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Invest In Spiders (SPDRS) To Cash In On New Opportunities

What is a Spider (SPDR)?  It is the acronym for S&P 500 Depository Receipts.  Spiders are a family of exchange traded mutual funds (ETF) and they derive their name from their first fund, which tracked the S & P 500 Index.  With about 75 fund options now, the name has sort of lost its relevance but has stuck with investors.

What Is An Exchange Traded Fund?

Most people are familiar with the concept of a mutual fund.  The idea of an exchange traded fund is similar in many ways.  When you buy into an ETF you are purchasing a share of the entire portfolio.  Just like with a regular mutual fund, you benefit from built in diversification.

From Wikipedia:

An exchange-traded fund (or ETF) (also known as Exchange-Traded Product (ETP)) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Because of their low costs, tax efficiency, and stock-like features.


What Can I Invest In Through An ETF?

There are a variety of ETF’s but the most popular are Index ETF’s.  Index ETF’s allow an investor to purchase an investment designed to mirror the movement of a particular index.  For example, if you don’t want to take on the headache of picking individual stocks for your portfolio you might just decide to invest in an ETF that mirrors the performance of the Standard and Poors 500.  This index is comprised of 500 of the largest stocks that trade on U.S. stock exchanges.  Most investors could never own the entire basket of stocks that are represented in this index, but they can do so buy purchasing just one share of (symbol) SPY, which is the ETF that mirrors that index.  There are also ETF’s that track the performance of bonds, currencies, and other markets.

The purpose of today’s article is to shed some light on a few investment opportunities that most people don’t even know about.  I, for one, am a big believer in the concept that there is always an opportunity in the investment markets if you look for it.  You may have heard it say that Wall Street firms makes money whether the market is going up or down.  That is absolutely true.  You too can make money when the stock market is going down and now it is easier than ever.

Finding Opportunities In A Down Market

Over the past 10 years, the Dow Jones Industrial Average has produced a 0% return!  That’s right, most investors in the U.S. stock market have made nothing in the last 10 years.  Some have even had a net loss.  We have all been taught that over long periods of time you will always make money in the U.S. stock market.  That has not been the case during the last 10 years, and I would argue that ‘buy and hold’ investing may no longer be a reasonable strategy.

Just in the last 5 years, you could have tripled your money!  But, you would have had to think outside the box.  An investment in the ETF that tracks the price of gold (symbol gld) has tripled in that period.  The fund invests directly in gold bullion.  This is as pure of a play on gold that you will find.  This is just one example of an investment that has been going up while the broad markets have been dropping.  Another opportunity I have my eye on is Oil.  Oil is currently at a 5 month low, and is another investment sector that may be a good place to have some money right now.  Consider XLE a Spider that has a focus on the energy markets.  Energy companies in this fund develop and produce crude oil and natural gas, and provide drilling and other energy-related services. Leaders in the group include Exxon Mobil Corp., Chevron Corp, and Conoco Phillips.

Do You Want To Learn More About ETF’s?

A great place to learn more is the offcial SPDR Website.  This site will provide you with a wealth of information and learning opportunities on ETF’s.

I am excited to announce that after taking a break for about six years, I am now accepting investment clients again.  If you are interested in working with me personally on your investment portfolio, visit our new website Christian Financial Planner.US .

Helping you make the most of God’s money!

James L. Paris
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