ETF for troubled times Friday, March 6, 2009
Posted by ei-forum in ETFs.trackback
We still feel uncomfortable about highlighting specif stocks seeing market conditions and possible unintended ramifications of problems with global financial/insurance conglomerates. At the moment, a lot of companies are very vulnerable to events completely out of their hands and more importantly, that they really cannot foresee.
Having said this, valuations are quite interesting and instead of focusing on how low things can go or when we are going to seen a massive bear-market rally, we prefer to look at an interesting ETF that could be added to your portfolio, thereby minimizing the risk of taking a position in a specific company.
One of the themes we feel is worth considering is inflation. Even though not many commentators are focusing on this, sooner or later we will have to deal with it and investors need to be aware of this.
In order to tackle this, a classical ‘boring’ way to be defensive is to think of utilities and an interesting option is the Vanguard Utilities ETF (VPU) which is trading close to all time lows and offers an attractive dividend yield.
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Your comment on inflation is doubly important. In fact, that probably is the only way to get Assets back to the needed valuation. In spite of its down sides, I don’t see any other solution, neither in the short term nor in the long run!
“One of the themes we feel is worth considering is inflation. Even though not many commentators are focusing on this, sooner or later we will have to deal with it and investors need to be aware of this.”
Agreed!