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These ETFs Could Make You The Next Warren Buffett

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MarketsMuse blog update profiles the best ETFs to invest in according to Zacks Equity Research to become the next Warren Buffett. The ETFs range from technology, to financial, to consumer. This MarketsMuse update is courtesy of Zacks Equity Research article, “Follow Warren Buffett with These Stocks and ETFs“, with an excerpt below. 

Everybody dreams of becoming rich and famous like Warren Buffett, Carl Icahn, Daniel Loeb and David Tepper. After all, these Wall Street gurus have successfully put their money in the right place and continued to reap huge returns.

Buffett’s Berkshire Hathaway has enjoyed an average growth rate of about 20% annually. Furthermore, Berkshire Hathaway has added more than 104% over the last five years that is better than the gain of over 94% from the broader market ETF SPDR S&P 500 ETF (SPY) during the same timeframe.

Thanks to this achievement, following billionaires’ investment strategies is now a fad these days. While investing in Berkshire is always a good way of following Buffett, who is commonly known as The Oracle of Omaha, there are numerous other ways to reproduce this stock market veteran’s investment theme and jazz up one’s portfolio.

Normally, Buffett takes interest in companies trading below what he believes is their intrinsic value.He aims long-term outperformance and apparently ignores short-term downturns. We have analyzed a few stocks that remain Buffett’s favorites and highlight the related ETFs for investors who want to follow this investment veteran.

The ETFs that Zacks Equity Research recommend to invest in to follow in Warren Buffett’s footsteps are as follows:

  • iShares U.S. Financial Services ETF (IYG)
  • SPDR Consumer Staples Select Sector ETF(XLP)
  • Market Vectors Retail ETF(RTH)
  • Consumer Staples ETF (VDC)
  • NASDAQ Technology Dividend Index Fund (TDIV)
  • Direxion iBillionaire Index ETF (IBLN)
  • Validea Market Legends ETF (VALX)
  •  Global X Guru Holdings Index ETF (GURU)

To read more about why Zacks Equity Research named these ETFs the best to be like Warren Buffett, click here.

ETF News

Retail ETFs: Black Friday Trading Strategies

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Courtesy of Daniela Pylypczak

With the 2012 holiday season just around the corner, the U.S. retail sector is already gearing  up for what could be another make-or-break year for many companies. Many retailers generate significant portions of annual revenues and profit during the holiday months of November and December, with Black Friday and Cyber Monday sales accounting for a significant portion of profits. And with this year’s rather dreary global economic outlook, companies have already begun ramping up advertisements and marketing strategies to get Americans on board again with the holiday shopping craze [see also Consumer-Centric ETFdb Portfolio ETFdb Pro Members Only].

According to the National Retail Federation, up to 147 million shoppers are expected to visit stores and shop online this Black Friday weekend. But with many Americans still feeling the pinch, average holiday gift budgets are forecasted to remain conservative as cash-strapped shoppers reign in their spending; analysts expect the average holiday shopper to spend $749.51 this season, up slightly from the $740.57 that was actually spent last year. NRF President and CEO Mathew Shay believes that “More than half of Americans this holiday season will feel the impact of the economy and will compensate by doing what they’ve been doing for several years – looking for ways to cut any corners, comparative shop online and in stores more often, and even planning to travel less or not at all.”

Though consumer spending is not expected to hit its pre-recession highs this holiday season, the outlook is “cautiously optimistic” despite the challenges seen in our current economic environment. For those looking to make a play on the biggest shopping season of the year, we outline four retail ETF options that could see some high levels of activity in the next few weeks.

  • SPDR S&P Retail ETF (XRT): With over $610 million in total assets and an average daily trading volume of 3.6 million, this ETF is by far the largest, most popular and most heavily-traded retail fund on the market. XRT offers concentrated exposure to traditional brick-and-mortar retail giants, spreading exposure across about 95 individual holdings. Top holdings include Barnes & Noble (BKS), Netflix (NFLX), SUPERVALU (SVU), Stage Stores (SSI), HSN (HSNI) and AutoZone (AZO).
  • PowerShares Dynamic Retail Portfolio (PMR): This ETF is part of the PowerShares lineup of “intelligent” ETFs linked to benchmarks that use quantitative analysis in an attempt to outperform traditional cap-weighted indexes. The resulting portfolio is rather shallow with only about 30 holdings, though allocations are nicely spread out across large-, mid- and small-cap firms. CVS Caremark (CVS), Kroger (KR), Costco (COST), Wal-Mart (WMT) and Limited Brands (LTD) make up PMR’s top five holdings. Continue reading →