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Reload this page 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
investinganother page on this site and trading techniquesanother page on this site


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Index Funds by Market Capitalization Category

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    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

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

    Mercer Bullard, founder of advocacy group Fund Democracy

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Short Options Bear Funds

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

    Idea 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. 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.

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Markets - Exchanges

    In the United States, A website external to this site 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. tool 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

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Non-US (International) Stocks

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Industry Sectors

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    Market Heat color codes sectors gaining/losing.

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

    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

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Real Estate Stocks

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    Reminder 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
    Their Inflation-indexed I Bonds at 2.19%, are a 0.42% discount against
    EE Bonds at 2.61%

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

    A website external to this site 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%.

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    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
    • There is currently no indexed fund based on gold indexes:
    • Futures contracts

    Gold Accounts

    Beware of auction scams using bogus "escrow" sites using non-repudiatable gold account sites.

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

    Country Coin Prem. Buy Sell Spread Kitco
    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.
    • 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.

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