A Sneak Peek at a Winning Portfolio
Wednesday, June 3, 2009 | Teeka TiwariRating:
Sector (sek-ter), noun: a distinct part of society or of a nation's economy: the housing sector; the educational sector.Hunter (huhn-ter), noun: a person who searches for or seeks something: a fortune hunter.
This week marks two significant anniversaries for Sector Hunter ...
The first anniversary is its 1-year birthday: on June 1st 2008, Sector Hunter Version 1.0 was released to students who completed my full ETF Master Trader course (without having taken the course, Sector Hunter in its early form would have been virtually impossible to use).
The second anniversary is, in many ways, even more significant than the first: this Saturday marks 90 days since we released Sector Hunter Version 2.0 as a stand-alone product to our Tycoon Report readers.
After years of planning and a full year of grueling development, our dream was finally realized:
Sector Hunter Version 2.0, was created for folks who didn't have the time and/or desire to want to learn exactly how my trading system hunted sectors.
It was the perfect solution for people who just wanted to know which stocks and ETFs (exchange traded funds) to buy, when to buy them, and when to sell them.
I'm often asked why we spent so much time and money to create a system that we don't even actively sell.
Why create a system that was only on the market for a total of five days (the time it took us to hit our initial membership limit of 1,000 people).
Was it for bragging rights? Did we do it to be able to say that we created the world's first system of its kind? The answer is a resounding NO!
For starters, we're far from the first firm to ever have created a sector hunting system this complex. Systems like this have existed for years on Wall Street -- it's how I first learned about them!
But we are the first firm to my knowledge to have released a system like this to the investing public, and that's what really matters.
Why?
Because during the past year -- during the Worst Financial Crisis Since the Great Depression -- Sector Hunter put out a total of 881 BUY and SELL recommendations.
The result? Fully 90% of all trades have been winners.
The one recurring theme among these fantastic winners is the sectors that they are in.
And that's perhaps the last great secret left on Wall Street today -- the relationship between sectors and the stocks within them, as well as the ETFs that track the sectors.
Research shows that up to 80% of what constitutes "getting it right" in the stock market is being in the right sector.
Take the China "sector" for example (Sector Hunter tracks countries as sectors also):
On November 20th, Sector Hunter recommended two stocks and one ETF from China - Netease (SYM: NTES) proceeded to trade for a 125% gain, Shanda Interactive (SYM: SNDA) for a 170% profit, and S & P SPDR (SYM: GXC) for a 91% gain.
We can see that these winners are all related to the mega trend of global development, specifically the growth of China! And that tells us that the real growth story is not happening in the United States.
(If there is one absolute to investing that you must completely accept, it’s that investment money flocks to where earnings are strongest and earnings visibility is highest.)
But which sectors should you be investing in right now? Which sectors and their representative stocks, ETFs and options should you buy, sell or hold right now, after the market's move from 6,500 to almost 9,000?
I can't give you a super-detailed answer ... that wouldn't be fair to Sector Hunter members who pay for this kind of information. But the good news is that, on Wednesday June 26th, Sector Hunter will be accepting 500 new members for the first time since we launched the new service 90 days ago!
Until then, I'm not going to leave you completely hanging! As for which sectors to invest in right now, I logged into Sector Hunter today and this is the essence of what I found:
Bullish Sectors (Bullish Status means the sector is squarely in the "sweet spot" of Sector Hunter's "Buy Range". Buys from this level are typically profitable 96% of the time):
After the market's recent (and quite remarkable) rally, it's no surprise that Sector Hunter is not overtly bullish on any sectors.
However, the Biomedics Genetics sector is getting stronger and may ( I repeat "MAY") become bullish in the near future, but as of now it's too early to call.
(If the Biomedics Genetics sector does becomes bullish, Sector Hunter would recommend the top 3 stocks and the top 3 ETFs representing the sector, for a total of 6 trading opportunities.)
Bearish Sectors (Bearish Status means that this sector has put in a Sector Hunter sell signal. New buys should be avoided in this sector):
1. Buildings Sector
2. Gaming
3. Machinery Tools
4. Retailing
While there are only 4 sectors with Bearish Status, fully 40% of all sectors tracked by Sector Hunter are getting weaker and may (I repeat "MAY") become bearish in the near future.
Neutral Sectors (Neutral Status means these Sectors are just sitting on the fence and "middling." They are neither bullish or bearish):
1. Aerospace Airlines
2. Banks
3. Computers
4. Drugs
5. Electronics
6. Healthcare
7. Household Goods
8. Insurance
9. Internet
10. Leisure
11. Media
12. Pollution Control
13. Protection Safety Equipment
14. Savings & Loans
15. Utility Electric
I'd like to leave you with a couple of thoughts in closing.
First, it's important to remember that just because a sector is "Neutral," for example, doesn't mean that individual stocks or ETFs affiliated with that sector can't go higher or lower.
On any given day a stock in a neutral sector can be acquired ... or a stock in a bullish sector can report terrible earnings and see its stock price collapse ... or a stock in a bearish sector can report that the FDA approved a drug it's been working on, sending shares soaring.
As I said earlier, 80% of a stock's or an ETF's movement is based on the activity of the overall sector, but remember 80% is not 100%.
The other important thing to remember is that any individual sector can have over a hundred stocks affiliated and as many as a dozen ETFs that represent that sector.
For example, the Retailing Sector listed above is comprised of 169 individual stocks and 9 ETFs, while the Computer Sector has 170 individual stocks and 17 ETFs ...
The Banking Sector alone has a whopping 405 stocks and 15 ETFs (although I doubt there will be that many stocks left by the end of this recession).
And finally, with this many stocks and ETFs to choose from within each sector, picking the right individual stocks and ETFs becomes as important as picking the right sector.
That's why each Sector Hunter recommendation comes with the top 3 stock and top 3 ETF picks that are expected to perform best within that sector.
On June 26th, another 500 Tycoon Report readers are going to discover why their Wall Street brokers never once mentioned the phrase "sector hunting" to them before.
P.S. -- Believe me when I tell you, we'd love to accept more than 500 members with this release: not only would we make more money, but we'd have even more satisfied customers.
But we have to be careful about the growth of our membership just to protect our existing members. Why? Because if the service gets too big, in some cases, we would artificially move the market.
For example, if Sector Hunter accepted 5,000 new members -- not too far fetched considering that 200,000 people read The Tycoon Report each day -- we would all be competing against each other to buy Sector Hunter's recommendations.
And since many members use the service to trade the options on recommended ETFs and stocks, they can dramatically alter the entry price. That could lower Sector Hunter profits dramatically -- something that we won’t stand for.
Opening Sector Hunter to only 500 new members at a time gives us the chance to make sure the performance of the service does not suffer due to too many new people.
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Teeka Tiwari
Chief Investment Officer
ETF Master Trader
