Energy continues to outperform

[Peaceful-B]

Energy (XLE) is our primary recommendation for the fourteenth week in a row. Over the past three months, XLE is up +12.67%, compared to +4.20% for the S&P 500 index. XLE did well this past week as well, rising +3.16% in the past five days, compared with +1.74% for S&P 500. We still see XLE as being in a solid long-term uptrend.

Our other recommendations include Korea (EWY), which is up +4.32% in the past five days, and gold (GLD), which is up +2.04% in the same period.

[rgcon]

FSENX is a good non-ETF mutual fund with an almost identical performance.

[flight23]

Why use a mutual fund when you can use an ETF with identical performance? To me, in order to even consider a mutual fund one of two things must be true:
1) There is no comparable ETF.
or
2) The fund significantly outperforms the comparable ETF when factoring in fees & expenses, including short term trading fees if applicable.

#2 is rarely if ever true from what I have seen.

[rgcon]

Well, there is another thing to consider: brokerage commissions. When you trade ETFs you pay a commission. I can re-balance my mutual funds within a fund family (in this case, Fidelity) without paying a commission. I'm not sure if ETF commissions outweigh the higher management fees of mutual funds, but it's certainly something an investor should consider. I would think if you are going long-term with a particular ETF, that's the better choice. If you make frequent trades, however, you might quickly wipe out the difference between relatively low fee ETFs (say 1/10 of a percent) and mutual funds (FSENX fees are 9/10 of a percent).

[rgcon]

This is from Marketwatch.com

"Cheap can be costly

While many investors purchase mutual funds directly from a fund company or through an investment adviser, ETFs are bought and sold through a broker. For example, TD Ameritrade charges $9.99 for online trades, which effectively adds a fee of about 1% to a $1,000 ETF purchase. Buying and selling can swamp ETFs' cost benefits quickly, especially with small amounts and when compared with a similar commission-free mutual fund."

[flight23]

Well, there is another thing to consider: brokerage commissions.

All of the major brokerages now offer a large variety of commission free ETFs... not anywhere close to the # of commission free mutual funds, but the number of available commission free funds is growing. "Commission free" is also a bit of a misnomer (whether for funds or ETFS), because the only reason there is no fee is because the fund/ETF has decided the ability to make money of management fees due to to increased inflow of cash with no fees outweighs the amount made on commissions with reduced cash inflows.

[flight23]

This is from Marketwatch.com

"Cheap can be costly

While many investors purchase mutual funds directly from a fund company or through an investment adviser, ETFs are bought and sold through a broker. For example, TD Ameritrade charges $9.99 for online trades, which effectively adds a fee of about 1% to a $1,000 ETF purchase. Buying and selling can swamp ETFs' cost benefits quickly, especially with small amounts and when compared with a similar commission-free mutual fund."

That is a commonly posted belief when trying to convince investors to be 'buy and hold' rather than traders. The problem is buy and hold is what the brokerages and banks want you to do rather than learn to become a better trader. Using just a couple of trades a year you can significantly increase returns without much cost. Buy and sell TNA at the 50 DMA for example..

Trading isnt for everyone but even then you are better off buying an ETF and holding than most funds because at least you have the *option* of getting out intraday if needed, expense ratios are typically much lower, and you dont have a minimum holding period, and you dont have any restrictions on amount invested.

Another issue with that is using $1000 as a cutoff because a large percentage of mutual funds, particularly the ones with better performance have much higher cutoffs. Most Fidelity funds that I have seen have between a $2500-10000 minimum when outside of an IRA. When playing with 10k, $7.95 per trade is only .0795%, five in and out trades would be .795%.

[Sarah]

.

[Winner]

FWIW,
As Jesse Livermore once said, "It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!”

Yes, sitting with some individual stocks like CMI, TBL, F, LULU and COST since Sept rather than chasing outperform sector. On the other hand, option trading are best to get cash monthly in the account when using a combine index credit spreads/iron condors to aim profit around .30 to .85 per contract with minimize risk especially with most ETF. IWM is one of my favorite since it rarely increase or decrease more than $10 in single month. The less time the less credit with 100% sure profit for 5% a month is not a problem.