Many people have asked if it makes sense to invest in a homebuilder ETF, given the recovery in housing that the economy is experiencing right now.  The most liquid homebuilder ETF is XHB. Here is its chart vs. the S&P 500 (Click Graph below to enlarge):

You can see it’s pretty volatile. It’s top 10 holdings (totaling 35% of the fund) are as follows:

The ETF is more volatile than the S&P, but less volatile than the homebuilders alone. See below, compared to TOL and DHI. (Click Graph to enlarge)There are only two home-builders in the top-10 holdings. The rest are suppliers and retailers. In fact, it’s an equal-weighted index of 31 companies that includes 9 homebuilders—about 30%.

XHB is an S&P-based SPDR, so it is well-sponsored with a broad following. You should be aware that it is comprised of around 1/3 builders, 1/3 suppliers, and 1/3 retail. And this area is hot right now.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

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So what has gone wrong in China?

The slowdown in Chinese economic growth has led to a 4% market decline this year, even as other world equity markets are growing at a double-digit rate. It may even have contributed to the recent record drop in Japanese stock prices. But what’s causing their economy to sputter?  Read More »

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Why has China grown so rapidly? 

There are lots of low-wage countries. In the ‘90s the “Asian Tigers” of Singapore, South Korea, Taiwan, and Hong Kong specialized in finance or high-tech manufacturing and developed rapidly. Now they are fixtures in the global economy, hosting some world-class businesses. Read More »

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Has China lost its mojo? 

During the late ‘90s and early ‘00s the country became a manufacturing powerhouse, using inexpensive labor and managerial skill to surpass Japan, Germany, and the US in global exports. The value of its stock market soared, growing 5-fold between 1999 and 2007. China’s economy, and especially its coastal areas, have become boom-towns.

But since the Financial Crisis that market has been in decline. Stocks have fallen 60%, led by Chinese oil companies and banks. While other indices have gone on to reach new highs, The best the Chinese composite did was come to regain about a third of what it lost—back in 2009. Since then, the market has been in a steady down-trend.

Has China caught a Japanese flu? Back in the ‘80s Japan’s market was soaring, only to collapse under its own financial bubble. All their borrowing and spending couldn’t jump-start that economy, and their market has been on a 20-year slide.

But China is not Japan. Their economy is still expanding at a dramatic rate because they are a developing economy still building tangible and intangible infrastructure. There’s no evidence that their share of global trade is falling, and their entrepreneurial culture is intact.

China’s economy is still highly competitive. It’s market pullback will reverse, once they deal with some of the problems their growth has created. 

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

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Golf is something that as a family we all enjoy; granted sometimes when I am playing; I truly wonder what part of it I DO enjoy!  A few weeks ago, we set out to play golf at a long-time favorite course.  My daughter declined to play, so my husband and two son’s and I ventured out for what was to be a memorable Sunday afternoon.

If there was to be a red flag wagging, it would have been at the first hole.  The boys tee’d off and I must say, they made me proud.  I then stepped up and after a long winter (in my own defense) I  sliced one clear to the right, directly into a torn up area on the fairway.   Unhappy and begging for mercy, I tried again.  It wasn’t perfect, but it got me into the middle of the fairway about 100 yards up.  Next up was my husband.  He tee’d it up and proceeded to visualize where it would land.

The boys and I were ready to move on, knowing full well that armed with a massive club like that in his hand, we would have yards to catch up to my husband.  Leaving him in his thoughts, we walked back to our bags to put our clubs away and select the next club that would bring us the bragging rights we were all competing for.  As a joke, we hid behind the cart trying to throw my husband off in his concentration.  Sure enough we succeeded; the ball drove fast and hard into my son’s shin.  In my husband’s blaze of glory he went down in flames, a story that will only get better as it is retold year after year.

Having had a good laugh, after making sure my son was okay, we finished our round.  All-in-all we did well on some holes and other holes we would rather forget.    You are probably asking what in the world does this have to do with investing?  Don’t let life’s distractions get in the way, there are always going to be those line drives or near misses, financial setbacks, unexpected life changes, that make you want to surrender.  But perseverance and focus on the end result is where you’ll find the reward.  It’s the journey that get’s you there that makes it all the more interesting.

Diane E. Guimond
Wealth Advisor

dguimond@chartertrust.com!
603-545-7285

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So how do you stay safe in the mountains? 

One way to stay safe is not to go–to conclude that the risk is too great, that the weather is too poor and the opportunities too scanty. So it’s just more rational to stay home and water the garden.  Read More »

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In spite of all you do, stuff happens.

In spite of all your preparation, all your planning, all your experience, mountains and markets can and will surprise you. Mountains are chaotic systems: they disrupt the airflow around them, and so they can create extreme situations, where the turbulent winds and a lack of cover transform a beautiful clear day into a massive maelstrom where there’s no shelter. Read More »

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It’s been said that the difference between danger and disaster is preparation.

“Be prepared” is the motto of the Boy Scouts, and it’s good advice when you’re headed into the mountains. You need to be physically ready for challenge of the peaks—core body strength, cardio-vascular endurance, and mental energy. You need to have adequate clothing and emergency supplies, like a headlamp and compass. And you need to know the mountain and trails you’re going to. Maps, guides, and experienced friends help you understand where you are and what surprises might be around the next bend in the trail.  Read More »

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What are your limitations? 

It’s tempting to disparage limits, to say that they stop people from doing what they want to do when they want to do it. But setting limits is just a way of acknowledging our humanity—that we live in a real world, not a projection of our own imaginations. Read More »

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How does respect fit into risk management?

When you’re in the mountains, the first thing you learn is respect for the mountain. No one ever “conquers” a peak. Hillary didn’t “conquer” Everest; Whymper didn’t “conquer” the Matterhorn. The men and women who made first ascents did something unprecedented, but the mountains are still there. Read More »

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