Thursday, October 2, 2014
The first ETF was introduced on January 22, 1993. State Street launched the SPDR S&P 500 ETF. The portfolio consisted simply of the 500 companies of the S&P 500 index and was calculated the same way as the Index itself, and is a physical replication of the underlying index (which is called 'full replication' in trader's lingo). Simple, transparent, and cheap too!, because the ETF calculates a rate of only 0.0945% as a result of an ongoing price war in the ETF markets. You'd pay ten times the amount if you would trade an equity fund (about 1%).
A lot has changed in the world of ETFs since then. Total assets under management in ETFs has increased to $2600 billion, spread over about 4,000 ETFs. Especially in the United States there has been a strong growth. In Europe, the ETF train is starting to get going as well.
But what is it that you probably don't know about ETFs and SHOULD?
Sunday, September 28, 2014
It turned out that Twitter is indeed worth its stock price. I switched to the other side and am now very bullish, although it wasn't that long ago when I was still very bearish about this company. At the end of July (as you can see on the chart above) Twitter's stock price surged and that was my conformation that it wasn't all just a hype, this stock is truly a gem. Sure I've been wrong before of course, but what was is that made me think Twitter's stock would tank?
By: +John van der Munnik
Tuesday, July 8, 2014
Answer my first question, and let's see if it's worth your time.
Monday, July 7, 2014
In the meantime, the official unemployment rate in the United States has decreased to 6.1 percent, according to the BLS (Bureau of Labor Statistics). For the fifth consecutive month about 288,000 jobs were created, the best progression since 2000! However, there's still the issue of low wages. One of the reasons why the Dow closed above a historic 17,000 points is that companies are raking in profits due to fact that there are low wages, and they're collecting profits from (still growing) emerging markets. Of course they're also still taking advantage of next-to-zero interest rates.
Saturday, June 28, 2014
Monday, June 9, 2014
The volatility index (VIX), also known as the panic index, or fear gauge, is at its lowest level since a long time. At 10.73 to be precise, at this time of writing. Around January 2007 it was around these levels - more than 7 years ago! In fact, I don't remember it even dipping below 10. In any case it looks very interesting to me. This is mainly due to the fact that this level strikes me as insane. Civil war in Syria, unrest in the Middle East, Europe not being able to keep its currency under control and tensions in Asia, yet the volatility index is at it lowest level (ever?). I think any range in the 10 'zone' is a reason to look at this index and be optimistic.
How to play?
But how do we play this trade? I personally like the XIV (VelocityShares' Daily Inverse VIX Short-Term ETN), the VIX backwards (get it) index. This ETN trades like a stock, and goes up when the VIX goes down. The XIV is a short term exchange traded note, which means less risk than the VXX (mid term, not inverse so keep in mind that if the VIX goes up, the VXX goes up as well). The XIV doesn't have options, unlike the VXX that does allow you to trade options contracts.
All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.