How Markets around the World are Reacting to the Bull Market

Under a Blood-Red Friday Sky

Markets began the week with a sense of optimism about the potential for strong bank earnings and a continuation of upside in emerging markets such as China. Though bank earnings were on the whole solid, and while there were some bright spots for the bulls in stocks such as Netflix (NFLX), the real news this week was the huge sell-off on Friday.

With about two hours left in the trading session on Friday, the Dow was down 330 points, or about 1.8%, as sellers stepped in big time on a host of concerns hitting the newswires.

A poor quarterly report from Dow component American Express (AXP), along with news overnight that Chinese regulators were cracking down on the use of shadow financing to buy equities, and that they have expanded the supply of shares available for short sellers, combined to send stocks in the U.S., China and other markets plunging.

Then there was news about renewed fears that Greece would default on its loan bailout from the Eurogroup, which could result in a Greek exit from the euro zone and a decided sell-off in stocks in the region.

The action in domestic markets, Chinese markets and European markets reminds us all that when you’re in a bull market, often traders are on edge, ready to press the “sell” button on any potentially unsettling news.

Certainly, the renewed fear of a Greek default and/or Greek exit from the European Union (EU) is a huge worry. Though most analysts think there will be a deal before the early May deadlines, the odds right now of a Greek default are much higher than they were last week.

As for China, most everyone thinks that Chinese policymakers would step up with more stimulus if China’s gross domestic product (GDP) growth rate were to fall below 7%. Yet when talk of restrictions on trading and the permission of short selling make news, it’s also understandable that we’d see selling in that country’s markets.

As for Europe, the Greek issues no doubt are weighing on stocks in the region. However, European equities have done very well this year, and they are way overdue for a profit-taking pullback at current levels.

Friday’s decline in the iShares Europe 350 (IEV) might be the start of that correction, so if you have equity exposure to this red-hot region, it might be a good time to make sure you have your stop-loss orders in place.

Finally, while the market is currently under a blood-red Friday sky, that doesn’t mean stocks are destined to begin a correction. Certainly that could happen. If it did, that correction should be viewed as a welcome reset to the gains we’ve had in many segments.

Only a constant, vigilant monitoring of the charts, the news and the underlying fundamentals of this market will tell us if this is a head fake, or a correction. So, now more than ever, make sure you read the Weekly ETF Report.

And if you’re not already a subscriber, then please check out my Successful ETF Investing newsletter for all the latest need-to-know advice that can protect and grow your money no matter what the market throws our way.

ETF Talk: Seeking Profits in Calmer Waters

Exchange-traded funds (ETFs) are a great way to gain exposure to international assets and companies without having to pay big fees or jump through hoops for the privilege of owning foreign securities. This is likely part of the reason international ETFs are popular and can achieve the size of the Vanguard FTSE Developed Markets ETF (VEA), with $48.9 billion under management after a recent influx of funds from investors.

Americans sometimes want to invest outside of the United States to find enhanced returns without taking on the risk inherent in delving into emerging markets. VEA is more focused on markets likely to be familiar to American investors, including Europe, Japan, Australia, South Korea and others, and it targets large-cap stocks.

In keeping with the pattern of funds flowing overseas so far this year, VEA is up 9.58% already in 2015. This performance is a significant improvement from its subpar results in 2014, when U.S. markets were favored by investors. VEA features a 2.88% dividend yield and has an expense ratio of just 0.09%.

The most prominent sectors among this fund’s holdings are financial services, 21.15%; consumer cyclical, 12.47; and industrials, 12.40%. Its highest national allocations are to Japan, 22.6%; the United Kingdom, 18.8%; and Germany and France, 8.7% each. The top 10 holdings in this fund combine to account for 11.24% of its assets.

VEA’s largest individual company holdings include Nestle SA (NSRGF), 1.69%; Novartis AG (NVSEF), 1.62%; Roche Holding AG (RHHVF), 1.36%; Toyota Motor Corp. (TOYOF), 1.3%; and HSBC Holdings (HBCYF.L), 1.15%.

Anyone seeking to invest overseas likely will find an ETF to be the most convenient way to do so. Vanguard FTSE Developed Markets ETF (VEA) is an easy and cheap way to fill that space in your portfolio.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Introducing the ETFU.com Database

The recent rollout of the ETF University website, or ETFU.com, has been a big success. If you have visited our newest education-oriented site devoted to exchange-traded funds, then I just want to say — thanks!

If you haven’t yet had a chance to visit ETFU.com, then now you have even more reason to give a look, as we have just upgraded the content at the site to feature our new, comprehensive ETFU.com Database.

This database is designed to give you all the information you need — and then some — about any ETF. What kind of information am I talking about? Well, to start with, you get all of the key vital statistics on any fund you select. These statistics include a basic description of the fund and which index it’s based on, along with the fund’s primary objective.

Then you get basic vitals such as current price, percentage change from the prior day’s close, trading volume, assets under management, expense ratio and the average daily trading volume during the past 100 days. You also get historical performance data (in percentage terms) for one week, one month, 100 days, year to date and one year.

Yet perhaps the best features, and certainly my personal favorites, when it comes to the content on the new ETFU.com Database are the Portfolio Stats, Technicals and, of course, the large price chart. In just a glance at these sections, I can get near-instant data on key metrics such as yield, P/E ratio, percentage the current price is from its 50- and 200-day moving averages and where the fund stands in relation to its 52-week high.

I know that from now on, when I research ETFs, the first place I’m going to start is the ETFU.com Database — and I invite you to do the same.

71% of Annuity Owners Are Doing It Wrong!

Every year, I urge readers of this e-letter, my newsletter Successful ETF Investing and also listeners of my podcast to review their annuities. An annuity can be a valuable income tool, but it also can be an underperforming asset in your portfolio.

If you currently own an annuity, I urge you to consider it carefully. It could mean hundreds of thousands of dollars to you over the next couple of years.

According to industry sources, 71% of annuity holders are not using that investment’s single-biggest retirement benefit. And I’m not talking about tax deferral… but something much more powerful.

It is the ability to use your annuity to create a never-ending income stream… one that funds your retirement and lasts for as long as you live.

The funny thing is that this benefit is no big secret. Every annuity contract has this potential to pay out income.

So why haven’t 71% of annuity owners taken advantage of this opportunity? Here are the most common reasons:

• They didn’t need an income stream at the time and simply forgot about the benefit…
• They bought the annuity 20-30 years ago and can’t get in touch with the seller…
• They’ve heard so much misinformation about annuities, they’re afraid to make a move…
• They simply don’t know about the income benefits available…

Even so, it’s still astounding to me that 71% of annuity holders aren’t taking advantage of the chance to receive hundreds of thousands — if not millions — of dollars in income over the course of their lives.

I’d like to show you how to do exactly that: Transform your annuity into a never-ending income stream…

And I’d like to do it FREE OF CHARGE!

At Fabian Wealth Strategies, we currently are offering a FREE annuity check-up designed to make sure you are getting the most out of your annuity. During this process, we will analyze your annuity and compare it with dozens of other annuities available in the market to make sure your investment is still aligned with your retirement goals and objectives.

To take advantage of this special offer, simply call us at Fabian Wealth Strategies toll free at (800) 391.1118 or CLICK HERE. When you call, we’ll schedule you for a FREE annuity consultation as soon as possible.

Don’t wait a minute longer. Contact us today so that we can help make sure you aren’t one of the 71% of annuity holders missing out on big money.

NOTE: Fabian Wealth Strategies is a Securities and Exchange Commission-registered investment adviser, and is not affiliated with Eagle Financial Publications.

Blood, Sweat & Markets

“What goes up, must come down/
Spinning wheel got to go round…

— Blood, Sweat & Tears, “Spinning Wheel”

This week’s price action in stocks reminds me of the classic Blood, Sweat & Tears song lyrics. Indeed, the spinning wheel has got to go around.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about the continuing rise of the Chinese market. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.

All the best,

Doug Fabian

Upcoming Appearance

I invite you to join me at the MoneyShow Las Vegas, May 12-14, 2015. With stock picking taking on renewed importance as the market shows signs of volatility, this event offers an opportunity to hear from a number of experts, including my Eagle Financial Publications colleagues Mark Skousen, Chris Versace and Bryan Perry.

Be a guest of Eagle Financial Publications and register for FREE by using priority code 038656 and calling 800-970-4355 (toll free in the United States and Canada) or signing up online.