I actually can’t believe I am thinking of investing in an ETF.
Except for when I first started out investing, I have never used any type of asset allocation or diversification strategy with my active trading account. Now that I look back, that time frame was really not good for the market over-all and I was extremely disappointed with my mutual funds.
In hindsight, I suppose this experience helped lead me away from investing in diversified managed funds and towards individual investments. But at that time it was not as easy for an individual investor to trade on his or her own.
Once online investment brokers became readily available, I began to think that I could do better as an individual investor. I started out by not investing any real money but rather kept track of stocks I thought were good and followed them to see if I was right.
As time progressed I saw I could at least match or beat the market AND my expertly managed mutual funds. So I took the online individual investor plunge and have never looked back. Over the years I have developed a definite investment style and strategy which is basically looking for well run and managed companies which are “setting up” for a breakout or are undervalued.
I have also noticed that often these companies which reverse or breakout tend to be in sectors which are also experiencing an uptrend. Which usually means this is where the investment money is going.
So when it comes to ETFs, I would ideally want to look for an ETF which follows the money or market trend. It would rebalance based on market conditions.
Unfortunately, finding one that fits this strategy is proving more difficult than I thought. So here is my first call out to the online blogging world.
Does anybody know of any ETF’s which follow this investment strategy?
I would love to hear everyone’s input and suggestions.
Meanwhile, I have gone searching for some ETF’s that just might fit my individual stock investing style.
With the market so top heavy and extended due to the Trump Rally, it was difficult finding ETF’s that I thought still had upside potential. But, I did find a few.
Here is what I have come up with: (in no particular order)
- Home Construction ETF (ITB)
- Home Builders ETF (XHB)
- Infrastructure ETF (IGF)
- Utilities (XLU)
- BioTech ETF (IBB)
The housing industry (and related ETFs), even with the likelihood of rising interest rates, is showing remarkable strength and all indications are that the economy is in recovery mode.
If Trump and his administration can actually get an infrastructure bill pushed through congress, the IGF ETF should continue to do well and is not terribly over extended like the rest of the market.
XLU is an interesting choice. It too can benefit from increased infrastructure spending and, like we saw last year, if the market starts reversing, the utilities may play out as a safe haven for investors regardless of the threat of rising interest rates.
IBB is setting up nicely and actually has many strong stocks at or near buy points. And just like many other Trump Tweet stocks( BA, LMT, etc, etc), have rebounded from his last tweeted threat.
Speaking of defense stocks, one might also want to consider the defense and aerospace ETF (ITA). Like the rest of the market, it is quite extended due to the Trump Rally, but has started to pull back and this budgetary increase does seem to have good congressional support.