Advanced Investing

The crowdfunding phenomenon is now taking on real estate investing. Sites like RealtyShares and iFunding are enabling small-time retail investors to become silent partners in projects they could not otherwise afford. Passive investments in real estate have been around forever in the form of limited partnerships. Crowdfunding things like trust deeds just lowers the entry barrier. It does not change the threshold for due diligence. The key to success in real estate has always been location, location, location. A crowdfunding investor can only perform a minimal assessment of a property's value without physically visiting the property. Anyone can log on to Zillow and view the most recent valuations of neighboring properties, or check a parcel's assessed value at the county assessor-recorder's office. Those are beginning steps. The next steps involve property appraisals, traffic analysis, and other checks on the track record of property managers. Those things can be crowdsourced to some extent but there's no complete substitute for traditional on-site legwork. Investing in residential property since the housing bust poses additional challenges. Getting clear title is a problem if a home mortgage was bundled and changed hands several times. I can't know whether a given trust deed on a crowdfunding portal has title problems without checking with a title search company first. I am concerned that novice investors could be hurt by a severe downturn in the housing market just as they were hurt in the housing crash that started in 2006. Buying a share of a note secured by a trust deed is like becoming a hard money lender rather than a title owner. The investor owns a share of a syndicated loan, denominated in dollars as a fixed-income instrument that pays a predetermined yield. If the US economy experiences high inflation, those note owners will see the value of their note evaporate as the dollar loses its value. Meanwhile, the actual property owner (either through an LLP, private REIT, or whatever) laughs all the way to the bank at the stupidity of those crowdfunding note holders. That doesn't happen in normal times but these aren't normal times. I think crowdfunding would work best for small projects that members of a community can see firsthand. Urban farmers could form a land trust, for example, and crowdfund it to establish community gardens in a blighted urban neighborhood. Charities like Habitat for Humanity could crowdfund a housing project for a low-income buyer and hand them title when the project is done. The valuation for such projects would have fewer variables to calculate because they're brand new and presumably unencumbered with the problems of previous owners. Crowdfunding portals can eventually be useful for conventional real estate investors once the housing market stabilizes, with the median property value for a given metropolitan area at somewhere between 2x and 3x of the area's median income. I am looking forward to seeing miscellaneous real estate investments like liens and rights-of-way traded on crowdfunding portals. Investors who have neither the time nor skill to evaluate a crowdfunded real estate project can always choose a publicly traded REIT or real estate index fund (or ETF) instead. A widely held fund has two advantages over a single property. It has no entry barriers or limitations for non-accredited investors and it arbitrages away the location problem by holding a large number of properties. Maybe some sharp investment manager will crowdfund a private REIT.

U.S. equities got off to a relatively strong start as investors turned their attention to the Federal Reserve meeting later this week. In economic news, the New York Fed’s Empire State manufacturing index rose to 7.84 in June, indicating an expansion; analysts had expected a reading of zero. In a separate report, the NAHB/Wells Fargo homebuilder sentiment index soared to 52 in June, marking the first reading above 50 since April 2006 and the biggest jump since 2002 [see The Cheapest ETF for Every Investment Objective]. Global Market Overview: XHB Pops On Homebuilder Data, EWG Jumps On Bundesbank Outlook Recovering from earlier lows, all three major U.S. equity indexes rallied to close in positive territory. The Dow Jones Industrial Average ETF rose 0.74%, after its underlying index logged in its fifth-consecutive triple-digit move. The S&P 500 ETF gained 0.78%, while the tech-heavy Nasdaq ETF rose 0.94%. In Europe, markets were broadly higher after Germany’s central bank reported [...]Click here to read the original article on ETFdb.com.Related Posts:Daily ETF Roundup: Buy The Rumor, Sell The TweetDaily ETF Roundup: Stocks Rebound From Worst One-Day Drop In 2013Daily ETF Roundup: Housing Data Brings Back The BullsDaily ETF Roundup: Bargain Shopping Euphoria Sparks Rally Daily ETF Roundup: Housing Soars, Earnings Miss

The Wolf of Wall Street movie trailer was just released. The movie is directed by Martin Scorsese and the screenplay is by Terence Winter (of Sopranos and Boardwalk Empire fame). It features Leonardo DiCaprio, Matthew McConaughey, and Jonah Hill as the main actors. We often like to highlight finance related movie trailers, but most of those films are dramas and serious in nature. The Wolf on Wall Street looks to be comedic to a degree and full of antics, as it is based on Jordan Belfort's book, The Wolf of Wall Street. In it, he writes about manipulating stocks in the 1990's at a brokerage firm. If you like Lamborghini Countaches, Ferrari Testarossas, a new song from Kanye West, and suits from the 90's, then this trailer is for you. In essence, this film is somewhat like the movie Boiler Room and should certainly enhance the great reputation Wall Street has with the rest of America /sarcasm. The Wolf on Wall Street movie trailer is embedded below: No release date yet, it just says "coming soon."

Active ETFs have grown in popularity over the last decade as a great alternative to the traditional assets. With the hands-on approach of a mutual fund but the aggressively cheaper price tag, these ETFs have been a strong hold in previous market conditions and today. With the end of the second quarter just around the corner, investors who are curious about this hybrid investment strategy should take a moment to look back at the best performing actively managed funds so far this year.  [For updates on all new ETFs, sign up for the free ETFdb newsletter]. Below, we look at a handful of actively managed ETFs that have surpassed all others since the beginning of 2013: TrimTabs Float Shrink ETF  UP 21.98%: This fund’s goal is to generate long-term returns in excess of the Russell 3000 Index while avoiding the volatility that can arise in the index. By investing in stocks with liquidity [...]Click here to read the original article on ETFdb.com.Related Posts:Complete List Of Active ETFsInternational Bond ETF Guide: All the Options For Ex-U.S. Fixed Income Exposure2011: A Year Of ETF FirstsGetting The Most Out Of Your Bond ETFsOctober ETF Roundup: Launches, Filings, and Closures

Exchange-traded funds have taken the market by storm, with more than $1.5 trillion in assets under management across more than 3,000 securities. These ETFs provide everyday investors with exposure to previously inaccessible corners of the market, while enabling them to build a diversified and low-fee stock portfolio both quickly and easily [see The Cheapest ETF for Every Investment Objective]. Consumer ETFs have become a popular way for investors to hedge a portfolio due to the relatively stable nature of consumer spending. For example, there’s little question that consumers will continue buying toilet paper from companies like Procter & Gamble Inc. (PG) or Kimberly Clark Corporation (KMB), even if the economy turns south. What’s the Appeal? Consumer spending drives approximately 70% of the U.S. gross domestic product (“GDP”), according to data from the World Bank, making consumer stocks an integral part of any diversified stock portfolio. But with so many moving parts [...]Click here to read the original article on ETFdb.com.Related Posts:Beyond XLY: Considering Consumer Discretionary ETFsETF Sector Rotation Strategies: Beyond The SPDRsETFs & Sector Rotation: Large Cap, Small Cap, Or International?Three Years Later: Best Performing ETFs Since Markets Bottomed Out3 Sector Rotation Strategies ETF Investors Must Know

Volatility returned on Wall Street last week, as investors digested a slew of economic news and data. Standard & Poor’s Rating Services raised its outlook for the nation’s credit from negative to stable, leading many to once again speculate when the central bank might scale back its bond-buying program. Meanwhile, the Labor Department reported that weekly jobless claims declined to the lowest level in almost five years. This week, investors will once again see many economic reports. Below, we outline three ETFs that should see a fair amount of activity during the week ahead [see also The Cheapest ETF for Every Investment Objective]: 1. MSCI Germany Index Fund Why EWG Will Be In Focus: This fund is designed to measure the performance of the German equity market, and it is home to over $3.9 billion in total assets. EWG will come into focus on Tuesday as data on Germany’s economic sentiment is released. Economic [...]Click here to read the original article on ETFdb.com.Related Posts:3 ETFs To Watch This Week: EWG, EWU, VXX17 ETFs For Day TradersETF Insider: Buy On The Dip With Caution ETF Insider: Gear Up For Turbulence ETF Insider: Do Fundamentals Justify The Wall Street Rally?

I wrote about Detroit's financial problems three years ago when the city's leadership had a viable plan to fix the city by downsizing its infrastructure. The Detroit Works Project had a blueprint for renewal in 2010. The city has since squandered the time and money it could have committed to that plan and is now facing imminent bankruptcy. This disaster was a long time in the making. Read Detroit's financial statements. The CAFR for FY 2012 has the bottom line up front on page 2, with an accumulated deficit of $326.6M from several years of operating deficits. The CAFR itself is ironically interspersed with happy photos of fun things going on in Detroit. Maybe next year's CAFR can show the Mayor and his state-appointed emergency financial managers turning shovels on bare dirt where their offices used to sit. The Single Audit Report is even worse, with up-front warnings of material weaknesses in Detroit's internal controls over financial reporting. The federal government has every right to cease funding programs in Detroit given these weaknesses, but politics means more than financial sense. Detroit's credit rating at Moody's has seen almost nothing but downgrades and downgrade reviews since 2010, with the exception of February to December of that year when credit facilities backed by the State of Michigan stabilized Detroit's outlook. The city had that window of opportunity (during which I wrote my blog article on Detroit's potential for unbuilding) to quickly begin its downsizing. The city instead has been paralyzed by public employee unions whose members have enjoyed generous pay and benefits for years and are still resisting fiscally responsible cuts to benefits. I think Detroit had the right intention to downsize itself but picked the wrong means to execute. Reviewing the Detroit Works Project's strategic framework reveals color-coded maps of the city's center. The city designated much of its inner core as blighted where no redevelopment would be allowed and tried to pigeonhole specific industries into specific neighborhoods. That's micromanagement, and it's dumb. Detroit is in no position to pick and choose which companies it will allow to move in. Contrast this approach with San Francisco, which has given tax breaks to several digital media companies that came to The City regardless of the neighborhood where they chose to settle. Detroit's detailed plan for renewal is probably going to come undone out of necessity if receivership forces it to move faster. Farms and ranches will sprout again within city limits and former unionized workers had better learn how to plant rows of corn. City managers should radically and immediately liberalize their approach to zoning. The lessons of Detroit for the state of California are obvious. Sacramento policymakers are committed to more of what hasn't worked: more spending on underperforming public schools, more taxes on high income earners, more regulations on business, and more protection for public employee benefits. None of that is going to work in Detroit now that Motor City is crossing an event horizon on its way to collapsing into a singularity.

After another week in the global market, the ETFdb pop quiz returns with another round of questions about France, Financials, and Floating Rate Bonds. As always, all answers can be found using the suite of free tools at ETFdb.com, including the ETFdb Categories, ETF screener and the ETF Analyzer. 1. Which ETF has the most exposure to France? 2. Which Active Currency ETF has the highest average volume? 3. Which Financials ETF has the highest yield to date, iShares Down Jones US Broker Dealers Index Fund or KBW Capital Markets Portfolio? 4. Which ETF has the highest 13 week return? 5. Which Floating Rate Bond ETF has the most assets under management? Also test your knowledge with our past Pop Quizes Energy, Engineering, and Emerging Market Bonds Denmark, Diversified Portfolio, and Direxion Currency, Credit Suisse, and Copper Follow me on Twitter @lynpaintzall Disclosure: No positions at time of writing. Click here to read the original article on ETFdb.com.Related Posts:No Related PostsClick here to read the original article on ETFdb.com.Related Posts:No Related Posts

Economic truth Interpolate many points Educated guess

Reading mainstream reports of economic activity can sometimes be misleading. I generally trust reports from private sector reporting groups like The Conference Board and the Association of American Railroads because their business members are responsible for results in the real world. I am less inclined to trust inflation and employment reports from government agencies anywhere in the world because they are subject to politically-directed changes. I like to compare headlines to the blurbs on Shadow Government Statistics that update one economist's reconstruction of unadjusted US government data. Shadow Stats has maintained its alarmist tone despite the mostly positive headline numbers reported in public media for the past year. Some headlines are beginning to converge with Shadow Stats' larger conclusions. US wholesale prices have just increased more than what many economists had forecast. The data caught up to Shadow Stats' notes on rising inflation. People are free to believe whatever they want. I am impressed with Shadow Stats' critique of government statistics and that is why I give John Williams' assessments more credibility than what headlines have reported. I do not feel sympathy for investors who have tied their asset allocations to conventional theories and official data. Anyone could have searched the web years ago for alternative explanations, just as I have done.