We all know that this recession is a deep one; the mystery here is how deep. Will the markets begin to make sense again for exchange traded fund (ETF) investors anytime in the near future?
The power of this recession has made much of the market incomprehensible and the market has long since stopped making sense. The fear levels are at code red for investors. Is there a way to gauge what you might want to get back into once the market looks slightly tempting again?
Gary Gordon for ETF Expert ponders where an investor is to go when all the traditional market readings and signals are all topsy-turvy.
- Gordon feels that a small rally of any kind would bolster S&P Pharmaceuticals (XPH) which could be what is a paradox of “smart risk.”
- Other areas that are pretty beaten-down could be identified by looking at the performance of UltraShort funds. Among the ones that made a killing in February are ProShares Ultra Short Consumer Goods (SZK), ProShares UltraShort Materials (SMN) and ProShares UltraShort Financials (SKF).
- There could be some value in the technology sector, too. Other areas of this type of smart risk could be found in the short and ultrashort sector funds. Semiconductors are collectively trading at a price-to-book of just 1.3.
The market is in serious need of fixing, and chances are, we’ve still got some surprises remaining. Whatever pops up down the line, if it’s these types of funds or something else, mind those trend lines and just stick to the strategy.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.