A look at the chart for SLV from September 2007 to  August 2008 (11 months) and from November 2010 to October 2011 (11 months) is remarkably similar – almost identical in fact. Therefore, if silver continues to trace out a similar path to what transpired in 2008, what are the possible implications for stocks, bonds, currencies, commodities, and precious metals? Take a look at the following 19 charts for some possible outcomes. Words: 731

So says Chris Ciovacco (www.ciovaccocapital.com)  in an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Ciovacco goes on to say:

You don’t need to know anything about technical analysis to conclude the two charts below of the silver ETF (SLV) look similar in many ways. The first chart is from August 2008 and the second from 2011 (compare points A through H).

How can these charts help us with stocks, commodities, and precious metals? Silver tends to be in greater demand when (a) the economy is expected to grow, and (b) when inflation expectations are high…When silver is weak it is logical to question (a) the expectations for future economic growth, and (b) if investors are concerned about future inflation. If inflation is not a concern, then deflation fears are most likely increasing.

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The charts below show asset class performance from August 29, 2008 through November 21, 2008, allowing us to answer the question, “What happened next in the 2008 deflationary period?”

The key for the charts below: (SPY) S&P 500, (EEM) emerging markets, (FXA) Australian dollar, (UUP) U.S. Dollar Index, (DIA) Dow, (DVY) dividend stocks, (TLT) Treasuries, (SH) short S&P 500, (GDX) gold stocks, (GLD) gold, (SLV) silver, (DBC) commodities, (DBA) agriculture, (EWG) Germany, (PFF) preferred stocks, (XLU) utilities, (XLP) consumer staples, (XLY) consumer descretionary, and (JJC) copper. Symbols and descriptions are shown in the upper-left corner of each chart below.

What happened next in 2008?

If the silver ETF can fill the gap…between 32.54 and 34.51, it increases the odds of bullish outcomes for stocks and commodities. The longer SLV can hold above 32.54 the better for the bulls. If SLV fails to clear 32.54, the odds increase of an August 2008 scenario occurring again, similar to the outcomes shown in the charts above. An intraday move in SLV below 27.41, and more importantly, a weekly close below 27.41, increases the odds the deflationary trio of shorts (SH), the dollar (UUP), and bonds (TLT) will perform well.

Conclusion

As of this writing, we continue to give the bearish/deflationary case the benefit of the doubt, understanding strong and gut-wrenching countertrend rallies are part of any bear market. Our portfolios continue to contain a mix of cash, shorts (SH), bonds (TLT), and the dollar (UUP). The deflationary/bearish case will take a hit if the S&P 500 trades between 1,250 and 1,260 for more than three or four days.

*http://www.safehaven.com/article/22924/silvers-signals-lean-bearish-for-stocks-and-commodities

In response to a recent request to identify the best one investment that provides acceptable growth without incurring unreasonable risk we applied our proprietary algorithms based on our unique ZYX Change Method and came up with a relatively unknown equity that warrants serious consideration for inclusion in your portfolio. Words: 454

So said Nigam Arora  (blog.thearorareport.com)  in an article* posted on Seeking Alpha which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([  ]), abridged (…) and reformatted below  for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. 

Arora went on to say, in part:

Using our proprietary alogoriths we looked at the following:

• Economic data from 23 countries
• Macro trends
• All major currencies
• All major commodities
• Geopolitical considerations
• Technology/Science developments
• All major industries
• 3000 U.S. stocks
• 1000 International stocks and
• Trends in bonds all over the globe

and came up with what we feel is that one such investment, namely, PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV).

The S&P 500 consists of 500 stocks and SPLV consists of those 100 stocks out of the 500 that have realized the lowest volatility over the past 12 months. In this market environment, low volatility roughly equates to lower risk. The ETF automatically rebalances every quarter.

* http://seekingalpha.com/article/236123-how-to-protect-yourself-from-the-crash-of-2011?source=email_the_macro_view

Despite gold’s move up to a new record, gold’s historical volatility is around 18%, compared to over 30% for the S&P 500. If gold and stock prices both embody systemic risk, why should their volatility diverge so much? Words: 482

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below further reformatted and edited [..] excerpts from David Goldman’s (http://http://blog.atimes.net/) original article* for the sake of clarity and brevity to ensure a fast and easy read. Goldman goes on to say:

Who is Buying Stocks?
With the 10-year yield at slightly over 3% and the earnings yield on the S&P 500 at over 6%, it’s understandable why institutional investors who require some yield would buy stocks. Even if the miserable US employment situation persists and the housing market remains in the dumps, America’s stripped-down, cash-rich corporate sector should continue to churn out some profits. Unless another shoe drops in the sovereign crisis or the miserable US economy turns sharply downward, equity prices should chop sideways.

Who is Buying Gold?
Gold is a different matter. Central banks and other investors who do NOT require current yield but need to preserve value have a quandary. The US is financing its deficit on the balance sheet of the global banking system – that’s why the Treasury’s TIC data keep showing huge purchases of Treasuries out of London and the Caribbean – as well as the US banking system. Because high unemployment and collapsed home prices foster deflation, the continued debasement of the US currency through balance-sheet leverage makes it unattractive as a reserve asset.

So what alternatives are available?
a) The euro is in danger;
b) Japan’s government is warning that its national debt at 227% of GDP threatens an eventual sovereign crisis for the yen;
c) the Canadian loonies and Aussie dollars are tiny markets;
d) [gold.]

[Yes, gold, and , as such,] the central banks appear to be accumulating gold, slowly and steadily, buying on declines, and nudging the price up as gradually as they can in order to reduce their average cost.

That might be why we observe so little volatility in the gold price. The prospective buyers, namely the central banks, are so much larger than the gold market that they avoid actions which might cause price spikes.

*http://seekingalpha.com/article/210840-who-is-buying-gold-and-why-is-gold-volatility-so-low?source=article_sb_popular (David P. Goldman was global head of debt research for Banc of America Securities and earlier global head of credit strategy at Credit Suisse. He owns gold mining stocks, GLD, as well as some longer-dated gold futures. It’s a relatively small part of my portfolio, but insurance against serious trouble.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given.
- Sign up to receive every article posted via Twitter, Facebook, RSS feed or our Weekly Newsletter.

While ETFs offer numerous advantages over traditional actively-managed mutual funds and individual stocks – near total transparency, intraday trading, and a (generally) more straightforward tax situation – they aren’t foolproof, and there are plenty of opportunities to make mistakes while investing in ETFs. Words: 1991

In further edited excerpts from the original article* Michael Johnston (www.etfdb.com) goes on to profile ten common but easily avoidable mistakes made by ETF investors as follows:

Mistake #1: Blindly Using Market Orders
The liquidity of ETFs ultimately depends on the liquidity of the underlying securities so an investor looking to establish a big position in a thinly-traded ETF that invests in blue chip stocks would be able to do so at or very near to NAV. That doesn’t mean, however, that limit orders are unnecessary when trading ETFs, regardless of the apparent liquidity of a fund. Putting in a market order on a thinly-traded ETF may result in the order being executed at a big premium or discount before the Authorized Participant (the primary arbitrage mechanism in place to keep market prices near the NAV) is able to step in and create additional shares.

Moreover, the readily available bid/ask numbers won’t always reflect the true depth of the market for an ETF, since some market participants are hesitant to show their entire hand, so using a limit order may allow investors to flush out additional buyers or sellers of a particular security. Regardless of the trading volume of an ETF, the use of market orders creates the potential to get burned and put yourself in an early hole.

Mistake #2: Ignoring Expense Ratios
ETFs have become so popular in part because of the competitive expense ratios charged relative to traditional actively-managed mutual funds. Nevertheless, the range of expense ratios charged by exchange-traded products is wide enough to drive a truck through, ranging from 0.07% to well above 1.0%.

Generally speaking, the more complex or granular the exposure, the higher the expense ratio so comparing the fees charged by an S&P 500 ETF to those of an emerging markets ETF isn’t exactly fair. ETF selections shouldn’t be made on the basis of expenses alone, but fees should definitely be part of the equation.

For more active traders with relatively short holding periods, the impact of a few basis points may be minimal but for buy-and-holders, the “tyranny of compounded costs” can eat into bottom lines. While expense ratios for similar ETFs will generally be comparable, there are some surprisingly large gaps between nearly identical products.

For investors looking to minimize expenses, the switch from mutual funds to ETFs is a good start. For those who want to really cut costs, comparing expense ratios is the next step, and can create some surprisingly large savings.

Mistake #3: Liquidity Screens
When narrowing the universe of nearly 1,000 ETFs down to find a particular fund, one of the first screens run by a lot of advisors and individual investors filters by liquidity. There are a lot of different rules of thumb thrown around for determining “sufficient” liquidity; some require average daily trading volume of 25,000 shares or $2 million in notional volume. The potential to get burned by running out a market order representing a significant portion of (or even a multiple of) daily volume is very real. Be that as it may, eliminating from consideration any ETF that doesn’t pass a “liquidity screen” can cut out some quality products that may be well-suited for accomplishing a certain goal.

Again, investors must be careful about trading low-volume ETFs, but there are several cheap and easy ways to establish or liquidate a position without paying a huge spread. The use of limit orders goes a long way to narrow spreads for smaller trades.

Liquidity screens seem like a good way to avoid the potential pitfalls of getting stuck in an illiquid asset, but these dangers are often overblown. Cutting down the universe of potential ETFs based on assets or trading volume is potentially a much bigger mistake.

Mistake #4: Judging A Book By Its Cover
Generally, the name of an ETF gives investors a pretty good idea of the exposure offered. The S&P 500 SPDR (SPY) tracks exactly what you’d expect but making assumptions about a risk/return profile based on an ETF’s name tag can – surprise, surprise – have some disastrous consequences.

It’s frightening to imagine, but there is no shortage of horror stories of advisors who bought USO for client portfolios, for example, thinking the underlying assets of USO are barrels of crude oil. It should go without saying that you can’t judge an ETF by its name, anecdotal evidence suggests that many investors and advisors do.

Understanding the underlying holdings of an ETF is particularly important in the commodity space. Be sure to take a quick look at the underlying holdings before purchasing an ETF. The assets that make up an ETF, and will determine its returns, won’t always be what you expect.

Mistake #5: Cap-Weighted Blinders
Investors are creatures of habit, and they tend to stick with what they know. The majority of equity ETFs available to U.S. investors are based on market cap-weighted indexes that determine the weighting given to an individual stock based on its market value. Familiarity with indexes like the S&P 500, Russell 1000, and S&P SmallCap 600 makes it easy to gravitate towards ETFs tracking these benchmarks and avoid unknowns like the Rydex S&P Equal Weight ETF (RSP).

There’s a lot of evidence, however, suggesting that cap-weighting methodologies may suffer from certain flaws, not the least of which is their tendency to overweight overvalued components. Once a sector or size/style combination is selected, a lot of investors will default to a cap-weighted ETF option but there are a number of interesting alternatives to cap-weighted exposure available through ETFs, including everything from equal weighting to allocation strategies based on top line revenue.

Know the nuances of the underlying index, and don’t be afraid to take the road less traveled by pursuing some of the alternatives to cap-weighted ETFs.

Mistake #6: Misjudging “International” ETFs
ETFs have been praised for bringing access to every corner of the world within the reach of U.S. investors. In some sense, they get far too much credit in this regard. While it is true that there are now ETFs targeting nearly every major market – both developed and emerging – the majority of these funds consist primarily of mega cap equities that might not necessarily provide pure exposure to the local economy.

Because many of the world’s largest companies maintain a global customer base, they generally maintain only moderate exposure to the economy where they are traded. The iShares MSCI Spain Index Fund (EWP) is a good example of this phenomenon. Many of the major holdings – including the top two that make up 40% of assets – generate significant portions of their earnings from Brazil. As such, despite massive economic issues in Spain, EWP actually held up pretty well last year because of surging demand in Brazil.

Be aware of the inherent limitations of some international ETFs. Investors looking for pure play exposure to a particular market may be better served through a small cap ETF.

Mistake #7: Using ETFs In Lieu Of Stocks
ETFs were first marketed as an improvement to traditional mutual funds, but investors have also embraced them as an alternative to stocks. Once upon a time, investors bullish on the financial sector may have purchased Citi stock. Now they’re more likely to buy XLF, recognizing that the wrong call in the right sector is still a bad pick.

Sometimes, though, this preference for ETFs can get taken too far. If you’re bullish on the outlook for Apple after the launch of the iPad, the best way to make that play isn’t through QQQQ or another tech ETF, but through Apple (AAPL) stock. ETFs will generally reduce risk by providing exposure to a diversified basket of securities, but risk is a two-way street. If you’re looking for a bigger up-side, individual stocks may be the way to go.

Stocks may seem strangely old-fashioned as investment vehicles. There’s nothing wrong with moving them to the bottom shelf of your investment toolkit, but don’t throw them out altogether.

Mistake #8: False Sense Of Diversification
ETFs have become so popular because, like mutual funds, they offer immediate exposure to a diversified basket of securities. Investors who understand security-specific risk also grasp why an ETF made up of 1,000 individual stocks may offer reduced risk relative to picking a handful of stocks but ETF investors, especially those with a preference for cap-weighted indexes, can easily get a false sense of diversification.

Many ETFs have hundreds of holdings, but the use of a market cap weighting methodology results in heavy concentrations in a few big names. The Energy Select Sector SPDR (XLE) is a good example. This ETF offers exposure to the energy sector through 42 different stocks but the largest, Exxon Mobil (XOM), makes up 17% of assets and the top ten account for more than 60% of holdings. It’s the same thing – albeit to a lesser extent – with broad-based ETFs like SPY.

When looking at a potential ETF investment, there are a few good indications of the level of diversification. Number of holdings is a good starting point, but it’s helpful to also consider the weighting methodology and percentage of assets in the top ten holdings. Equal-weighted ETFs will avoid big concentrations in a few names, a problem that plagues some cap-weighted products.

Mistake #9: Ignoring New Products
A lot of advisors have their “go to” list of ETFs that they use when constructing portfolios for clients. There’s nothing wrong with going through the due diligence process to identify a preferred list – that’s one of the signs of a good financial advisor – but letting your list of “go to” funds get stale can mean you’re missing out on some you should be considering.

The ETF industry is still very young and is growing very quickly. Last year there were more than 100 new product launches, and we’re already above 60 so far in 2010. Not all of these new products are going to be useful for everyone – products have, in general, become more targeted and esoteric in recent years -but there are some interesting ideas coming out that offer a way to gain exposure to a previously inaccessible asset class or a unique twist on popular products.

If you’re not aware of all the ETFs that have been brought to market in recent months, it might be worth taking a look.

Mistake #10: Skipping Out On ETF Homework
This last one sounds simple and obvious, but it’s worth repeating yet again. ETFs are very simple in many ways, but somewhat complex in others. From understanding the unique tax treatment of GLD to how contango affects UNG to the differences between EEM and VWO, there are a lot of nuances that can have a significant impact on total returns.

As we’ve seen by the total failure of some to understand how leveraged ETFs actually work, there are a lot of lazy investors out there who aren’t taking advantage of an abundance of educational resources on leveraged ETFs. There are a lot of great resources out there.

If you’re willing to do a little research and take a little time, you’ll be far less likely to make potentially costly investment mistakes.

*http://seekingalpha.com/article/200390-10-common-mistakes-made-by-etf-investors?source=email (ETF Database provides news, analysis and offers a proprietary ETF Screener that allows investors to filter the universe of 900+ ETFs to find the right fund.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given.
- Sign up to receive every article posted via Twitter, Facebook, RSS feed or our Weekly Newsletter.
- Submit a comment. Share your views on the subject with all our readers.
- Buy the book below from Amazon. It’s pertinent to this article and inexpensive too.

Many ETFs now present unique approaches to stock and bond investing by tweaking popular and widely-followed benchmarks. The very first ETF, the S&P 500 SPDR (SPY), remains by far the largest U.S.-listed ETF, reflecting investor familiarity with the underlying benchmark, but there are now approximately 30 other issuers now competing for a slice of this still-growing pie. Words: 789

In further edited excerpts from the original article* Michael Johnston (www.etfdb.com) profiles nine such ETFs and ETNs that put a unique twist on S&P investing:

1. RevenueShares Large Cap ETF (RWL):
- comprised of the same securities as the S&P 500, but ranks each component by top line revenue, not market capitalization, when determining the weighting given to each. As such, RWL will generally overweight stocks with low price-to-revenue multiples and underweight stocks with high price-to-revenue multiples.
- management expense ratio (MER) of 0.49%.

2. WisdomTree Earnings 500 Fund (EPS):
- tracks the WisdomTree Earnings 500 Index which measures the 500 largest market capitalization companies that have generated positive earnings in the past four fiscal quarters. The companies are weighted based upon “core earnings,” a calculation of earnings that includes expenses, income, and activities that reflect the actual profitability of a company’s operations.
- MER of 0.28%.

3. First Trust Large Cap Core AlphaDEX (FEX):
- tracks the “enhanced” Defined Large Cap Core Index. This benchmark is constructed by ranking S&P 500 stocks on a series of growth and value factors, such as price appreciation, sales-to-price, and cash flow-to-price. Stocks receiving the highest weighting are included in the index, with bigger weightings given to the top-ranked equities.
- MER of 0.70%

4. PowerShares Dynamic Large Cap Portfolio (PJF):
- tracks the performance of another enhanced benchmark, the Dynamic Large Cap Intellidex Index which includes stocks, in a certain market segment, that have the greatest potential for financial growth. The benchmark analyzes potential component stocks by calculating unique financial characteristics from four broad financial perspectives: fundamental, valuation, timeliness and risk.
- MER of 0.60%.

5. ALPS Equal Sector Weight ETF (EQL):
- offers exposure to the domestic large cap equity market but, unlike SPY, it gives equal exposure to each sector of the economy, investing in equal proportions in all nine of the Select Sector SPDRs. This gives the fund the advantages of diversification, the opportunity to participate in a market rally, and potentially lower exposure to overvalued corners of the market.
- MER of 0.55%

6. Rydex S&P Equal Weight ETF (RSP):
- follows the performance of the S&P Equal Weight Index, a benchmark that includes all constituents of the S&P 500. As its name suggests, RSP gives an equal weighting to each component, meaning that upon rebalancing all of the 500 stocks in the S&P 500 are given an equal weight of 0.2%. For investors who dislike the tendency of cap weighted benchmarks to overweight overvalued stocks, RSP offers a price blind alternative for large cap exposure.
- MER of 0.40%

7. UBS E-TRACS S&P 500 Gold Hedged ETN (SPGH):
- measures the S&P 500 Gold Hedged Index, a benchmark that simulates the combined returns of investing equal dollar amounts in the S&P 500 Total Return Index and long positions in near-term exchange-traded COMEX gold futures contracts. As such, SPGH provides investors with a hedge against declines in the value of the U.S. dollar relative to gold bullion.
- MER of 0.85%

8. ProShares Credit Suisse 130/30 (CSM):
- tracks the Credit Suisse 130/30 Large-Cap Index, using a unique strategy by shorting the stocks predicted to perform poorly, and doubling down on those that are expected to outperform. For each stock in the universe, expected alpha scores are calculated to determine the position taken. A portfolio optimization process is used to ensure that the long/short portfolio maintains similar risk characteristics to the long-only large cap universe. The ETF’s name refers to the fact that the portfolio maintains 30% short exposure and 130% long exposure, resulting in a net 100% long position.
- MER of 0.95%

9. WisdomTree LargeCap Dividend Fund (DLN):
- follows the WisdomTree LargeCap Dividend Index, a fundamentally-weighted benchmark that measures the performance of the large-capitalization segment of the U.S. dividend-paying market. Allocations given to individual stocks are determined based on cash dividends paid. This methodology may create a bias towards value stocks, and concentrates exposure among the biggest dividend-paying firms..
- MER of 0.28%

*http://seekingalpha.com/article/200089-s-p-500-etfs-9-alternatives-to-spy?source=email (ETF Database provides news, analysis and offers a proprietary ETF Screener that allows investors to filter the universe of 900+ ETFs to find the right fund.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given.
- Sign up to receive every article posted via Twitter, Facebook, RSS feed or our Weekly Newsletter.
- Submit a comment. Share your views on the subject with all our readers.
- Buy the book below from Amazon. It’s pertinent to this article and inexpensive too.

Stock market can go down as well as up but I have some good news on how you can actually protect yourself from losses while making money if the markets plummet! Words: 701

In further edited excerpts from the original article* Ron Rowland (www.moneyandmarkets.com) goes on to say:

How to “Short” the Market
There are different ways to profit from declines in individual stocks, particular sectors or the major indexes, namely:

1. Short-Selling
In a short sale, you borrow stock you don’t own and sell it. If all goes well, you’ll repay the stock loan when you can buy the shares later at a lower price. Practically speaking, this isn’t as easy as it sounds. The stock has to be available for you to borrow, and you must have a margin account. IRAs and other retirement plans aren’t allowed to use margin, so you can’t short stocks within these accounts.

2. Put Options
Put options give you the right to sell a stock or an index at a specified “strike price.” Options can be very profitable, but they’re often volatile and illiquid. Moreover, they have time value that decays the longer you hold them. Options are best for when you have a strong indication of a short-term direction. Otherwise, without professional guidance, they’re a good way to lose your shirt.

3. Inverse ETFs
With inverse ETFs you can get around many of the problems of short selling and options trading while potentially “hedging” your long positions. In other words, inverse ETFs can help offset any losses in your regular stock and ETF positions.

What’s an Inverse ETF?
It’s just an ETF in reverse. In an earlier column, I told you about SPY: the SPDR Trust that tracks the S&P 500 Index where, if you’re bullish on stocks, you can just buy SPY and your account will go up in tandem with the index. Well, the ProShares Short S&P 500 can do the same thing if you’re bearish. The ticker symbol is SH, and it tracks SPY in reverse. If the S&P 500 falls 1 percent tomorrow, SH is designed to go up by 1 percent. Nice!

You can do the same thing with other major benchmarks and sectors. Feeling bearish on the Dow? Buy the ProShares Short Dow 30 (DOG). If you think small caps are ready to fall, jump into the ProShares Short Russell 2000 (RWM).

Inverse ETF Advantages
1. they are much easier to trade. You don’t have to figure out what strike price is best or wonder whether stock is available to borrow. All you need to get started is a standard brokerage account. Plus you can trade inverse ETFs inside your IRA.
2. they have limited loss potential. In a short sale, it’s possible to lose more than your initial investment. Inverse ETFs are designed to prevent this from happening.
3. they have no time value with inverse ETFs. If you have the patience, you can wait months or years for your bet to pay off. Your ETF position won’t expire like options do.
4. they can help you protect your stock investments when the markets go down.

Inverse ETF Disadvantages
1. they work both ways. If you buy an inverse ETF and the market you’re tracking goes up, your inverse ETF will drop accordingly. So if your timing is even slightly off, you can lose money just as fast as bullish investors are making it.
2. they don’t always track their benchmarks precisely, especially over long time periods so make sure you have the right expectations.
3. inverse ETFs that use leverage have additional risk factors you need to understand before purchasing.

Conclusion
With inverse ETFs, you don’t have to stay on the sidelines as your stock investments fall in value when the bear starts to growl.

*http://www.moneyandmarkets.com/inverse-etfs-let-you-profit-in-a-falling-market-3-34322 (Money and Markets is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given.
- Sign up to receive every article posted via Twitter, Facebook, RSS feed or our Weekly Newsletter.
- Submit a comment. Share your views on the subject with all our readers.
- Buy the book below from Amazon. It’s pertinent to this article and inexpensive too.

I want you to get familiar with six of the most popular exchange-traded funds ( ETFs) that track key stock market benchmarks. You need to know their ticker symbols by heart … they’re the bread and butter in your ETF shopping cart. Words: 1015

In further edited excerpts from his original article* Ron Rowland (www.moneyandmarkets.com) goes on to say:

I’m NOT saying you should buy any of my bread and butter ETFs right now but if you want to be a successful investor, it’s a big help to know what’s available. If you do, you’ll be able to react more quickly when the time is right.

ETF #1: SPY
SPDR Trust is the granddaddy of all ETFs. Introduced in 1993, the SPY (that’s the ticker symbol) was the very first U.S.-listed ETF and tracks the S&P 500. This index of 500 large-capitalization stocks is a standard benchmark for the U.S. equity market.

When you buy shares of SPY, you get an instant portfolio of 500 domestic stocks covering every industry sector. Financials, technology, health care, energy … they’re all in there!

ETF #2: QQQQ
PowerShares QQQ used to be called the “Nasdaq 100 Tracking Stock” until the Nasdaq honchos decided to spin off their ETF business to PowerShares.

This can be confusing, so read closely: The name of the ETF is PowerShares QQQ, with three Q’s. The ticker symbol is QQQQ. That’s four Q’s. Clear enough? Obviously someone wants to keep us all on our toes. In any case, the QQQQ is based on the Nasdaq 100 Index. Note that this is not the same as the Nasdaq Composite Index that you typically see quoted in the news media. The Nasdaq 100 is a sub-set of the Composite, consisting of the 100 largest non-financial stocks in the index and is heavily tilted toward technology stocks. In fact, many traders look at it as nothing more than a large-cap tech benchmark.

ETF #3: DIA
The DIAMONDS Trust follows the Dow Jones Industrial Average, which is probably the best-known stock market proxy in the world. Unfortunately, the Dow is also mostly useless as a benchmark, at least in my opinion, and so are products like the DIA that attempt to follow the Dow. It has three big problems …

1. like the Dow, it’s very narrow with only thirty stocks. That simply isn’t enough to reliably represent the U.S. industrial economy, as the Dow purports to do.

2. the DIA excludes some key sectors like transportation and utilities. Dow Jones publishes separate indexes for those groups.

3. the Dow and the DIA are weighted by the share price of the component stocks rather than the market value. This was advantageous back in the days when you had to calculate things on the back of an envelope, but now it’s just outmoded.

Despite these issues, there are times when the DIA can come in handy. For instance, if you’re looking for an actively-traded proxy of mega-cap stocks, the DIA might be a good pick.

ETF #4: IWM
The IWM is the iShares Russell 2000 Index Fund. What’s the Russell 2000? You already know the answer if you’re a fan of small-cap stocks. Each year, Frank Russell Associates ranks all the stocks in the U.S. by their market value. Chop off the top 1,000 biggest stocks and consider the next 2,000. That’s the Russell 2000.

These are relatively small companies — but that’s the whole point! When the U.S. economy is booming, small-cap stocks usually lead the way higher and the IWM lets you buy hundreds of tiny stocks in one simple trade. The IWM should be a staple item for almost every investor. It’s easy to jump in and out as the economy fluctuates, and you get plenty of diversification. There’s no better way to play the domestic, small-cap stock market.

ETF #5: EFA
The iShares MSCI EAFE Index Fund is international because it’s based on the Europe, Australasia and Far East Index published by Morgan Stanley Capital International. The EAFE Index is designed to represent the entire developed world, excluding the U.S. and Canada. It includes Western Europe, Australia, Japan — the countries with modern stock markets and banking systems (in contrast to the emerging markets, which we’ll get to in a minute).

The list of countries in the index can change. Recently MSCI promoted South Korea and Israel to developed-market status, and stocks from those countries were added to the index and to the EFA.

The EFA is useful as a way to round-out a portfolio that already includes enough U.S. stocks. Say you own the SPY and the IWM, but you want to have exposure to the rest of the world. Add the EFA to the mix and you’re almost there. I say almost because there’s one final piece …

ETF #6: EEM
The EEM is the standard ETF if you want to trade emerging markets. These are places that only recently established economic ties with the rest of the world and are growing quickly. Markets like Brazil, Russia, India and China are good examples. MSCI produces an Emerging Markets Index as a benchmark for these markets, and the EEM lets you trade that index. This is a really handy fund because it’s often difficult and expensive to buy individual stocks in emerging markets.

The EEM is a quick and easy way to allocate some of your portfolio to emerging markets. Keep it on the tip of your tongue for the next time you’re ready to make such a move.

There you have them: SPY, QQQQ, DIA, IWM, EFA and EEM. These are the six ETFs every investor ought to know. Get familiar with them. Add them to your watch list, and be aware of how they could fit into your portfolio.

*http://www.moneyandmarkets.com/six-etfs-every-investor-should-know-2-35046 (Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil.)

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