Can we just pick one stock? Part one will attempt to answer this and will ultimately fail.

From the ever depressing world of EWZ comes this quote:

"Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the iShares MSCI Brazil Capped ETF (EWZ), where 7,150,000 units were destroyed, or a 7.2% decrease week over week." - Forbes

Attempting to simplify, let's narrow a search down to one stock.  We can take a peak at the ETFs that we've been overviewing and just select one company.  First, we'll check out the main components of the Asian ETFs.

First, here is TSM, which is Taiwan Semiconductor and is the main component (20%) of EWT.  Unfortunately, there is no real way to get to Samsung, the major component of EWY, through the US market.  You can pick some up as over-the-counter (OTC) or through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S - a BofA subsidiary), but that's not the way we want to go.  If we want to grab some of that juicy Samsung growth, then we'll have to stick with the ETF. 

How about the consumer discretionary or consumer staples which were VCR and VDC, respectively?  VCR has the holdings in the chart below.  The spread is nice, and if you remember from a few weeks ago this ETF was solidly outperforming SPY.  We can take a look at the top few, but they aren't necessarily a strong force pushing the value of this fund around.  Maybe, we just start with the ones that we know.  Amazon and Comcast come to mind, even though we don't necessarily want to support Comcast.

Top 10 Holdings (32.95% of Total Assets)

Company Symbol % Assets Amazon.com, Inc. AMZN 5.08 Walt Disney Company (The) Commo DIS 4.78 Comcast Corporation CMCSA 4.42 Home Depot, Inc. (The) Common S HD 4.27 McDonald's Corporation Common S MCD 3.65 priceline.com Incorporated PCLN 2.29 Time Warner Inc. New Common Sto TWX 2.24 Ford Motor Company Common Stock F 2.13 Starbucks Corporation SBUX 2.07 Twenty-First Century Fox, Inc. FOXA 2.02

VDC has the holdings shown in the chart below.  As you can see, the fund isn't quite as diverse.  Choosing one stock from this bunch is a little easier.  The fund has been tracking SPY very closely.  

Top 10 Holdings (60.71% of Total Assets)

Company Symbol % Assets Procter & Gamble Company (The) PG 12.11 Coca-Cola Company (The) Common KO 8.55 Wal-Mart Stores, Inc. Common St WMT 7.37 Philip Morris International Inc PM 7.25 Pepsico, Inc. Common Stock PEP 6.93 CVS Caremark Corporation Common CVS 4.89 Altria Group, Inc. MO 4.06 Colgate-Palmolive Company Commo CL 3.47 Mondelez International, Inc. MDLZ 3.10 Walgreen Co. Common Stock WAG 2.98

 
For next week, Procter & Gamble, Coca-Cola, and Amazon.

Profit!

Charts, and Farts, and Graphs...

A While back, we were considering a few Asian ETFs:

If you take a look at a comparison of each to SPY, you will see that both are more or less flat overall. 

Now if you compare them to each other, it appears that EWY (in blue) is more slightly more volatile. 

If you examine the Beta (as calculated by Yahoo Finance) EWY has a Beta of 1.07, whereas EWT has a Beta of 0.77. This confirms what we gleaned from the chart. While this may seem obvious, it is somewhat satisfying to be able to look at the graph and construct meaning out of it. Our English and Math teachers would be so proud. 

Their volumes are similar as are their sector makeup. We lean toward EWT, based on its lower volatility. Also, according to Yahoo finance the yield is higher with EWT (1.9) than EWY (1.5), which is another point in its favor. 

This investment would meet our goal for greater global diversity in our portfolio, however we have to make sure to not just diversify for its own sake.Or according to Random Roger: 

        To repeat from past posts, the objective is an equity portfolio that is hedged with diversifiers as I         perceive are needed. I do not want a portfolio of diversifiers hedged with a little bit of equity               exposure.

Profit!

PS, your phone company may be putting the screws to you. Here's a place you go for relief. 

Korea vs. Taiwan: Fight!

We're digging deeper into South Korea and Taiwan, particularly Samsung, but apparently they aren't traded in the US. That said, you can get some Samsung if you go with a fund. We were thinking about  EWY (S. Korea fund), AAIT (regional tech fund), and EWT (Taiwan).

We did a bit of research into Samsung, and they have had some troubles with impropriety, however they do seem to be doing well. The article from the independent mentions the idea that Samsung is so very important to the Korean economy that it may be able to weather any troubles. What we're wondering is if this makes it a good investment.

So it shakes out like this, we are looking at increasing our tech sector holdings. We are both looking to diversify country holdings and balance our sector weighting. We don't have anything in Asia and we have two individual country funds and a regional tech sector fund. Investing in any of these fulfills our objective of further balancing the portfolio. So the question becomes, which will be the most profitable. Isn't it always? Which one is the best fit for us may be a better question.

It may be helpful to consider the volume of each fund, since that will determine the ease of unloading it when the time comes. Additionally, smaller funds may be in danger of closing and being liquidated.

Here are some criteria to consider for further analysis of each:

1. Volume

2. How does it balance our portfolio?

3. Where is it in its cycle? That is, is it on the up- or down-swing?

There are a lot of things that don't look good for AAIT. One, the volume is low. Two, it basically at a 52-week high. However, it is not as heavily in either Samsung or Taiwan Semiconductor, which makes the holdings more balanced. Since EWT and EWS aren't 100% tech, they do bump up our tech sector holdings, but not disproportionately. AAIT would represent a larger
shift in our sector weighting.

For next week, we continue this.

Profit!

Let me google that for you...Taiwan

Looking into [South] Korea and Taiwan, specifically EWY and EWT, respectively, and we noticed that both funds are a little too heavily invested in one company (or umbrella company). This reminds us of the Petrobras incident with EWZ, which we still haven't recovered from. At the same time, it also does the opposite. We did make a healthy profit with AT&T, and that was just one stock. The diversification mitigates both losses and gains. So maybe these are worth a gander.

Here are the main holdings and sector weightings  for EWY:

And for EWT:

As you can see, EWY has more holdings in Consumer Cyclical, which is something that we're trying to beef up in our portfolio. We're also low in Technology. There is less in Financials and Communication in both funds. The only thing that we're severely lacking in is Real Estate, but we all are pretty against really going in on that. 

The next step is to look at where each of these funds is in their respective areas. For example, how do the largest holdings of each fund stack up against each other and their respective sectors? But that will have to wait for next time, kids. 

Tune in when we fight the Riddler, and by that we mean look at more investments. Same profit channel, same profit time.

Profit!

Weighing in on Sector Weighting.

Our current portfolio sector weighting

When we started this experiment, the initial goal was to learn about finance through having a real stake it it. Perhaps true to our personalities, this meant going with a very conservative and reasoned approach to building a portfolio. To date, we haven't sold anything and acquiring new investments has come at a very slow pace. We have tried to hedge our bets a bit by investing globally and across an even spread of sectors. Dividends have played a small part in this strategy as well.

Everything has been focused on slow, steady growth and the portfolio has been humming along.

There was talk about investing in Taiwan. The original idea was that we wanted to invest somewhere in Asia, but the surrounding countries have their own issues, and it seems like something worth looking into. We are pretty low in Tech and Consumer Discretionary, so investing in an ETF like EWT would balance out those sectors a little more. This is good because more balance across sectors protects you against negative changes in the global economy or across specific sectors or funds (EWZ, I'm looking at you). The flip-side, of course, is that it mitigates any growth across specific sectors, but we're a bunch of scaredy cats, so we tend to worry about the bad.

We were looking at IXI, a global consumer staples ETF as well.

For next week, we will continue our research on Taiwan and other Asian options.

Profit!

Jigsawed: KOL Finance Reads Its Section and Shares Out With the Group

This morning we took a look at an analysis of the current market upswing put out by J.P. Morgan. We each took a section to discuss with the group. The first section outlines the various domestic factors that have contributed to market growth. There were a few factors that struck us as particularly interesting. The article cited excess US labor/industrial capacity and went on to mention that US labor cost are low relative to profits & GDP. This let us to discuss the apparent disconnect between markets flourishing while there is high unemployment. Essentially it is an employer's market, where workers are in greater supply, and command lower wages (both real and in the form of benefits). Obviously, this makes a business more profitable, but what about the morale and prosperity of the work force itself? Surely workers who feel unfairly compensated (or in the least are more financially strained) will be less prone to productivity and even innovation. It breaks down to two business models, investing in short-term profits, vs. investing long-term in building a solid and experienced (and potentially more satisfied?) workforce.

While this sounds like a loaded analysis on our part, it has to be noted that each model has its strengths and weaknesses. Obviously there is a human (and possibly economic) cost to having high unemployment and workers who are not compensated as much as profits would allow. On the other hand, companies such as Bell South or more recently Kodak are paying the price for trying to take care of their workforces. It is indeed a complex problem, and the solution most likely lies in finding an equilibrium between the two conflicting approaches.

In the next section, this imbalance was reinforced with the prosperity of high ticket stocks, such as LVMH and Coach, which could basically be thought of as the Jersey Shore ETF.

And in the final section, thee factors to consider with everything else:

1. Unexpected inflation. We have been at more or less no inflation for a while. This will probably continue since there is so much spare capacity in the labor markets.

2. Chinese economic growth hasn't been crazy, but we'll have to wait and see.

3. Iran. So, it would be really difficult to forcibly deal with Iran's nuclear proliferation. This means that we should make nice-nice, and not go to war. This would be good for the markets.

The big picture is that we are sort of out of the economic woods. Maybe?

For next week, we plan to dig through Asian investments, work through Avi's fund manager picks (what they are, why they are chosen, etc.).

Profit!

Excel tables... it's like I'm still at work.

Attendance:  Really?!  9am Mother's Day plans? Ha!

Tesla is doing very well.  This stock has been a group favorite for a while.  It appears that the auto that they've designed is getting good ratings and their stock is up.  Now, will people buy the car?  There are also some new transmission designs on the way from companies such as Ford to increase efficiency.  Mazda is pushing something fancy as well.  A fun discussion.

We also talked a bit about HTC's fall in the mobile sector.  They were once top tier, but now are falling below Samsung.  That company will be something to notice in the following chart:

Here are the four ETFs from last week.  AIA is fairly similar to AAXJ, but the latter has qualities that make it more desirable such as the lower exposure to Samsung and the more even geographic distribution.  AIA is out for now.  Comparing the other three stocks, there are positives and negatives to each.  They all have good spreads in terms of top holdings.  They all hit sectors that are not overweight in our portfolio.  CHIQ is especially good in this regard.  The 22% Japan isn't a deal breaker for MAPIX, but it is something to be wary of.  That ETF is very low risk and has a good return for its category.  Slighly high expense ratio, though.  AAXJ has some posities all around, but we'd like to bring up some other sectors in our portfolio.

Our current portfolio is doing well.  We're a few percentage off of the S&P 500, which is having a great year.  It still may be a good exercise to compare EWZ to other items in category.  EWZ is our only loser now and it has held fairly steady for the last year.

Next week we'll dive into the categories for our three remaining Asian stocks to find the best performers.

Profit!

Shut yo mouth!

Members present (and agape!): Brian, Bickford, Danak

We looked at our SigFig account, and were trying to find out exactly where the dividends are going. We didn't have any luck.

Also, EWZ--should we dump this thing? It has been so bad to us.

We still have our eyes on some sort of African ETF, in particular NAFAX, but that doesn't look so good. Then there was another fund, WAFMX. However, we stopped taking a look at it, since the minimum investment is $2000--a little big for us.

The search continues.


For next week:

Look for potential investments in Africa &Asia

Profit!