Remembering David Martin

A subscriber to my weekly VIS Alert.com newsletter, David Martin, unfortunately passed away last week from a freak shark attack.

http://today.msnbc.msn.com/id/24325640/

I met David Martin at AIQ’s fall seminars. He was a fan of my ETF rotation approach and used it in his own portfolio. At his last seminar we agreed that the following year we would go mountain biking after the seminar. Unfortunately that ride never happened. He seemed 20 years younger than his real age, always saw the glass as half full, and will be missed. Our prayers are for his family during this difficult time.

AAPTA Seminar

A week ago I spoke at the American Association of Professional Technical Analysts (AAPTA) seminar in San Francisco. While my wife and children enjoyed the sights and sounds of the city, I was able to visit with some of the top technicians in the country.

The AAPTA organization was founded in 2004 and has around 130 members. This organization allows professional technicians to engage in networking and thought provoking dialog.

My session covered the strategies found in my ETF Trading Strategies Revealed book. Since Paul Desmond of Lowry’s Research was the next speaker, I was honored to be the warm up act! It is a bit intimidating speaking to this group but I quickly settled in when I humorously described what you hear on financial TV and what it really means. It goes like this:

"We have great values in our portfolio." translation - Our stocks have been massacred.

"The market sold off on technical factors." translation - We have no idea why the market went down.

"We are short term cautious but long term optimistic." translation - We want to be right no matter what happens.

Although the S&P 500 is near an important 1400 resistance area, I can unfortunately report that Linda Raschke and Paul Desmond remain bearish (both turned bearish at much higher levels). Stan Erlich was more constructive, however, pointing to a developing head-and-shoulders bottom pattern.

I had the pleasure of meeting Tom and Sherman McClellan. Surprisingly Tom knew me from my past appearances on a Los Angeles financial TV show. Tom is extremely knowledgeable on the financial markets. Another highlight was talking to Nelson Freeburg, author of Formula Research. I’ve always admired his detailed quantitative testing.

This was a good time and I look forward to next year’s event.

More on ETNs

After posting our March 10 blog on Exchange Traded Notes (ETNs), a reader posted a question regarding the advantage of ETNs over Exchange Traded Funds (ETFs). In truth, there are only small advantages and disadvantages to each form of security and as a shareholder you likely won’t notice any difference between the two.

The advantage of ETNs is that they eliminate tracking error between the security and the index that it follows. ETFs have some, albeit small, movement away from their underlying indexes. For buy-and-hold investors there may be a tax advantage in ETNs as you can defer capital gains and income until the day you sell your investment. Then again if you need income distributions then ETFs have the advantage.

The disadvantage of ETNs is that they are secured by senior debt notes. Although a company like Barclays with $1.5 trillion in assets is very dependable, it will never be as safe as a central bank. If Barclays and other ETN issuers are forced to close their doors then we’ll have more problems than our ETN holdings!

I treat ETFs and ETNs the same. If I’m looking to trade a commodity and an ETN choice has more liquidity, then that is where I’ll go. There is a good web site called ETNCenter.com with lots of good information on ETNs.

David Vomund
www.ETFportfolios.net