08/15/2008 Weems:

Q: Hi Ulli: I read your blog regularly and look forward to your weekly newsletter. We are currently on the sidelines thanks to your trend tracking index.

How do you set trailing sell stops for mutual funds? Our online broker only provides this feature with Exchange Trade Funds. For mutual funds, we only find out the price after the market has closed. We can then only sell the next day, and receive the next day's market price, which may be worse or better than the 7% loss target.

Is there a way to have the funds automatically traded on the day they break the 7% stop loss price?

A: Weems: This has been a very common question. Whether you invest in mutual funds or ETFs, you need to track your sell stops separately on a spreadsheet, and enter the order the next day after your stops have been triggered.

I only work with day-ending prices only, and that applies for ETFs as well. This will avoid you getting stopped out based on intra-day fluctuations.

08/08/2008 Ed:

Q: Thank you for all your sage advice. You are a master tactician in a most perplexing market.

I am wondering, given the housing bailout package Congress recently passed, do you see any real estate ETFs or REITS that are poised for a run-up because they will benefit from this boost? If so, which ones and at what entry point?

Also, do you recommend any entry points for KOL or GAZ? Right now I think coal, with so much American coal being shipped abroad, is perhaps the most attractive of the fossil fuels. How do you see it?

Finally, with the dollar firming, do you expect gold (GLD) to pull back significantly?

Again, thank you for sharing your time and expertise.

A: Ed: Another useless bailout package. I have no idea how this will play out, but I suggest that you watch the trends of those REITs you are interested in. If they break their respective trend lines to the upside that would be a good time to buy. I advise against any bottom fishing.

KOL and GAZ haven’t been around long enough to apply any trend line to see where they are at. The short-term chart I saw makes me want to wait before making any commitments.

We just got stopped out of our Gold positions this week, so yes, maybe this is the end of the trend.

08/01/2008 Tony:

Q: I own some small positions in the XLU, JXI and a few other utilities...EP and Duke energy.

Since people need electricity and utilities pay dividends, I thought adding to my positions to increase dividend accumulation would make sense, even in this bear mkt.

I'm going to be 65 this year, so income is right up front on my must have list.

Would you still wait for the TTI to go positive?

A: Tony: Most sector and country funds run on their own cycles and have nothing to do with the position of the Trend Tacking Indexes (TTIs). You need to look at their own individual trend lines in order to determine which direction they are headed.

Interest rates have been inching higher so utilities will go down in value. Don’t get caught like many investors did last year, by collecting juicy dividends of 7% in some cases and then, at the same time, losing 12% of their principal.

07/25/2008 Doug:

Q: Ulli: This is probably stupid, but I have a long position in two funds closed to new investors and some substantial gains which I hate to loose! I want to hedge the positions but do not know what funds to use?

Position one is T. Rowe Price New Asia and I am currently using "EFU" as a hedge? Position two is Vanguard precious metals and mining and I have no idea what to use as a hedge? Any help will be appreciated.

A: Doug: My hedging efforts have mainly been concentrated on the domestic market. So I can’t be of much assistance.

You did not give the ticker for TRP New Asia, but it seems like a decent fit with EFU. Keep in mind that, as new short ETFs come on the market, more opportunities will present themselves. Although with your precious metals position, you may not have a choice other than an outright sale.

The key here is to lock in your profits and not to give them all back.

07/18/2008 Ray:

Q: Ulli: I have been out of touch with the market for the last couple of weeks, and I noticed recently that your bear funds are a buy, and I missed that June 25 call. I actually have about an 8% long position (in funds) that has done well simply because they are energy related. Do you think it is too late to initiate a bear fund position?

A: Ray: Sure, as long as you use a trailing sell stop and ease into the short position with a small amount. It all depends on your risk tolerance.

07/11/2008 Ron:

Q: Ulli: I just read your Monday blog (2 weeks ago), and it actually triggered a few questions that I have related to your buy strategy.

I do like your answer about being flexible and simply follow the TTI. But don’t you also want to have a diversify portfolio? (Means having holdings both domestic and international).

Based on the flexible buy strategy, there is a very high probability that you will end up holding more domestic or international stock and very well you can have 100% exposure on all international stocks. Is that still a proper diversification?

I remember either your blog or some article indicating that you never wanted to have more than 50% exposure to international stock even if your risk tolerance is high. What is your thought on this?

A: Hello Ron: A diversified portfolio is fine as long as the trend is there to support an exposure to the international area. To diversify just for the sake of diversifying makes no sense to me.

If that means that I will be invested 100% in domestic equities because the momentum is only present in that arena, then that's where I will invest. Since you should always work with trailing stop loss points, it does not matter how much exposure you have. Too much risk is only a problem, if you don't have an exit strategy.

07/04/2008 John E.:

Q: Ulli: You recommend having stop losses in place on all investments, and I agree. However, mutual funds don't permit them and your suggested stop losses of 7 to 10% are based on day end figures for ETFs.

How do you keep track of prices during the day, or do you just ignore them? Do you have a spreadsheet for tracking prices and % draw downs?

I am a little confused as to how to do the analyses. My broker (TD Ameritrade) offers a stop loss program for ETFs, but I have been stopped out by intra day fluctuations. Any help would be much appreciated. I have a system for buying that works well, but want to get selling under control.

A: John: You need to track your trailing stop losses on a spreadsheet and then enter the order when they get triggered. For ETFs, I use day-end prices only. Never place a sell stop order for an ETF ahead of time, so that you won't be affected by intra-day market swings.

06/27/2008 John N.:

Q: Ulli: In light of your caveat Friday regarding a market downtrend, do you agree with me that Energy and Health funds remain a secure investment as we proceed thru this election year?

A: John: No I don’t agree with that at all. Unless those two sectors are in major up trends, and you have trailing stop loss point in place, then it's fine to be exposed to those markets.

Just to be in those areas for fundamental reason to have something to buy and hold goes against my philosophy.

06/20/2008 Frank:

Q: Ulli: Where would I put approx. $60K of taxable money that would be moderately liquid (I might need some of it to purchase a new car in a year or two or three)? I live in NYC so the city, state & fed taxes are a heavy burden.

Thanks.

A: Frank: Trying to invest money short-term (less than 3-5 years) is something I do not recommend. Since you seem to have short-term needs (buying a car), so keep the money in the bank or buy CDs.

No matter which investment approach you use, there are bound to be fluctuations and they tend happen to the downside most often just when you need the money most. Stay liquid and risk free so that you can take care of your planned purchase.

06/13/2008 Susan:

Q: Ulli: Thank you for your website! If a sell signal comes, where do we put the money? I am thinking not bonds or municipals from your last post? And Money markets have had some negative feedback too?

Since I am following your entry-exit points in my 401k to enhance performance, if I exit my choice is PTTAX or WFIXX? Bonds or money market?

What are your thoughts for the best "squatter" choices?

A: No question Susan, you always want to go to money market. Bond funds will expose you to market risk, which is what we are trying to avoid when on the sidelines.