Investment Vehicles

Here are my notes on the different options where I can get my money to work harder for me.

This is a companion page to my notes on
investing and trading techniques

Topics this page:

• Index Funds
• Short Funds
• International Stocks
• Real Estate
• Industry Sector Funds
• Bonds
• Commodities
• Your comments???

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Index Funds by Market Capitalization Category

Click on icon for a ticker. Click on fund symbol for a fund description:


Total Market Capitalization	Index		ETF Index Funds	Futures Index	Leveraged Long	Short Fund	Leveraged Short
Large-cap “Blue Chip” > $10 bil.	$INDU	DJIA of 30 largest cap stocks, price-weighted.	DIA “Diamonds”	YM VXD	RYCVX-H	RYCWX	RYPMX UWPIX ETF
	___	FORTUNE magazine's 500 largest corporations	FFF	-	-	-	-
	^OEX	S&P 100 largest	CBOE	-			-
	$INX ^SPX ^GSPC	Standard & Poor's 500 largest market cap stocks, cap. weighted ^SPFIV	SPY “Spiders” Depository Receipts by State Street	ES VIX	RYTNX    Leveraged	RYURX	RYTPX URPIX ETF
	^RUI ^RLV ^RLG	Russell 1000	IWB	-	-	-	-
Mid-cap $2-10 bil.	^MID	S&P Midcap 400 Index	MDY	-	RYOTC	RYMDX	RYMHX UIPIX ETF
	^NDX	NASDAQ 100 Trust Series I (non-financial co's) and during trading day	QQQ “cubes”	NQ VXN	RYOCX RYVYX    Leveraged	RYAIX	RYVNX USPIX = QID (ETF)
	^COMPX IXQ ^IXIC	Nasdaq Composite	ONEQ PHLX	QC	-	none?
Small-cap < $2 bil.	^IUX IWM ?	Russell 2000 smallest companies (8% of the market cap) in the Russell 3000 Index.	IWM Base IWO Growth	ER	RYSHX (-1x) UCPIX ETF	RYMKX
Micro-cap < $200 mil.	-	-	-	-	-
Total (Broad) Market	^RUA	Russell 3000 largest securities traded.	IWZ	-		-	-
	^TMW	Wilshire 5000 Index has ALL 6300+ publicly traded companies in America	VTI “Vipers” (Vanguard Index Participation Equity Receipt Shares)	-	-
	^VAY ^VLIC	Arith. Average & Geo. median price of 1700 stocks (unweighted) covered by Value Line	-	KCBT	-

These have become the most heavily traded issue on exchanges.

"Growth" indexes collect the highest price-to-book ratios and highest forecasted growth

DJIA (Dow Jones Industrial Average) 30 stocks $INDU

• The S&P500 is the market benchmark for mutual fund performance.

• The fair value of the S&P futures is the toal price of all stocks in the index, plus the interest saved, less dividends forgone.

  The Lehman Brothers Aggregate Bond Market Index, is a mix of U.S. Treasury, corporate, and mortgage-backed issues.

• $25/year monthly Index Trader has model portfolios asset allocation for 6 base currencies using three different approaches to portfolio construction
• rules of thumb,
• mean/variance optimization, and
• dynamic programming

  Other Indexes

  • NYSE (New York Stock Exchange)
  • Amex
  • Schwab 1000
    
  • CBS Marketwatch 75

  Exchange Traded Funds (EFTs) originated by the AMEX (American Stock Exchange)

  Mercer Bullard, founder of advocacy group Fund Democracy

Short Options Bear Funds

The past 10 bear markets have occurred every 2.4 years in the short corrections of 1987 and 1990.

Timing systems Chart Short Funds:

• RYVNX - Rydex Funds (listed above) was the first short fund, requiring a $25,000 minimum. Trades among funds are free, but they can occur only once a day (vs. instantly with ETF funds).
• ProFunds requires a lower $10,000 minimum.
• Potomac Funds based on indexes
• CPFAX - Comstock Strategy A Fund and
  DRCVX - Capital Value A Fund (part of the Gabelli family) by Charlie Minter & Marty Weiner of Comstock Partners
• BEARX - the Prudent Bear Newsletter and fund
• Leuthold Gizzly Short Fund
• Robertson Stephens Contrarian Fund

The stock of the exchanges themselves, such as the CME (Chicago Merchantile Exchange) have done very well in 2005-6.

TradingMarkets.com has a course on "Making a Living in a Bear Market"

The Arbitrage Fund - ARBFX - makes a living from arbitrage of mergers and acquisitions. This was good during a sideways market 2004 when being in an ETF performed worst than the indexes they tracked.

Dow Jones Industrial Average (DJIA) Components (in Alphabetical order)

1. MMM - 3M
2. AA - Alcoa
3. MO - Altria Group (Philip Morris & Kraft)
4. AIG - American International Group
5. AXP - American Express
6. BOE - Boeing
7. CAT - Caterpillar
8. C - Citigroup
9. COKE - Coca Cola
10. DD - DuPont
11. XOM - Exxon Mobil
12. GE - General Electric
13. GM - General Motors
14. HPQ - HP
15. HD - Home Depot
16. HON - Honeywell
17. INTC - Intel
18. IBM - IBM
19. JNJ - Johnson & Johnson
20. JPM - JPMorgan Chase
21. MCD - McDonalds
22. MRK - Merck
23. MSFT - Microsoft
24. PFE - Pfizer
25. PG - Procter & Gamble
26. ATT - SBC Communications
27. UTX - United Technologies
28. VZ - Verizon Communications
29. WMRT - Wal-Mart
30. DIS - Walt Disney

ATT, Kodak & International Paper were removed in April 2004.

Markets - Exchanges

In the United States, The SEC (Securities and Exchange Commission) regulates the issuances and trading of securities (stocks and mutual funds) traded on these markets:

Exchange	Index
The NYSE (New York Stock Exchange) started in 1792 on the corner of Wall and Broad streets in New York City. It is losing its 80% market share because it is still mainly an auction market, with specialists taking orders from brokers by open outcry. Since 1987, its SuperDot (Super Designated-Order Turnaround System) route trades of up to 2,099 shares for specialists (market makers) to execute. Unlike other exchanges, there is only one market maker per security. Market makers can stop trading if there is an imbalance of sell vs. buy orders. Nicknamed the "Big Board", it traded a record 1.2 billion shares on the mini-crash day of October 27, 1997. The NYSE also trades international ADR (American Depositary Receipt) stocks.	^NYA.X ^TIC.N
The "AMEX" (American Stock Exchange) - called the "annex" - was merged with the Nasdaq in 2006.	^XAX
NASDAQ (an acronym for National Association of Securities Dealers Automated Quotation) was created in 1971 as the world's first electronic stock market offering computerized trading on the most active over-the-counter (OTC) stocks. About 5,000 stocks listed on the Nasdaq National Market (NNM) are handled differently than the roughly 5,000 OTC securities. Level II screens show all posted bids and offers in real-time. Level I quotes as seen on Yahoo!Finance are delayed 15 minutes. NYSE quotes are delayed 20 minutes. Mutual funds are priced once at the end of each day.	Stocks as a whole is generally bullish when the NASDAQ Composite outperforms the S&P500 (its ratio is above its 50 day simple moving average).
25% of NASDAQ volume is handled in "After-hours trading" after the major U.S. exchanges close at 4PM EST on ECNs (Electronic communication networks) used by institutions since 1975 and between individuals since 1999. ECNs match limit orders that cross, without a market-maker and without spreads (allowing buy on bids and sell on offers). So to simplify, only limit orders in blocks of 100 shares of the most actively traded stocks (not mutual funds) are traded on ECNs: INCA - Instinet Group Inc. [INGP] (the largest), ISLD - Island (used by Datek), TNTO - Teranova ARCA - Archipelago Holdings (IPO by E*Trade among 14 wall street firms) Has the lowest fees, but also the lowest liquidity. REDI - Redibook (Spear, Leeds, and Kellogg) BTRD - B-Trade by Bloomberg ATTN - Attain STRK - Strike Technologies NTRD - NexTrade BRUT - The BRASS Utility MarketXT - direct-access firm Tradescape was the first ECN to participate in Nasdaq's SuperSOES trading system. See their activity on Tradingday.com.

Pink Sheets provides a Electronic Quotation Service for OTC (Over The Counter) "penny" stocks.

The "CyBereXchange" system by CyberCorp in Austin electronically routes orders to whichever trading venue offers the best price.

International Exchanges also trade some NYSE-listed stocks.

• FOREX = foreign exchange of currencies via refcofx.com

• The "See-bo" — CBOE (Chicago Board Options Exchange) trades individual equity, index, and interest rate options.

• The CBOT (Chicago Board of Trade) trades in both agricultural commodities and financial contracts. Established in 1848, is the world's oldest derivatives exchange.

• The CME (Chicago Merchantile Exchange) trades in livestock, currencies, and stock index futures using their GLOBEX® electronic trading platform.

• The NYMEX (New York Merchantile Exchange) trades in energy, metals, and financial contracts.

• The COMEX (Commodities Exchange) in New York trades futures in precious metals, copper, and aluminum.

Non-US (International) Stocks

In 2007, Europe eclipsed the US in stock market value for the first time since the first World War.

US stocks make up about a third of the Global 500 list of largest corporations in the world.

iShares issued by Barclays Global Investors are EFTs based on international indexes

ADR (American Depository Receipts) = Amex International Market Index

Weekly Market update, CBS Marketwatch

Currency converters

The largest actively managed international funds include:

• International (BJBIX Julius Baer International Equity A)
• VPACX - VANGUARD PACIFIC STK IDX FD
• VPKIX - VANGUARD PACIFIC STK INDEX FD

• UBS

Industry Sectors

The GICS (Global Industry Classification System) from MSCI further divides these 10 sectors into 23 industry groups, 59 industries, and 123 subindustries. Select Sector SPDR. Funds correspond to specific Select Sector Indices.

Sector	Co's	% of Total Market Cap	iShares	Rydex	Vanguard	Index
GICS Consumer Discretionary / Dow Cyclicals - autos	1407	24.3%	IYC	-	VCR	^CYC
GICS Consumer Staples - food & drug / Dow Non-Cyclicals	288	4.6%	IYK	RYRIX	VDC	^RLX
Energy	240	3.8%	IYE	RYEIX RYVIX
Utilities—electric, natural gas, water	251	4.0%	IDU	RYUIX	VPU	^DUX
Financials	1166	18.5%	IYF	RYFIX RYKIX	VFH	^BIX ^BANK ^BTK
Industrials (Capital Goods)	288	4.6%	IYJ
Technology	1107	17.6%	IYW	RYTIX RYIIX	VGT	^TXX
Basic Materials	1635	25.9%	IYM	RYBIX
Telecommunication Services (including wireless)			IYZ	RYMIX	-	^TCX
Health Care—drugs, biotech, health care			IYH	RYHIX	VHT	^BTK ^DRG

Market Heat color codes sectors gaining/losing.

Specialty Healthcare funds had the best returns (13%) over the last 10 years.

BIPIX - Biotechnology UltraSector from Profunds 150% of the Dow Jones U.S. Biotechnology Index using equity caps, collars and floors, swaps, and options.

The Rydex Sector Rotation Fund RYVNX changes its investments in the hottest sectors of the previous month. This may not be profitable in a volatile market. For example, in early April 2004, REITs were hot, then tanked mid-month on fears of interest rate increases.

16 computer chip manufacturing stocks (such as Intel, Micron Technology, and Texas Instruments) are indexed by the
^SOX (Philadelphia Stock Exchange Semiconductor Sector index.

35 electronics-based technolgy stocks (such as HP, IBM, MSFT) are indexed by the
^MSH Morgan Stanley High Technology 35 Index broadcast by CNBC

24 Money center banks (such as BancOne, Citibank, and Wells Fargo) are indexed by the
^BKX -- the Philadelphia Stock Exchange/Keefe, Bruyette & Woods) index.

Stocks related to number of jobs:

• Monster, Manpower, Labor Ready, Korn Ferry, ADP, Paychex, Kelly Services

Real Estate Stocks

Index	Index Fund Symbol	Short Fund
REW.X	The The Wilshire Real Estate Securities Index measure of the performance of publicly traded real estate securities, such as Real Estate Investment Trusts (REITs) and Real Estate Operating Companies (REOCs).	???
-	Russell/NCREIF Property Index		-

NAREIT Equity REIT Index

MHX MERISTAR HOSPITL

The Creative Investor's Forum claims to be the largest Real Estate Investing website on the internet.

These are sensitive to interest-rates:

The largest home builders:

• Beazer Homes

Bonds

The price of existing bonds fall in value when interest rates rise for new issues.

This chart of interest rates include:

• FVX 5 Year Treasury Notes yield-to-maturity Index.

• TNX 10 Year Treasury Notes yield-to-maturity Index.

• IRX - the CBOE's Short Term Interest Rate Index based on the annualized discount rate on the most recently auctioned 13-week Treasury bill (the recognized benchmark of short-term interest rates).

• TYX 30-year U.S. Treasury Bond Index

• RYJUX - Rydex Juno fund is the Inverse(opposite) of the daily price movement of the yield-to-maturity rate for the most recently auctioned 30-year U.S. Treasury Bond. It competes with the RRPIX Investor Class & RRPSX Service Class Rising Rates Opportunity ProFunds correspond to one and one-quarter times (125%) the inverse (opposite) of the daily price

Buy U.S. Treasury securities from Savings Bonds.gov
Their Inflation-indexed I Bonds at 2.19%, are a 0.42% discount against
EE Bonds at 2.61%

To take advantage of US dollars falling in the future, buy bonds denominated in other currencies.

Everbank World Markets charges 3/4% each way per currency translation. Their Currency CDs in Euro and Yen pay zero percent. But Rand pays 7%, Australian dollars 4.5% and British pound stering pays 3.25%.

Commodities

There are several types of commodities and different ways to make money with them:

The Commodity Research Bureau CRB index has 17 commodities.

• 16 oil stocks are indexed by the AMEX Oil Index ^XOI & ^OSX AMEX Oil Service Index
• Precious Metals,
  • 50% Platinum - Aurora Platinum
  • 20% Nickle
  • 10% Gold - Gold was fixed price at $20.67 an ounce until the 1934 Bretton Woods meeting when Roosevelt devalued the dollar by officially increasing the gold price to $35 an ounce. It peaked at $875 an ounce in February, 1980 when U.S. inflation reached 12%. Its price reached its nadir at $252 an ounce during the summer of 1999.
  • Silver - XSLV = World Silver Index?
  • Palladium
  • Rhodium
  • Iridium

There are several ways to make money from volitity in commodities:

• Stock in junior exploration companies and major extraction companies. But beware that companies may hedge their positions and will miss out on sudden price moves.
  • NEM - Newmont Mining According to Ed Bugos, editor of the Goldenbar Report, Newmont Mining (NEM) tracks the real price of gold more closely than any of the other companies he follows. It has a very minimal hedge book of .3 years. Newmont has a total cash production cost of $205/oz and Bugos expects the company to continue to grow earnings about 10% a year for the next several years.
  • RandGold (RANGY) trades at .4x the price of gold given its cash flow. The company has a minimal hedge book of .1 years and a 5-year earnings growth rate of 37.8%. It produces gold for a very reasonable $97/oz. -- the deepest discount based upon a comparison of actual and implied prices of gold.
  • Barrick Gold Corp. has been the world's largest gold producer. In 2003 they mined 5.5 million ounces of gold at a total production cost of approximately $285 per ounce. They were the first major gold miner to hedge (and profit billions) in the late 1980's. But the reversal in price has resulted in unrealized loss of $1.2 billion.

• mutual funds that manage gold stocks, such as
  • GOLDX - Gabelli Gold fund
  • TGLDX - the Tocqueville gold fund
  • MDG - Meridian Gold
• There is currently no indexed fund based on gold indexes:
  • XAU Philadelphia exchange Gold and Silver Index of 7 stocks include Phelps Dodge, which mines copper.
  • CMX Gold Index
  • HUI Amex "Gold Bugs" Index of gold stocks
  • GOX CBOE Gold Index
  • XGLD = World Gold Index?
• Futures contracts

Gold Accounts

Beware of auction scams using bogus "escrow" sites using non-repudiatable gold account sites.
• Gold Money Digital Gold Currency is gold in a digital form that can be spent electronically like a currency. Kitco enable one to send and receive Gold Money orders with others by email in USD, Euros, British Pounds ("Sterling"), Canadian dollars (the "loonie"), or Gold Grams ("gg"). Each "gg" is USD $13.78 (at a spot rate of $428.56 divided by 31.1035 grams per full troy ounce) Their 1% transaction fee maximum of 100 mil (0.10gg, about $1.38 USD) is less than what PayPal charges.
  However, each account is charged 100mils ($1.40 USD) per month for storage of holdings in a London vault. Purchases of gold from Exchange stations ("Cambios") into their vault are not charged shipping costs but just the 2.9% above the spot rate.

• e-gold has more currencies and larger user base of merchants and market makers such as affliated OmniPay (Gold & Silver Reserve, Inc.) It charges 1% per annum account maintenance fee.

Physical possession of coins, nuggets, grains, Sheets, Wires, Solders, Tubes

Country	Coin	Prem.	Buy	Sell	Spread	Kitco Fab
South Africa	Krugerrand	8.69	414.59	402.25	12.34	10.94
US	Gold Eagle	18.27	424.17	407.12	17.05	25.70
Canada	Maple Leaf	16.24	422.14	403.06	19.08	23.59
China	Panda	30.44	436.34	399.00	37.34	-
Austria	Philharmonic	13.80	419.70	403.06	16.64	-
Spot (intrinsic value) "fix"		405.90

The table at right compares the costs of trading various uncirculated one oz. gold coins. Smaller coins have more expensive costs. Note that one ounce 24 caret Krugerrands (nickname "kruger" which began being minted and issued in 1967) incur the lowest transaction costs, the lowest premium (difference between spot price and coin buy price), and the lowest spreads (difference between buy and sell price). This is why some predict that the South African currency (the Rand) will rise against the US dollar.
• Kitco is the largest, but they charge higher premiums plus a flat $30 for shipping that costs them $18.50.
• Goldmasters.net charges ($17.50 + $1 per $1,000) for USPS Shipping. Their Premium (see "Prem." column) is lower than Kitco's "Fab" charges (to fabricate coins from gold in account).
• Burton Blumert's Camino Coin, 47 years in Burlingame, Calif.
• Jefferson Coin in New Orleans
• IRA or Roth accounts can consist of gold purchased at Merit Financial and stored at Church Trust

The biggest consumer of gold is India. China is expected to be a large market when citizens are allowed to own (speculate on) more gold. On January 1, 1975, Americans were again allowed to own gold.