Monday, June 29, 2015 – Market’s Rapid Sell Off!

Monday, June 29, 2015

Market’s Rapid Sell Off

Likely a great buying opportunity!

Through roughly 12:55CT the markets had sold off sharply over (1) Greece and its looming debt crisis and fears of it exiting the Euro currency and the Euro Zone (this is likely overblown as it’s literally a $1 billion dollar default, not anything huge or significant… Amazing the World Bank didn’t lend the cash, because now, the whole world is losing trillions as equities sell off rapidly!).  Other negative catalysts included (2) a low VIX (the volatility index) which spiked nearly 26.77% thus far today alone, to 17.77 by mid day; as well as (3) the looming debt crisis in Puerto Rico.  Additional negative sentiment carried over from (4) volatility from the Euro currency exchange rate vs. the U.S. Dollar, and (5) negative sentiment in China, and its stock market sell off (its slowing economic growth, and because its regulators have tightened up on rules on margin lending for securities purchases).

These types of totally irrational sell offs should be viewed as a great buying opportunity (for low PE indices).

The DJIA has returned (through mid-day) roughly -0.66% YTD, and I believe represents a great opportunity.  The DJIA also has the lowest PE Multiple of all the major broad based stock indices in the USA, as well as a stronger dividend yield versus e.g. the S&P500.

Sectors which have lagged the bull run YTD, and over longer spans, include the energy sector (see ETF ticker XLE), and the utilities sector (see ETF ticker XLU).

Before you know it, investors and traders will be saying that Europe is better off without Greece, and is stronger without them;  The currency volatility will dissipate;  The VIX will reach a peak, and begin its next descent, bring about higher stock prices.  Additionally, with China and the rest of the world cooling off (after an astronomical, parabolic, and rapid ascent of Chinese stocks), money will be pulled out of the higher risk foreign markets and brought back to the USA (where most of it came from), it will likely find its way back into equities (and perhaps junk fixed income and high yield fixed income).  In just days or a couple weeks, there will be further evidence of a strengthening U.S. economy, and I believe this will bring the bulls back.

Andrew G. Bernhardt

[Checkout my Great Links Page – of great quotes and research]

6-22-15 Major U.S. ETFs & Their PE Multiples & Divident Yields

Monday, June 22, 2015

          Here’s a list of all major U.S. ETFs and their PE Multiples and Dividend Yields (data as of Friday, June 19, 2015, at the close).  If you click the ticker, it will take you to the updated raw data source.

          I have awarded the designation *** (three stars- or asterisks) to DIA because it has the lowest PE Multiple (and one of the highest dividend yields) of all the major U.S. broad based indices; also to MDY because it has far superior long term past performance figures, has consistent long term EPS growth, and consequently is one of my all time favorite indices; and also to XLE and to XLU because these sectors have lagged the market this year YTD thus far, because they both have low PE Multiples, and I think they’ll have a nice performance from this point forward through year end, and into next year.  Lastly, I have given the *** designation to KBE because I believe that it’s very very reasonably valued and that financial service sector stocks (and their respective indices, matched e.g. by the ETFs XLF, KRE, and KBE) will continue to outperform the market going forward for years to come.  I choose KBE because it has the lowest PE multiple of all the financial services index ETFs.

Currently, I am most bullish on DIA and KBE due to their low PE Multiples.

TICKER     PE     YIELD     INDEX

ICF          40.73      3.01         Cohen & Steers Realty Majors Index

RWR       30.16      3.28         SPDR Dow Jones REIT Index

VTI           21.74      1.77          Vanguard Total U.S. Stock Market Index (formerly the Wilshire 5000)

IWM        21.28      1.27          Russell 2000

DIA          15.93      2.39          DJIA (Dow Jones Industrial Average) ***

SPY         19.49     2.01           S&P500

MDY        21.93      1.49          S&PMidCap400 ***

QQQ        20.75     1.00          Nasdaq 100

XLE          15.50     2.77           Energy Select Sector SPDR Fund ***

XLI           20.45     2.15           Industrial Select Sector SPDR Fund

XLU         16.85      3.79           Utility Select Sector SPDR Fund ***

XLP         22.59      2.61           Staples Select Sector SPDR Fund

XLB         21.73       1.97           Basic Materials Select Sector SPDR Fund

XLV        24.02      1.42            Healthcare Select Sector SPDR Fund

IHY         25.52      0.84            iShares U.S. Healthcare

IHI           28.75      0.41            iShares U.S. Medical Devices

IHF         26.19      0.06            iShares U.S. Healthcare Providers

IHE         27.30      0.85            iShares U.S. Pharmaceuticals

IBB          31.12       0.02           iShares Nasdaq Biotechnology ETF

SBIO          ??           ??             ALPs Medical Breakthroughs ETF

XLF         16.37       1.88           Financial Select Sector SPDR Fund

KRE        17.17        1.93           SPDR S&P Regional Banking ETF

KBE        15.71        1.85           SPDR S&P Bank ETF  ***

IYF          17.88       1.55            iShares U.S. Financials ETF

ITA         19.49        0.74           iShares U.S. Aerospace & Defense ETF

XHB       21.98       0.76           SPDR S&P Homebuilders ETF

IYT         21.09       0.84           iShares Transportation Average ETF (aka “Dow Jones Transportation Index”)

Happy trading!

Andrew G. Bernhardt

[Click Here To Review My Great Links Page]