There is a saying the smartest minds work on Wall Street. I’m sure many people agree and want to follow the “professional” opinions they read or hear, but with all of the misinformation, opinion changing and ulterior motives I’m been asked, “how do you know what to do”?
The answer is simple. Sure, I read other opinions about the market, but I don’t act on them unless the market’s price action corresponds with idea behind the opinion. For example, many of the “professionals” are talking about a recession or possible depression. One went as far as saying this is the worst since the great depression. Now, I don’t know if he is correct, but I do know this, the Consumer Staples ETF (XLP) is composed of defensive companies. This means, the companies in the index make products people should be buying regardless of the health of the economy.
For example, here are a few companies in the index as of 11/15/07"
Procter & Gamble Co. PG
Altria Group Inc. MO
I bet you purchase many of the products produced by these companies or shop with them regularly.
I run a model portfolio at ETF Updater called the “Sector Rotator”. It seeks to outperform the S&P 500 and just before I wrote the post we liquidated the Industrials ETF (XLI) and replaced it with the Consumer Staples ETF (XLP). I’m not pumping the Consumer Staples ETF for investors or Swing Traders, I’m disclosing I do have a position in XLP.
If you would like more ETF Education, Swing Trading Lessons or would like to know when we make changes to our Sector Rotator portfolio visit us at http://www.etfupdater.com/.
Mike Matousek, CMT
Portfolio Manager, ETF Updater
http://www.etfupdater.com/
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