Dion Money Management Blog   Money Management for Retirees and Their Families

As I explained earlier this week, commodities have become difficult to tame as the broad market works its way through this current rough patch. While attempting to target the broad resource spectrum as a whole may be tricky at this time, there are individual segments that are showing promising strength.

Agriculture, for instance, has stood out in recent weeks as crops such as corn and wheat generated headlines. This scenario is boding well for equity-backed ETFs linked to the farming industry.

The veteran Market Vectors Agribusiness ETF (MOO) has enjoyed a welcomed jolt of activity as rising food prices drive investors towards farming-related companies like Mosaic (MOS) , Deere (DE) , and Monsanto (MON) .

According to the May flow data compiled by the National Stock Exchange, MOO topped the list as being the single largest inflow recipient. Over the course of the month the fund gathered $1.4 billion.

Meanwhile, the region’s popularity has also aided younger funds, such as the Global X Fertilizer/Potash ETF (SOIL) .

Fertilizer and potash has become a popular subsector of the farming industry as investors seek ways to benefit as farmers work to boost crop yields. SOIL is designed to hone in on this industry by spreading its assets across 29 related companies around the globe. Top holdings include CF Industries (CF) , Yara International, and Potash of Saskatchewan (POT) .

In a little over three months, Global X has rolled out four ETFs designed to provide investors with access to various segments of the food industry. Launched in late May, SOIL is the third of these products. Others include the Global X Fishing Industry ETF (FISN) , Global X Food ETF (EATX) and the Global X Farming ETF (BARN) .

As I’ve noted on a number of occasions, it is usually not a good idea to dive into brand new products such as these. Rather, I typically encourage investors to wait a few weeks or months to see if a young fund can generate enough volume to be considered a stable.

While FISN, EATX, and BARN are still working to gather steam, SOIL already appears to have gotten off to a rousing start. In the two weeks following the fund’s initial launch, SOIL has enjoyed heavy interest. Already, the fund boasts an average trading volume of over 90,000.

SOIL’s impressive initial action bodes well for the fund as it works towards becoming a major force within the ETF industry. However, there are still plenty of reasons to use caution before jumping in.

For one, the fund’s tight investment focus will likely make it inappropriate for conservative minded investors. Additionally, the fund’s track record is still short. In the weeks ahead, investors should keep a watch on the fund to ensure that interest persists.

Food is in focus and investors are clamoring for exposure to the agriculture industry. This, in turn, is aiding ETFs designed to provide investors with access to components of the farming sector.

Looking ahead, MOO continues to stand out as the strongest option dedicated to this corner of the marketplace. However, with interest piqued, young funds such as SOIL could soon become a force to be reckoned with as well. Risk tolerant investors may want to keep this fund on the radar.

Disclaimer

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to fnd out who’s winning and who’s losing when it comes to ETFs.

Global X Norway ETF (NORW) 1.5%

Although crude oil prices are sliding, the energy-heavy Norway ETF is managing to hold onto gains.

NORW continues to stand out for investors looking for European exposure outside of the E.U. Use caution though. The fund has struggled to power through its 50-day moving average since dipping below in early May.

iPath Dow Jones UBS Coffee Subindex Total Return ETN (JO) 1.3%

Coffee prices are getting a jolt at the start of this week, pushing the futures-backed JO to ETF industry leading gains.

The broad soft commodities spectrum is witnessing bipolar action. While JO is heading higher, funds designed to follow sugar, cocoa, and cotton are in trading in negative territory.

Market Vectors India Small Cap ETF (SCIF) 0.9%

2011 has been a rough year for the Indian marketplace as corruption concerns and inflation fears have weighed heavily. Because it tracks a basket of small, volatile companies, the SCIF has been one of the heaviest hit India-tracking funds. The fund appears to have solidified a bottom but I urge investors to continue to exercise caution here.

iShares Silver Trust (SLV) -3.1%

The market’s mixed action is doing little to quell the investor concerns that have developed over the course of its six-week retreat. In response to these jitters, the industry-linked precious metals like silver and palladium are retreating.

Gold is struggling to hold up as well as both bullion- and miner-backed gold ETFs are trading lower.

Global X Uranium ETF (URA) -3.0%

The uranium industry is facing daunting headwinds as Fukushima concerns continue to weigh heavily on investor sentiment. So far, June has been a dismal month for URA. Since its start, the fund has stuck to a steep, downward path.

I urge investors to use extreme caution in the uranium industry. URA is now trading at new 2011 lows and it is unclear when the fund will find footing.

SPDR S&P Oil & Gas Exploration & Production ETF (XOP) -2.6%

Oil prices are taking a hit, pushing many of the oil producers underlying XOP and other producer-tracking ETFs into negative territory.

Natural gas is not faring better. The First Trust ISE Revere Natural Gas Index Fund (FCG) and the futures-backed United States Natural Gas Fund (UNG) are both witnessing losses in early afternoon trading.

Disclaimer

Using ETFs, it is possible to alleviate some of the headaches associated with today’s rocky commodities investing environment.

Up until recently, commodities stood out as a popular destination for many investors as sweeping global market strength helped propel the prices of metals, agricultural products, and energy sources along seemingly uninterrupted upward paths.

Over the past few weeks, however, commodities have stopped moving in unison, calling into question this full-steam-ahead mentality. While some resources such as corn are powering toward record highs, others such as nickel are facing substantial headwinds.

Investors looking to follow suit and take on a malleable approach to commodities investing may want to consider looking at managed futures exchange traded products like the Elements S&P CTI Total Return ETN (LSC) and the WisdomTree Managed Futures Strategy Fund (WDTI) .

Both LSC and WDTI track the performance of futures contracts that are linked to a diverse collection of commodities ranging from gold and silver to live cattle. However, unlike traditional commodities-related ETFs and ETNs, these funds are designed in a way that will allow investors to better navigate uneven scenarios.

Rather than simply going universally long, LSC and WDTI use rules-based strategies to determine whether to go long or short individual index components. This way, the fund can benefit from the strength of outperformers as well as the weakness of underperformers.

At this time, the exposure of these two funds is appropriately representative of the bipolar state of the commodities industry. LSC is currently flat energy, long grains and precious metals, and short industrial metals, livestock, and soft commodities such as cocoa and sugar. WDTI’s split is similar.

WDTI boasts a more expansive portfolio than LSC, however. On top of providing investors with exposure to the commodities spectrum, the fund also sets aside a portion of its portfolio for currencies and Treasuries. Currently, the fund is nearly universally long this category. The Canadian dollar stands out as its only short position.

The more expansive exposure gained by using WisdomTree’s fund comes at a cost. The fund currently carries a 0.95% expense ratio. LSC meanwhile charges investors 0.75% in fees.

Over the past 30-day period, this managed futures approach has paid off. Not only have LSC and WDTI successfully beaten the performance of passive, broad-based commodities futures ETF products like the PowerShares DB Commodities Fund (DBC) , the funds have also outperformed the SPDR S&P 500 ETF (SPY) .

It is crucial to note that, while attractive given the current investing scenario, both LSC and WDTI have struggled in the past to generate interest. Light daily trading volume may make these funds particularly susceptible to liquidity issues. Be sure to keep any exposure small and focused.

As we work our way through this slow, arduous multi-week soft spot, many regions of the marketplace have become increasingly difficult to navigate. For instance, a glaring split has reared its face in the commodities realm. LSC and WDTI are two funds that may help relieve some of this uncertainty.

Disclaimer

Here are five ETFs to watch this week.

Teucrium Corn ETF (CORN)

This futures-based corn ETF took off at the close of last week following the USDA’s decision to slash supply expectations. The fund is currently trading at all-time highs.

Skyrocketing food prices are helping to thrust equity-based agricultural ETFs into the spotlight. As I noted last week, the veteran Market Vectors Agribusiness ETF (MOO) has become wildly sought after. According to the May flow data compiled by the National Stock Exchange, the fund topped the list of inflow gainers.

The popularity has aided fledgling agriculture ETFs as well. Although it has only been available for a few weeks, the Global X Fertilizer/Potash ETF (SOIL) has gotten off to a strong start, with the fund’s average daily trading volume already topping the 100,000 shares.

iShares MSCI All Peru Capped Index Fund (EPU)

The Peru ETF had a roller-coaster performance last week as investors digested the results of the nation’s recent presidential election. Although the fund started off the week with a steep drop, revisiting previous 2011 lows, it spent much of the ensuing days recovering lost ground.

In the next few weeks, it will be interesting to see how politics will affect the performance of Peru’s markets. Miners, which account for a large percentage of EPU’s index, could take a hit in the event that the newly elected president attempts to raise taxes.

SPDR S&P Retail ETF (XRT)

A number of retailers are scheduled to report their quarterly earnings performance this week. The performance and outlooks from companies such as Best Buy (BBY) and Kroger (KR) will provide investors with information regarding the state of the U.S. and global consumer.

This week’s economic calendar boasts a number of consumption-focused data points as well. On Tuesday, the retail sales report for May will be released.

XRT has run into significant headwinds recently as dicey market action weighs on investor outlooks. I urge investors to keep this fund on the radar, however. The consumer’s recovery remains an interesting story to watch.

iShares Dow Jones Select Dividend Index Fund (DVY)

Dividend investing has fallen into favor in recent weeks as investors attempt to defend their portfolios against market turmoil. DVY has proven to be a popular destination for cautious ETF investors. The fund has enjoyed above average trading volumes on six of the past seven trading sessions.

On Thursday, Global X announced the launch of a new product aimed at satisfying investor demand for dividend-paying equities. The Global X SuperDividend ETF (SDIV) has gotten off to an excellent start, with trading volume over 300,000 on its opening day. While investors should continue to hold off until the fund generates a stable following, SDIV could prove to be a force to be reckoned with among dividend ETFs.

SPDR S&P Homebuilder ETF (XHB)

The homebuilder ETFs have had a rough start to June as the outlook for the residential real estate industry remains weak. Since the start of the month, the fund has seen only one day of upward action.

Investors will learn more about the start of the housing market during the middle this week as a deluge of industry-specific reports come through the wires.

XHB will be particularly interest on watch on Thursday when top holding Pier 1 Imports (PIR) reports earnings.

Disclaimer

Here is my list of this week’s ETF winners and losers.

iPath Dow Jones UBS Sugar Subindex Total Return ETN (SGG) 7.3%

Investors who have been monitoring SGG’s performance over the past few months are learning first hand of the roller-coaster nature of single commodity-tracking ETNs.

Since the opening days of May, the fund has taken a steep, largely interrupted upward trajectory. That action is markedly different from the fund’s performance in April, when shares of SGG fell on all but five trading days.

The agriculture industry is attractive. However, given this type of wildly volatility, I urge conservative-minded investors to look elsewhere for exposure. Options such as PowerShares DB Agriculture ETF (DBA) and Market Vectors Agribusiness ETF (MOO) will behave more reliably over longer time frames.
ETFS Physical Palladium Shares (PALL) 3.7%

Since bouncing off levels near 2011 lows in mid-May, the physically-backed palladium ETF has been on a steady upward path. This week’s strength has helped to push the fund back toward early March levels.

This strength is interesting considering the broad market’s shaky action over the past few weeks. Palladium is used extensively in the production of catalytic converters and, therefore, tends to trade in line with the marketplace. This fund may prove to be interesting to watch in the days ahead.

Market Vectors Russia ETF (RSX) 2.4%

Crude prices were closely watched following this week’s OPEC meeting. In response to the group’s inability to agree on output, oil prices headed higher.

The upward action that took place in the energy markets boded well for RSX, and pushed the fund to industry-leading gains. Oil and gas players including Gazprom and Lukoil make up the largest slice of this fund’s index.

Guggenheim Solar Energy ETF (TAN) -7.4%

Weak market action combined with ongoing concerns about Europe’s looming debt issues helped to create ample headwinds for the volatile solar energy sector.

This week’s losses have helped push TAN further along the downward path it has been traveling since the start of May. The retreat has been dramatic. The fund is currently trading at levels last seen in July 2010.

iShares Dow Jones U.S. Home Construction Index Fund (ITB) -5.9%

ITB’s dismal action over the past week once again reminds investors of the ample headwinds facing the residential real estate industry.

The coming week’s economic calendar is laden with real estate-related data points. Although I urge long-term investors to steer clear of ITB and SPDR S&P Homebuilder ETF (XHB) , these reports will likely prove interesting.

iShares MSCI Thailand Investable Market Index Fund (THD) -4.8%

Thailand’s market has run into substantial headwinds over the past month as market jitters send investors fleeing from volatile members of the emerging world.

THD will likely be in store for continued shakiness in the coming weeks as investors look to the national elections that are scheduled for July 3.

Disclaimer

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to get a feel of who’s winning and who’s losing when it comes to ETFs.

Winners

iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) 2.9%
Natural gas prices are trekking higher, helping the futures-based GAZ and United States Natural Gas Fund (UNG) close out the week on a strong note.

Equity-based ETFs designed to tap into the energy sector are getting a lift as well. The Global X Uranium ETF (URA) and Market Vectors Coal ETF (KOL) are also listed among the day’s notable gainers.

SPDR S&P Russia ETF (RBL) 2.7%
Outside of the United States, a number of international ETFs are benefiting from the energy lift as we head towards the close of the week. Russia and Norway are two notable climbers.

Investors can gain heavy exposure to these two nations through funds such as RBL and Global X Norway ETF (NORW) respectively.

First Trust ISE Global Copper Index Fund (CU) 2.0%
Commodities strength is extending beyond the energy industry. Metals-producers such as those underlying the CU are witnessing positive action as well.

Precious metals miners are gaining ground as well, with Global X Silver Miners ETF (SIL) and Market Vectors Junior Gold Miners ETF (GDXJ) jumping.

iShares Dow Jones U.S. Home Construction Index Fund (ITB) (ITB) 1.5%
The homebuilders are seeing strength, pushing ITB to its third day of gains. With Friday’s upward action the fund has managed to pierce through its 50-day moving average for the first time since the start of the month.

The residential real estate industry remains an area of concern. Investors should use extreme caution here.

Losers

iShares MSCI Turkey Investable Market Index Fund (TUR) -2.6%

Although it witnessed a bounce during the opening half the week, the past few days have been painful for the Turkey ETF. With Friday’s losses, the fund has retreated back to levels last seen during mid-March.

May was a tough month in general for TUR. Since hitting 2011 during the opening days, it has been on a steep decline, breaking below its 50- and 200-day moving averages.

iPath S&P 500 VIX Short Term Futures ETN (VXX) -1.8%
The markets are witnessing gains on Friday, closing out a choppy week on a positive note. In response to this upward action, the VIX-tracking VXX is stumbling.

VXX has lost ground for four consecutive days, pushing it new all-time lows.

Disclaimer

Although they tend not to generate the same wild fanfare as their gold and silver counterparts, the platinum group of metals could be in store for gains as we prepare to head into the second half of 2011.

Investors can gain direct access to these industrious metals through physically-based ETFs including the ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL) .

Alternatively, both platinum and palladium can also be found underlying physically-backed precious metal basket funds such as ETFS Physical Precious Metal Basket Shares (GLTR) and ETFS Physical White Metal Shares (WITE) .

So far, this year has been difficult for this class of precious metals; as silver and gold have generated headlines and flirted near record highs, platinum and palladium have largely flown under the radar. Year to date, both PALL and PPLT have lagged other precious metal options.

PALL, the worst performer among the bullion-backed precious metal ETFs, has had a particularly rough ride. Despite the market’s gains and ongoing investor interest in precious metals, the fund has remained locked in negative territory over the first five months of the year.

Although their performance in recent months has been lukewarm, these two precious metal players may see a lift in the near term.

That’s because the state of the auto industry has and will continue to play a major role in directing the performance of these two metals. Both platinum and palladium are used extensively in the production of catalytic converters. Therefore, I have often urged investors with exposure to these metals to keep a close eye on the ongoing global automotive sector recovery.

The production resurgence from Toyota and other Japanese car players should provide both palladium and platinum with a welcomed boost.

While the prospects for platinum and palladium will improve as car companies continue along the road to recovery, the supply picture appears to point to strength as well. As

The combination of an improving global automobile industry and supply shortages is painting an optimistic picture for palladium and platinum as we move ahead, and funds like PALL and PPLT may prove attractive in the coming weeks and months. However, it is important to note that these two components of the precious metals industry tends to behave a volatile manner.

Therefore, while it may be tempting to dive headfirst into either of these funds, both are best approached conservatively. By using PALL or PPLT in combination with a gold-based product like iShares Gold Trust (IAU) , investors can construct a well-diversified precious metal portfolio.

Disclaimer

The temperature is heating up here in the Berkshires and for many here and across the U.S., this means a time to escape the day to day office life and enjoy some welcomed rest and relaxation.

While many are counting down to the time when they can replace their desk chairs with beach chairs, for others, the introduction of the summer months can present a number of attractive investing opportunities.

Within the ETF universe there are a number of products that may prove exciting to watch over the next few months.

PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ)
Investors can profit as friends and family escape the workplace for the fun in the sun. PEJ is a unique, consumer-focused ETF product designed specifically to track the companies responsible for providing individuals with the food, fun, and entertainment that define summer vacation.

The fund’s top holdings include Starbucks (SBUX) , Las Vegas Sands (LVS) , Carnival (CCL) , and Disney (DIS) . Despite its niche focus, PEJ’s index is relatively well-diversified. The fund’s 10 largest positions account for less than half of its index.

iShares Gold Trust (IAU)
As we have seen so far this year, it is difficult to predict when and where the next bout of market turmoil will originate. Given this uncertainty, investors will want to make sure that they maintain a level of defense when it comes to navigating the market the next few months. Gold, bonds, and dividend-paying equities will come in handy when it comes to weathering turmoil.

Another precious metal ETF to keep an eye on will likely be the iShares Silver Trust (SLV) . This shiny, industrious metal has run into headwinds since falling from near record highs. In the near future, it will be interesting to see if volatility persists.

iShares MSCI EMU Index Fund (EZU)
The first half of 2011 has been inundated with concerning international stories and events including the bloody political turmoil in the Middle East, and the devastating Pacific earthquake.

Meanwhile, in Europe, ongoing sovereign debt issues have continued to generate headlines and raise investor ire. As vulnerable nations including Spain, Ireland, and Greece work to battle economic headwinds, this region will likely be one to keep an eye on. Risk tolerant investors looking to track the developments in this corner of the developed world will want to keep EZU on the radar.

EZU boasts heavy exposure to troubled nations such as Spain, Italy, and Portugal. However, with Germany and France headlining the geographic breakdown, the fund may be able to offset some of the region’s volatility.

iShares Dow Jones Transportation Average Index Fund (IYT)
Rising energy prices have been on the minds of many as they prepare for the summer travel season. Interestingly, however, oil’s ascension has had only limited effect on the companies underlying the Dow Jones Transportation Index so far.

Over the most recent three month period, IYT has managed to outpace the broader SPDR Dow Jones Industrial Average ETF (DIA) by a comfortable margin.

Although the impact has been limited so far, it will be interesting to see if energy prices will affect the plane, train, and delivery industry as summer presses on. IYT’s performance may also provide investors with insight into the state of the consumer. Companies like Delta (DAL) , FedEx (FDX) and Union Pacific (UNP) will benefit as individuals take to the rails, sea, and sky.

First Trust Dow Jones Internet Index Fund (FDN)
The Internet industry will be on investors’ minds over the next few months as they attempt to profit from the hot social media industry. Following the successful IPOs of LinkedIn (LNKD) and Yandex (YNDX) , many have begun to question whether we are in the midst of a new Internet bubble. This debate will continue to rage in the months ahead as the markets seek to uncover clues regarding the futures of Zynga, Twitter, and Facebook.

FDN is an attractive, well-diversified product for investors looking to access the Internet’s popularity. Rather than exposing investors to volatile, newly IPOed firms like LinkedIn, this fund combines exposure to weathered online veterans including Google (GOOG) and Amazon (AMZN) .

Disclaimer

Here are five ETFs to watch this week.

iShares MSCI EMU Index Fund (EZU)
Europe took center stage last week as investors were once again reminded of the debt crises facing vulnerable euro members. During this week, it will be interesting to see if these issues remain on the forefront of investors’ minds.

I continue to urge investors to avoid products with heavy exposure to nations like Spain, Italy, Greece and Ireland. Rather, risk-tolerant investors seeking exposure to this corner of the developed world may find nations outside of the euro bloc attractive. Over the most recent 30-day period, funds like the iShares MSCI Sweden Index Fund (EWD) and iShares MSCI Switzerland Index Fund (EWL) have managed to outpace EZU.

Market Vectors Vietnam ETF (VNM)
Inflation concerns have wreaked havoc on the Vietnam’s market, leading the VNM to suffer a heavy bout of losses. Throughout the latter half of May, the fund witnessed a steep sharp sell-off, ultimately resulting in new all-time lows.

VNM’s steep decline over the past few weeks can be viewed as a reminder of the volatility inherent in emerging and frontier markets. Although nations like Vietnam can witness strong upside action during times of market euphoria, it is crucial to keep exposure to these countries small and focused. This way, investors can protect against weakness.

First Trust NASDAQ Global Auto ETF (CARZ)
In its opening weeks of trading, First Trust’s automotive ETF has struggled to gather much of a following. During this shortened week, however, CARZ may be a product to keep an eye on.

Auto and truck sales numbers are slated to be released this Wednesday. Whereas in the past I have often pointed investors to products such as SPDR S&P Retail ETF (XRT) or the iShares Dow Jones U.S. Consumer Goods Index Fund (IYK) in order to track the car industry, with the introduction of CARZ, investors can now gain direct access to the top car makers from around the globe.

Ultimately, CARZ should be watched from the sidelines. The fund’s paltry average trading volume makes it vulnerable to liquidity issues.

Utilities Select Sector SPDR (XLU)
XLP and other ETFs designed to track defensive market sectors may prove to be popular destinations for conservative investors as we kick off June.

May was a strong month for consumer staples, utilities, and the health care sector. As wide-reaching global economic concerns weighed heavily on the broad market indices, the Consumer Staples Select Sector SPDR (XLP) , XLU, and Healthcare Select Sector SPDR (XLV) managed to outperform.

Looking to the near future, many of the same issues that plagued the global markets in May look set to continue. Devising a strong plan for defense will be essential to successful market navigation.

PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ)

The summer vacation season is gearing up and as consumers prepare to escape their offices for a little rest and relaxation, investors may want to keep the PEJ and other consumer-focused funds on the radar.

Despite concerns regarding the detrimental effects of rising commodity costs, the consumer has proven to be a resilient corner of the market during the first half of 2011. It will be interesting to see if this strength holds up during the coming months.

Disclaimer

As he has quipped in the past, Warren Buffett’s favorite holding period for any investment is “forever.” By sticking to a long-term time horizon when structuring his legendary investing portfolio, the famed investor has been able to weather the numerous short term shake-ups during his multi-decade career.

In examining his current holdings lineup, it is possible to uncover clues that will help retail investors mimic this financial titan and profit over the long run.

Buffett’s portfolio taps into a wide range of market sectors, providing the investor with exposure to industries ranging from energy to health care. The largest chunks of the Berkshire Hathaway (BRK.A) portfolio, however, are dedicated to companies in the financial sector and consumer sector. These two components help to exemplify one of the major strengths of Buffett’s portfolio.

Heavy exposure to financial goliaths like Wells Fargo (WFC) , American Express (AXP) and US Bancorp (USB) places the Berkshire Hathaway portfolio in a strong position to benefit during times of market euphoria. Financials and other cyclical sectors of the marketplace perform best at times when nations are enjoying broad economic growth and expansion.

At the same time, Buffett’s portfolio is also well suited to profit during times of uncertainty. As we have witnessed in recent weeks during shaky market periods, strength tend to gravitate towards more durable corners of the marketplace. Consumer staples are often a notable beneficiary in scenarios such as this.

The Berkshire Hathaway portfolio is laden with companies that will exhibit stability even in the face of market shakeups. Companies like Coca-Cola (KO) , Procter & Gamble (PG) and Kraft Foods (KFT) are a few of Buffett’s largest defensive positions.

Aside from their endurance during times of market uncertainty however, these holdings also offer attractive dividends that will further aid the Nebraska native as the markets work through economic storms down the road.

By simultaneously playing both offense and defense, Warren Buffett has prepared the Berkshire Hathaway portfolio to perform well in any and all market environments. Using ETFs, it is possible for investors to mimic the duality inherent of Oracle of Omaha’s investing strategy.

While it can be tempting to dive head first into the hottest companies and most rapidly-growing nations, I have often insisted that even the most aggressive investors maintain long-term exposure to defensive asset classes like bonds, gold, and dividend-paying equities. While, during times of strength, fast-moving, headline grabbing names may provide plenty of upside, during times of market weakness, investors will be able to depend on ETFs like the iShares Gold Trust (IAU) and the iShares Dow Jones Select Dividend Index Fund (DVY) for some welcomed comfort.

Navigating this slow and often arduous market recovery has taken patience, a watchful eye, and a strong stomach. While I believe that we are on the healing path, I am also confident that hurdles will lie ahead. By following Buffett’s lead and dividing exposure across a combination of offensive and defensive positions, it is possible to overcome these challenges and prepare for long- term strength.

Disclaimer