Some of the best trading
opportunities are in the least well-known investments. In my most
recent posts, I've looked at
water resources and
clean energy as possible sector themes for the future that can be traded
from any stock market account with Exchange Traded Funds (ETFs). Now let's go
to another ETF theme: globalization.
With a single stock, we can buy equity
performance from almost any major region of the world. Below we have a chart of
the S&P 500 Index (blue) (SPY | Quote | Chart | News | PowerRating); the Vanguard Pacific ETF (yellow) (VPL | Quote | Chart | News | PowerRating);
the Vanguard Europe ETF (red) (VGX | Quote | Chart | News | PowerRating); and the Vanguard Emerging Markets ETF
(light blue) (VWO | Quote | Chart | News | PowerRating). Going back to March, 2005, we can see that the most
popular of the indices--the S&P 500--has also been the most punk performer.
In terms of directional movement and volatility, we've had better trading
opportunities from almost any other major portion of the world.
The best investment talent in the world--including many hedge fund and
investment bank traders I've been privileged to know--shares one thing in
common: they are not restricted to particular trading instruments or asset
classes. They also do not limit their trades to vehicles within a
particular set of national boundaries. They go where the opportunity
is, whatever and wherever that might be.
With ETFs, it is increasingly possible for individual traders to pursue a world
full of opportunities. Value vs. growth? National vs. international? Equities
vs. fixed income? Small cap vs. Large? Currencies, commodities, equity sectors?
All can be traded from a single stock market account.
Old habits die hard. We tend to gravitate to the known trading instruments. But
there's a trading world at your fingertips--and it's expanding every month.
Brett N. Steenbarger,
Ph.D. is Associate Clinical Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY and author of
The Psychology of Trading (Wiley, 2003). As
Director of Trader Development for Kingstree Trading, LLC in Chicago, he has
mentored numerous professional traders and coordinated a training program for
traders. An active trader of the stock indexes, Brett utilizes
statistically-based pattern recognition for intraday trading. Brett does not
offer commercial services to traders, but maintains an archive of articles and a
trading blog at
www.brettsteenbarger.com and a blog of market
analytics at
www.traderfeed.blogspot.com. His book,
Enhancing Trader Performance, was
recently released for publication (Wiley).
