in a plan and adjusts asset mixes based on market conditions such as asset price momentum utilized by TAA.
The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies. For comparison purpose, we also include the moderate model portfolios of a typical 3 asset <a rel="nofollow">SIB (Simpler Is Better) plan </a>. This SIB plan has the following candidate index funds and their ETFs equivalent:
US Equity: SPY or VTI Foreign Equity: EFA or VEU Fixed Income: AGG or BND Performance chart (as of Mar 21, 2011)
<a rel="lightbox"> </a>
<a rel="lightbox" href="../LTISystem/article_viewchart.action?portfolioID=17111,17117,31628,31631"> <img style="margin: 6px;" title="chart" src="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=17111,17117,31628,31631" alt="chart" /></a><a rel="lightbox" href="../LTISystem/article_viewchart.action?portfolioID=17111,17117,31628,31631"> </a>
Performance table (as of Mar 21, 2011)
<div id="show_Port_div" style="display: block;">
<table id="comparetablePort" class="tablesorter" style="width: 100%;" border="0" cellspacing="1" cellpadding="0">
<thead>
<tr>
<th class="header" width="40%">Portfolio Name</th>
<th class="header" width="10%">1Yr AR</th>
<th class="header" width="10%">1Yr Sharpe</th>
<th class="header" width="10%">3Yr AR</th>
<th class="header" width="10%">3Yr Sharpe</th>
<th class="header" width="10%">5Yr AR </th>
<th class="header" width="10%">5Yr Sharpe</th>
</tr>
</thead>
<tbody>
<tr>
<td><a> Amazon.com 401K Plan Tactical Asset Allocation Moderate</a></td>
<td>4%</td>
<td>32%</td>
<td>7%</td>
<td>70%</td>
<td>8%</td>
<td>70%</td>
</tr>
<tr>
<td><a> Amazon.com 401K Plan Strategic Asset Allocation Moderate</a></td>
<td>7%</td>
<td>60%</td>
<td>4%</td>
<td>26%</td>
<td>5%</td>
<td>30%</td>
</tr>
<tr>
<td><a> Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate</a></td>
<td>-2%</td>
<td>-32%</td>
<td>2%</td>
<td>16%</td>
<td>4%</td>
<td>28%</td>
</tr>
<tr>
<td><a> Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate</a></td>
<td>11%</td>
<td>69%</td>
<td>4%</td>
<td>13%</td>
<td>4%</td>
<td>14%</td>
</tr>
</tbody>
</table>
</div>
Currently Commodities, Real Estate and US Equity are doing well. Only US Equity is available to Amazon.com 401K Plan participants.
This plan beats the three asset benchmark by virtue of the US asset class choices. If would be a stronger plan with more fixed income choices and an additional asset class.
To summarize, Amazon.com 401K Plan would do well by their employees to consider reviewing their existing funds and adding additional asset classes such as REITs and emerging market stocks.
Symbols:<a href ='../../../../LTISystem/f401k_symbols.action?symbol=AMZN&amp;count=002'>AMZN</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SPY&amp;count=00127'>SPY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VTI&amp;count=0091'>VTI</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EFA&amp;count=00142'>EFA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00124'>VEU</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00134'>AGG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BND&amp;count=00144'>BND</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVV&amp;count=0044'>IVV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IYY&amp;count=0036'>IYY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWV&amp;count=0041'>IWV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VV&amp;count=0036'>VV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DLN&amp;count=0038'>DLN</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RSP&amp;count=0040'>RSP</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHX&amp;count=0036'>SCHX</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=CIU&amp;count=00104'>CIU</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BIV&amp;count=0045'>BIV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=GWL&amp;count=0038'>GWL</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PFA&amp;count=0035'>PFA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVE&amp;count=0035'>IVE</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWW&amp;count=0032'>IWW</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKF&amp;count=0025'>JKF</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VTV&amp;count=0037'>VTV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=ELV&amp;count=0024'>ELV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PWV&amp;count=0025'>PWV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RPV&amp;count=0025'>RPV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHV&amp;count=0027'>SCHV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVW&amp;count=0040'>IVW</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWZ&amp;count=0032'>IWZ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKE&amp;count=0029'>JKE</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VUG&amp;count=0041'>VUG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=ELG&amp;count=0028'>ELG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=QQQQ&amp;count=0081'>QQQQ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RPG&amp;count=0029'>RPG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHG&amp;count=0031'>SCHG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IJH&amp;count=0026'>IJH</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWR&amp;count=0026'>IWR</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKG&amp;count=0017'>JKG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VO&amp;count=0026'>VO</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=MDY&amp;count=0072'>MDY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EMM&amp;count=0020'>EMM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PJG&amp;count=0017'>PJG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DON&amp;count=0020'>DON</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EZM&amp;count=0020'>EZM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=MVV&amp;count=0016'>MVV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IJS&amp;count=0022'>IJS</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWN&amp;count=0022'>IWN</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKL&amp;count=0013'>JKL</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VBR&amp;count=0021'>VBR</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DSV&amp;count=0014'>DSV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PWY&amp;count=0013'>PWY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RZV&amp;count=0013'>RZV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=UVT&amp;count=0013'>UVT</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IJT&amp;count=0019'>IJT</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWO&amp;count=0020'>IWO</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKK&amp;count=0013'>JKK</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VBK&amp;count=0024'>VBK</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DSG&amp;count=0013'>DSG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PWT&amp;count=0011'>PWT</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RZG&amp;count=0010'>RZG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=UKK&amp;count=0010'>UKK</a>,
Exchange Tickers:(AMZN),(SPY),(VTI),(EFA),(VEU),(AGG),(BND),(IVV),(IYY),(IWV),(VV),(DLN),(RSP),(SCHX),(CIU),(BIV),(GWL),(PFA),(IVE),(IWW),(JKF),(VTV),(ELV),(PWV),(RPV),(SCHV),(IVW),(IWZ),(JKE),(VUG),(ELG),(QQQQ),(RPG),(SCHG),(IJH),(IWR),(JKG),(VO),(MDY),(EMM),(PJG),(DON),(EZM),(MVV),(IJS),(IWN),(JKL),(VBR),(DSV),(PWY),(RZV),(UVT),(IJT),(IWO),(JKK),(VBK),(DSG),(PWT),(RZG),(UKK)
Disclosure:
MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
 
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AMZN

Online Pioneer Amazon.com Can Expand Its 401K Plan for More Diversification

Aging boomers highlight the major retirement crisis as they come to the end of their working careers. They don't have enough money. There is no money to bail out retirement – it's already been spent on salvaging the economy for the working. This is one of the first generations for whom their retirement is based on what they have with little assistance from Social Security. Henceforth, the bleak reality is that this will apply to everybody.
 It is going to be up to the individual to make the most of what they have. We will have to accept less or work longer or achieve better returns from their investments.
 We are exploring a range of different portfolios looking for ideas to help improve returns for retirement investors. We believe that it is vital for the individual to be more involved with their retirement investing to see better results. These articles are intended to help build the foundational understanding that will enable better returns, lower risk and less angst in our lives.
 The Harry Browne Permanent Portfolio has defied conventional thinking with a lazy portfolio of four assets, Cash, Gold, US Equities and Long term treasury bonds. This is a three asset class portfolio with two fixed income assets (50%) of the portfolio with US Equities and Gold -- being a specialized type of commodity.
<ul>
<li>25% in U.S. stocks, to provide a strong return during times of prosperity. For this portion of the portfolio, Browne recommends a basic S&amp;P 500 index fund such as <a href="http://www.google.com/finance?client=ob&amp;q=MUTF:VFINX">VFINX</a> or <a href="http://www.google.com/finance?q=MUTF%3AFSMKX">FSKMX</a>.(VTI, SPY) </li>
<li>25% in long-term U.S. Treasury bonds, which do well during prosperity and during deflation (but which do poorly during other economic cycles).(LQD)</li>
<li>25% in cash in order to hedge against periods of “tight money” or recession. In this case, “cash” means a <a href="http://www.money-rates.com/BasicGuides/MoneyMarket/MMA_versus_MoneyMarketFunds.htm">money-market fund</a>. (Note that our current recession is abnormal because money actually isn't tight — interest rates are very low.)</li>
<li>25% in precious metals (gold, specifically) in order to provide protection during periods of inflation. Browne recommends gold bullion coins.(GLD) </li>
</ul>
<div class="sidebar_box_noPadding roundHeadingBlue"></div>
<div class="sidebar_box_noPadding roundHeadingBlue">Annualized Return</div>
<div class="sidebar_box_noPadding roundHeadingBlue">
<div class="sidebar_box_noPadding roundHeadingBlue">
<div class="sidebar_box_content">
<table style="background-color: #ffffff; width: 50%;" border="0" cellspacing="1" cellpadding="0">
<tbody>
<tr bgcolor="#ffffff">
<td style="text-align: center;">
<h3>Name</h3>
</td>
<td width="90" align="center">
<h3>Last 1 Year</h3>
</td>
<td width="90" align="center">
<h3>Last 3 Years</h3>
</td>
<td width="90" align="center">
<h3>Last 5 Years</h3>
</td>
</tr>
<tr class="vf_even">
<td height="30"><a href="../LTISystem/jsp/portfolio/ViewPortfolio.action?ID=17551&amp;type=4" target="_blank">Harry Browne Permanent Portfolio</a></td>
<td style="text-align: center;" height="30">11%</td>
<td style="text-align: center;" height="30">6%</td>
<td style="text-align: center;" height="30">8%</td>
</tr>
<tr class="vf_odd">
<td height="30"><a href="../LTISystem/jsp/fundcenter/View.action?symbol=vfinx&amp;type=4" target="_blank">VFINX (Vanguard (S&amp;P 500) Index)</a></td>
<td style="text-align: center;" height="30">13%</td>
<td style="text-align: center;" height="30">0%</td>
<td style="text-align: center;" height="30">0%</td>
</tr>
<tr class="vf_even">
<td height="30"><a href="../LTISystem/jsp/fundcenter/View.action?symbol=vbinx&amp;type=4" target="_blank">VBINX (Vanguard Balance (60% stocks/40% bonds)</a></td>
<td style="text-align: center;" height="30">10%</td>
<td style="text-align: center;" height="30">2%</td>
<td style="text-align: center;" height="30">2%</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
<div class="sidebar_box_noPadding roundHeadingBlue">
<div class="sidebar_box_content"></div>
</div>
<div class="sidebar_box_noPadding roundHeadingBlue">
<div class="sidebar_box_heading_white"> Historical Portfolio Chart</div>
<div class="sidebar_box_content"><img src="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=17551&amp;securityID=1144,91&amp;width=680&amp;height=500&amp;Type=0" alt="" width="595" height="437" /> 
 The first thing to note is that the portfolio is very stable. It has similar properties to a tactical asset allocation in the sense that it resists taking losses very well. Just about every lazy portfolio has the same unpleasant V in the 2009 timeframe and the Browne permanent is about the only one that avoids this. The combination of gold, cash, long term treasury and US equities turned out to be the perfect hedge against the downturn. 
 And even after the downturn, gold and US equities have performed very well even until today where Gold and US are second and third on the rank of major asset classes.
 We now compare the returns of the original portfolio compared with the same funds being deployed with strategic and tactical asset allocation strateties. 
<ul>
<li>SAA keeps all the funds in the portfolio but moves assets between cash and treasury bonds -- so that the fixed income may all be treasury bonds or equally split with cash or all cash.</li>
<li>TAA will do the same as SAA but can also move all the risk assets into cash or bonds</li>
</ul>

<div id="show_Port_div" style="display: block;">
<h3>Portfolio Performance Comparison</h3>
<table id="comparetablePort" class="tablesorter" style="width: 100%;" border="0" cellspacing="1" cellpadding="0">
<colgroup><col style="width: 359px;" /><col style="width: 82px;" /><col style="width: 82px;" /><col style="width: 82px;" /><col style="width: 82px;" /><col style="width: 82px;" /><col style="width: 82px;" /></colgroup>
<thead>
<tr>
<th class="header" width="40%">Portfolio Name</th>
<th class="header" width="10%">1Yr AR</th>
<th class="header" width="10%">1Yr Sharpe</th>
<th class="header" width="10%">3Yr AR</th>
<th class="header" width="10%">3Yr Sharpe</th>
<th class="header" width="10%">5Yr AR </th>
<th class="header" width="10%">5Yr Sharpe</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=17551">Harry Browne Permanent Portfolio</a></td>
<td>11%</td>
<td>168%</td>
<td>6%</td>
<td>61%</td>
<td>8%</td>
<td>81%</td>
</tr>
<tr class="odd">
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=17707">Harry Browne Permanent Portfolio Plan Strategic Asset Allocation Moderate</a></td>
<td>12%</td>
<td>164%</td>
<td>7%</td>
<td>56%</td>
<td>9%</td>
<td>76%</td>
</tr>
<tr class="even">
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=17701">Harry Browne Permanent Portfolio Plan Tactical Asset Allocation Moderate</a></td>
<td>10%</td>
<td>140%</td>
<td>2%</td>
<td>20%</td>
<td>5%</td>
<td>50%</td>
</tr>
</tbody>
</table>
</div>
 We would expect the Tactical Asset Allocation strategy to struggle. With only three asset classes, there is nowhere to hide in terms of hedging and doesn't do well until the last couple of months when it catches up with the original. Both the SAA and TAA portfolios only have 40% in fixed income as opposed to the original that has 50% so the SAA and TAA are more aggressively positioned in risk equities.
 In the middle of 2010 when US equities corrected, the SAA dropped significantly while the TAA and Browne original plans use different approaches to minimize downside. As we entered 2011, the fixed long term treasuries weighed on the Browne Original where TAA and SAA rotated them out into cash and let the risk assets pull them up.
 Despite this, the Browne portfolio charts an uncannily even path through volatile waters and delivers reasonable returns with little effort and volatility. We can see benefits from being able to rotate subclasses in but at the cost of some volatility and extra trading that some would think unwelcome.
 In a future article we will add consider adding an extra asset class to see if that would enable us to get better returns without sacrificing volatilty.
 <span class="Apple-style-span" style="border-collapse: separate; color: #000000; font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; font-size: medium;">
Disclosure:
MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
Symbols (NYSE: SPY), (NYSE: VTI), (NYSE: IYR), (NYSE: VNQ), (NYSE: ICF), (NYSE: AGG), (NYSE: BND), (NYSE: DBC), (NYSE: IVV), (NYSE: IYY), (NYSE: IWV), (NYSE: VV), (NYSE: DLN), (NYSE: RSP), (NYSE: SCHX), (NYSE: CLY), (NYSE: LQD), (NYSE: BLV), (NYSE:VCLT),  (NYSE: DGL), (NYSE: IAU), (NYSE: DBG), (NYSE: AGOL)
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Gold, US Equities, Long Term Treasuries and Cash Make For an Uncanny Portfolio

David Jackson, the founder of Seeking Alpha left the following question on a post of mine;
<blockquote>Can you be more specific about the broad-based ETFs you have in mind? I wasn't clear whether you are referring to broad-based US equity ETFs like the total market ETFs (<a class="ticker" href="/stock/iyy#">IYY</a>) and (<a class="ticker" href="/stock/tmw#">TMW</a>), or global ETFs like (<a class="ticker" href="/stock/veu#">VEU</a>).</blockquote>
My unedited answer;
<blockquote>I could sum up by saying the broader you go the more you give up in the context I mean. The broader you go the greater the likelihood that whatever you buy will have a higher correlation to something like SPY. So as far as foreign goes something like EFA blends away the various attributes of the component countries. EFA has a higher correlation to every country fund I've ever looked at. One big reason to invest in foreign is to capture diversification for your US holdings, to me this means finding countries with as little in common with the US as possible which gets blended away in EFA.
As for domestic (US as this is where I'm based) and buying things like SPY, or the Russell 1000; my thoughts all along have been that these types of indexes won't work for the foreseeable future. That has been correct for a while and I believe will continue to be the case as my thesis has been the US is a less compelling investment destination such that the broad averages will have price appreciation below "normal," not an Armageddon scenario mind you, but maybe in ten years we look back on 3-5% annualized not 9% or whatever number we used to get.
Investors had a chance to add a lot of value to US portfolios during the last decade by building portfolios at the sector level but avoiding or underweighting sectors that grew to be larger than 20% of the S&amp;P 500 (tech ten years ago and financials six or seven years ago) which is something I wrote about frequently before the crisis. Unfortunately with no sector that large now my opinion here is based more on a weak outlook for the US (too much debt, seriously damaged housing market, terrible employment picture, entitlement programs and the desperate measures taken by the Fed and the US gov't thus far.
I've navigated the last seven years (which how long I've been in this part of the business) on the premise that success will come from making sector decisions, country selections and incorporating themes into client portfolios. I expect this, that is making very narrow decisions, to continue to be the way to go for a long time into the future.</blockquote>
<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_7ZckZ-8naz0/TSvC8WbioXI/AAAAAAAADv8/JkUBzSMXKz0/s1600/diomede.jpg"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 320px; height: 240px;" src="http://1.bp.blogspot.com/_7ZckZ-8naz0/TSvC8WbioXI/AAAAAAAADv8/JkUBzSMXKz0/s320/diomede.jpg" alt="" id="BLOGGER_PHOTO_ID_5560752506988044658" border="0" /></a>Now for something completely unrelated but fascinating (to me anyway). The new season of Alaska State Troopers started on Sunday Night on the Nat Geo channel; no DVD coming for this post.
One of the segments was about the little village of Diomede which is on a tiny island that off of Nome and on the Bering Strait. Apparently 117 people live there, what you see pictured to the left is the town. In the winter it is possible to walk out over the Strait two miles to Russian soil, or maybe just ice.
There are plenty of difficult ways to get on in life but the idea of being a 45 minute plane ride from Nome is difficult to imagine but still fascinating. When the show was filming there the temperature was about 50 below. 
<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/8532070-8417092680996504903?l=randomroger.blogspot.com' alt='' /></div>

David Jackson Asks, I Try To Answer

Sam Eisenstadt, a former chairman of Value Line, Inc. and creator of Value Line stock ranking system thinks that the best way to analyze stocks in turbulent times like these is by predicting the stock market's total return over the next six months using the known data from the beginning of that period.
Eisenstadt wrote in his article for <a href="http://www.marketwatch.com/story/market-could-gain-20-percent-in-2010-eisenstadt-2009-12-23">marketwatch.com</a> that this approach is not perfect, but it is still better than the traditional way of estimating P/E ratio and interest level. 
His approach predicts that S&amp;P 500 will advance 11% in the first half of 2010. For the second half he looked at previous recessions and tried to compare market's behavior then and now. He concluded that after first nine months of the rally from recession lows the market tends to slow down, but it still continues to go up. He expects to see additional 7% to 8% growth in the second half which leads us to the total of almost 20%.
If you think that he might be right and that this approach is the right way to analyze stocks you can look at some ETFs that would benefit from the outcome Eisenstadt expects. SPDR S&amp;P 500 (<a class="ticker" href="/stock/etf#">ETF</a>) (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) is surely one of them. This ETF corresponds to the price and yield performance of the S&amp;P 500 Index. iShares Dow Jones U.S. Index Fund (<a class="ticker" href="/stock/etf#">ETF</a>) (NYSE: <a class="ticker" href="/stock/iyy#NYSE">IYY</a>) will also benefit if market continues upward.

Aberdeen Emerging Markets Telecommunications & Infrastructure Fund

Sam Eisenstadt Sees Market 20% Higher In 2010 ( SPY, XLF)

Many investors see 'broad market' ETFs as a great way to gain low cost exposure to the US stock market. And they are correct, I also think a low fee broad market ETF is a great foundation for most portfolios.
But which ETF is the best of the bunch in this area? And do all these 'broad market' ETFs invest in the same way in the same companies?
Here is a closer look at 3 of the most popular ETFs in this space:
Ishares Dow Jones US Index Fund (NYSE: <a href="/stock/iyy">IYY</a>)- This fund's focus is indeed on the entirety of the US stock market. It does not focus on the S&amp;P 500, Dow Jones, or NASDAQ specifically, but invests in companies within all these indexes and across all sectors. It is a capitalization weighted ETF with close to 1400 holdings.
Over the past 2 years the ETF returned -26.6% (excluding dividends) while the S&amp;P 500 returned -28.2% (excluding dividends). This difference is mainly due to the fact IYY holds non S&amp;P 500 holdings.
The total expense fee is 0.2% per year.
SPDR S&amp;P 500 ETF (NYSE: <a href="/stock/spy">SPY</a>)- This funds' focus is solely to emulate the S&amp;P 500, so it has a slightly more narrow focus than IYY or VTI. Still it invests in companies within all sectors and industries and it is still considered broad market. It has 500 holdings (corresponding with the S&amp;P 500) as it mirrors the weightings of holdings in the index itself. 
Over the past 2 years the ETF returned -28.1% (excluding dividends) while the S&amp;P 500 returned -28.2% (excluding dividends). This represents a miniscule tracking error (in the investors favor), as even with the expense fee the ETF outperformed the index.
The total expense fee is 0.1% per year.
Vanguard Total Stock Market ETF (NYSE: <a href="/stock/vti">VTI</a>)- This fund, like IYY, attempts to emulate the performance of the entire US stock market. The fund owns about 2X as many equities as IYY at 3,385, but the top 10 holdings represent 16% of the total portfolio. 
Over the past 2 years the ETF returned -26.8%, compared with -26.6% from IYY, and -28.2% from the S&amp;P 500 (all excluding dividends).
The total expense fee is 0.09% per year. 
In summary any of these funds are good investments to hold as a low cost proxy for the broad US market. When all else is nearly equal cost is a good tiebreaker, which would point to the Vanguard fund (<a href="/stock/vti">VTI</a>) if you want the broadest exposure at the lowest price. 
However one important point is that all 3 are poor choices to capture any of the movement with mid and especially small cap equities. If an investor does want mid or small cap exposure you would need to purchase another market cap specific ETF, as the above 3 are heavily weighted to large and mega cap.

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