Sunday, November 26, 2006

The (Trading) World At Your Fingertips

Some of the best trading opportunities are in the least popular investments. Take the world stock markets. Above we have a chart of the S&P 500 Index (SPY; blue); the Vanguard Pacific ETF (VPL; yellow); the Vanguard Europe ETF (VGX; red); and the Vanguard Emerging Markets ETF (VWO; light blue). Going back to March, 2005, we can see that the most popular of the indices has also been the most punk performer. In terms of directional movement and volatility, we've had better trading opportunities from almost any other major portion of the world.

The best investment talent in the world--including many hedge fund and investment bank traders I've been privileged to know--shares one thing in common: they are not restricted to particular trading instruments or asset classes. They also do not limit their trades to vehicles within a particular set of national boundaries. They go where the opportunity is, whatever and wherever that might be.

With ETFs, it is increasingly possible for individual traders to pursue a world full of opportunities. Value vs. growth? National vs. international? Equities vs. fixed income? Currencies, commodities, equity sectors? All can be traded from a single stock market account.

Old habits die hard. We gravitate to the known trading instruments. But there's a trading world at your fingertips--and it's expanding every month.