We do about 10 trades across the world markets every month. Following is a sample set of trades from our model portfolio.
SPDR ETF Trading-2007-2010
When you buy Index ETFs, its like buying the entire market, which removes company specific risks. Even the best quality stocks can run into big trouble. For example, you know how Goldman Sachs fell 25% over 2 weeks in April 2010 due to legal issues. Missed earnings, factory accidents, rig failures, CEO leaving suddenly….there are N number of accidents/risks that we face when we invest in company stocks.
Its true, a good performing stock can beat the S&P 500 returns, but can you really load your entire capital on one stock? So you need at 3-5 winners, and that is difficult, and accidents can happen with winners too, and the market reaction will be even more harsh. Most fund managers I know will be very happy to have just 2-3 winners every year.
In the S&P500 ETF (SPDR), we have the market in a box, and its the real winner. Capital may flow from stock A to B, sector X to Y, but it tends to stay with the within the market most of the times, and that gives you rock-solid support for the S&P500 index. The SPDR is the most popular ETF in the world, and that’s for a good reason, because it represents the S&P500 index.
If you have to buy/trade in only one stock/instrument, please pick the SPDR (ETF) or S&P500 EMini (Futures). Just buy at 1-3 month market low, and you won’t go wrong. You will be surprised how consistently the SPDR gives you profits than any other stock. And you can load as much capital as you want…no problem at all. If you are in for the long haul, buy a CAT or Mack truck, not a Ferrari.