dow
iShares MSCI World Index Fund ETF, $34.01, symbol XWD on Toronto (Units outstanding: 5.8 million; Market cap: $197.3 million; ca.ishares.com), holds large- and mid-cap stocks across 23 developed countries, including Australia, Canada, France, Germany, Hong Kong, Ireland, Japan, Singapore, the U.K. and the U.S. The ETF holds 1,507 stocks covering about 85% of the market in each nation. It does this by holding units of the iShares Core S&P 500 ETF (54.3% of assets), the iShares MSCI EAFE ETF (41.6%) and the iShares MSCI Canada ETF (4.0%). iShares MSCI World Index Fund ETF has an MER of 0.47% and yields 1.6%....
Exchange traded funds (ETFs) are set up to mirror the performance of a stock-market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index.
ETFs trade on stock exchanges, just like stocks....
ETFs trade on stock exchanges, just like stocks....
You may have read about the “scary 1929 market chart” that has been making the rounds on Wall Street. It shows two periods of trading history of the Dow Jones Industrial Average, superimposed one over the other. (You can see the chart in a Mark Hulbert column at www.marketwatch.com) One period covers 1928 and 1929. The Dow had a sharp rise in 1928 and the first three quarters of 1929, followed by the October 1929 market plunge which led into the 1930s depression. The second period on the chart shows the Dow from mid-2012 through today. The two periods are aligned so that the peak in the 1929 market is roughly above the recent peak in today’s market. When you compare the two historical patterns, you can see some vague similarity between the two sets of squiggles. It’s clear that the creator of the chart wants to suggest that history is repeating itself and the Dow is headed for a 1929-1932 style collapse. These “1929-all-over-again” charts have been around for as long as I’ve been in the investment business. The last time I recall one of them gained this much notice was in the first half of 1988. Back then, investors were still rattled by the one-day, 22.5% market plunge that happened on October 19, 1987, sometimes referred to as “Black Monday”....
Now that the market downturn is firmly established, you may wonder if you should sell all or part of their holdings, in hopes of getting back in at lower prices. Before doing that, you should determine how appropriate your portfolio is for you, regardless of the market outlook. Ask yourself how well your portfolio would suit you if the outlook was neutral. Here’s one key factor to consider: how soon do you need to take your money out of the market? After all, there is a large random element in the timing, duration and depth of market downturns. Suppose you plan to take the money out of the market this fall, perhaps to buy a home. In that case, you shouldn’t be in the market at all. As a general rule, you should only invest money in stocks if you can afford to keep the money there for two to five years. Are you investing with borrowed money? This expands your risk....
Commentators are blaming last week’s sharp downturn on the after-effects of the U.S. Federal Reserve Board’s plan to cut back on its QE (Quantitative Easing) program. Under QE, the Federal Reserve has been buying U.S. Treasury bonds every month. To pay for these purchases, the Fed simply writes a cheque—creates new money out of thin air, you might say. (This is standard practice with central banks like the Fed.) This expands credit available to borrowers in the U.S. and world credit markets. It helps maintain recent low levels of interest rates. Now, however, the Federal Reserve plans to reduce that regular QE buying. This may cut into available credit and give interest rates at least a slight nudge upward. Fears about a QE cutback have been particularly hard on entities that are already finding it hard and/or expensive to borrow. This applies especially to emerging markets that face political and economic strife, notably Argentina, Turkey and South Africa....
Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients: “In my last couple of quarterly letters, I talked about my belief that we’re in a secular bull market. This is a long-term stock-market rise that carries the market to successively higher levels over a period of a decade or two, if not longer. Secular bull markets generally start after a period of financial distress, when many investors feel at least somewhat negative toward the stock market. This period of financial distress may have lasted up to a decade, or longer. It’s a time when corporate earnings are weak or irregular, and investors assume they will stay that way indefinitely. Investor sentiment becomes extremely negative, and investors take it for granted that the market may be headed for another big downturn. The secular bull market begins around the time when investors begin to swing back to a more positive view of the stock market....
SPDR DOW JONES INDUSTRIAL AVERAGE ETF $158.76 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.
The fund’s top holdings are Visa, IBM, The Goldman Sachs Group, ExxonMobil, Chevron, 3M, McDonald’s, Johnson & Johnson, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.
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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $23.86 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.55%. It yields 4.1%.
The fund’s top holdings are CIBC, 6.8%; National Bank, 6.4%; Bonterra Energy, 6.4%; TD Bank, 5.9%; Bank of Montreal, 5.7%; Telus, 4.7%; Royal Bank, 4.6%; IGM Financial, 4.5%; Bank of Nova Scotia, 4.3%; and BCE, 4.0%.
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APPLE INC., $560.02, Nasdaq symbol AAPL, moved up this week in response to media reports that the company has signed a deal to supply iPhones to China Mobile, that country’s largest wireless carrier, with over 740 million subscribers. The Chinese government recently authorized China Mobile to offer 4G wireless service. That should spur demand for smartphones that can take advantage of the faster speeds that 4G offers, including the new iPhone 5S and 5C models. Apple already sells iPhones to smaller Chinese carriers, but they use an older technology. Adding China Mobile could boost iPhone sales in China by around 17% in the company’s current fiscal year, which ends September 30, 2014....