Market Overview

ETFs For The Allen Stanford Verdict (FXP, XLY, EWL)


He's no Bernie Madoff in terms of the size of the Ponzi scheme, but R. Allen Stanford is every bit the unscrupulous huckster and jurors seemed to agree. A panel of eight men and four women found the Texas "business" man guilty of 13 of 14 counts brought against him for duping investors out of $7 billion over two decades.

Like Madoff, Stanford was once one of the wealthiest men in America and like Madoff, Stanford had a taste for the finer things in life, yachts, jets, etc. And like Madoff, Stanford, 61, is facing some serious time in the slammer. Up to 20 years and perhaps longer, according to multiple media outlets.

We vote for longer. Let's have some fun at this sleazeball's expense and look at some ETFs that are loosely related to R. Allen Stanford, financial fraudster.

iShares MSCI Switzerland Index Fund (NYSE: EWL) The iShares MSCI Switzerland Index Fund features a 19% allocation to financial services firms and it's reasonable to expect Stanford hid some of his ill-gotten gains with a Swiss bank or two. With Stanford's conviction, a shorter, civil trial will be held with the same jury on prosecutors' efforts to seize funds from more than 30 bank accounts held by the financier or his companies around the world, including in Switzerland, the United Kingdom and Canada, according to the Associated Press.

That's good for former Stanford investors because Swiss banks aren't what they used to be. As in they're suddenly quite willing to help U.S. authorities out. Here in the real world, EWL is showing some technical weakness and probably isn't a buy here.

Consumer Discretionary Select Sector SPDR (NYSE: XLY) As we mentioned, Stanford had a taste for the finer things and probably lavished Coach (NYSE: COH) purses and Tiffany (NYSE: TIF) bling upon his wife and daughters. Ah, the spoils of fraud. In the near-term, XLY's prognosis is marginally better than Stanford's, but the ETF is vulnerable to a pullback here. It's a buy around $41.50 with eyes toward the $45-$46 area by year-end.

Guggenheim Airline ETF (NYSE: FAA) Did you know that Stanford had a jet? Actually it was a fleet of jets. Private jets, quite the way to travel, are not found among the components of the Guggenheim Airline ETF, but we previously warned this ETF was facing unfriendly skies.

With Brent crude looking it wants to stay awhile above $115-$120 per barrel, FAA's near-term fortunes are about as bleak as Stanford's. Don't give either of them your money.

ProShares UltraShort FTSE China 25 (NYSE: FXP) China sure takes its fair share of criticism and some have even hurled the Ponzi scheme accusation at the world's second-largest economy. Time will tell if that's true or not, but for those brave enough to short China, that bold move could be handsomely rewarded with FXP if the Chinese economy falters and more global investors start asking questions regarding exactly how things work in the world's largest country.


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