Summer is Coming to Summer With 4 Attractive ETF Ideas

Summer is Coming to Summer With 4 Attractive ETF Ideas ...

This week, we''ll begin with two questions I received last week that are just posing the same thing.

Your thoughts on the market direction and some individual stock/option recommendations would be great and very welcome. Low-cost stocks with a future.

When you saw trade recommendations, I liked them.

Im primarily more of a CEO than anything, but rather a stock picker. I will avoid putting a few of my ideas out there. Ill maintain this by saying that my success rate is probably the same as anyone else and take these picks with a grain of salt.

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A temptation out there today is a temptation towards cash. Ive received multiple messages from family asking if it''s time to go. This is historically speaking, one of the worst things you can do, because then investors ultimately miss out on the rebound that no one can see coming. If a store is selling clothes for 30% off, it''s more likely youll buy them, right?

I adopt the same approach to investing. Be mindful but take advantage of opportunities when they present themselves. Im a fan of moving more than selling. With the benefit of doing very few changes, I have made some sector bets and hedges.

With that being said, here''s where I see some opportunities today.

ARK Fintech Innovation ETF (ARKF)

Yes, I know that ARK and Cathie Wood have become pariahs in this sector. For the record, im still a fan, but you certainly need to understand what youre buying with the ARK ETFs.

Her funds are house run swings. When they work, they are great. When they fail, you probably already know the answer. ARK is down more than 70% from its 2021 peak and is now down since its early 2019 beginning.

As a result of higher interest rates, rising inflation, rising recession risk, and geopolitical concerns in Ukraine, here''s how I look at it. When a fund is down more than 70%, the most of the worst case scenario is already priced in. Could this still be reduced? Sure, I think most of the excess is still shaken out of this sector. Its recent performance is a result of higher interest rates, high inflation, increased recession risk, and geopolitical challenges in Ukraine. All of these are extremely

Fintech is predicted to grow by leaps and bounds over the next decade. If you believe in this trend, you should probably have at least a minor exposure to it in your portfolio. Plus, when this turns around, the ARK ETFs are likely to rip faster than most funds. It''s a high risk play, but it''s also a good deal.

Disclosure: I have a stock of ARKF.

iShares 20+ Year Treasury Bond ETF (TLT)

The same notion in terms of buying after the most significant losses are already had. Most investors are betting on higher rates here based on what the Fed is going to do. My belief is that most, if not all, of the Fed''s investment is financed into the bond market. The 2-year Treasury yield has increased from 0.25 percent in August 2021 to 2.75% recently. It is unlikely that the Fed will increase more than that, given how GDP growth and inflation are expected to fall in the second half of this year.

Investors are likely to turn towards Treasuries again as these risks arise. Any dovish shift from the Fed (which I believe will happen in 2023 at the latest) will send yields down again. I think there is a possibility that yields continue to rise here, but I think it is much more likely that yields begin heading down than up.

Disclosure: I have a stock of TLT.

iShares Biotechnology ETF (IBB)

Biotech is basically in the same position as ARKF in terms of its focus on future-gen technology, which is very out of favor at the moment. The selling in this group, according to me, is overdone.

Recently, a tweet reveals that 20% of the Nasdaq Biotech Index members are trading for less than the cash on their balance sheets. That''s a huge figure. One quote from it - These businesses have $20 billion of cash, but are only $11 billion."

If you see something similar, it might be time to load up. The SPDR S&P Biotech ETF (XBI) is the equal-weighted version of the biotech industry in the event you wanted to spread your bets out (although it would also overweight small- and mid-caps, so risk would go up). Im sticking with the cap-weighted IBB due to the smaller allocations to the mega-caps that add a layer of protection.

iShares AAA-A Rated Corporate Bond ETF (QLTA)

This isn''t a bet on corporate bonds here, but it''s a better way to invest in space. For me, junk bonds are off the table. Over time, yield spreads are rising, and when they reach today''s level, they''re much higher.

Corporate bonds that are investment-grade are a better bet, but they will still be impacted by rising spreads. It''s better to stick with the highest-rated debt you can if you want to invest in corporate bonds.

ETF Sector Breakdown

Let''s look at the markets and some ETFs, with that being said.

Consumer staples were the only sector to post positive returns last week. Real estate has dropped off the radar in the last two weeks and has completely disconnected from its defensive counterparts. Tech continues to struggle to gain momentum and may continue to do so until we see a trigger that decreases market volatility.

The growth sub-sectors have noticed quite a shift in market performance. Blockchain remains largely volatile and subject to large swings either way. For the time being, the positive sentiment about cybersecurity stocks, which peaked in the early days of the Russian invasion of Ukraine, appears to have dissipated. Homebuilders have had a decent month, relatively speaking, but keep an eye on this. This looks like an oversold bounce and not much more because the housing market will decrease significantly in the second half of this year.

The energy sector is still holding some good results, but the mega-cap names have enjoyed their greatest outperformance recently, with ExxonMobil and Chevron. Bank stocks havent been able to take advantage of higher interest rates as the focus remains on the impact of slowing growth ahead and decreasing mortgage demand. The materials sector also looks like some to be coming back. Gold and silver miners, falling 10% each, have been among the markets'' worst performers in the last week.

The dollar has just refused to give up any ground. The dollar is now reaching two decade highs. Both precious and industrial metals continue to back off and may be an early sign of sentiment shifting in the commodities industry. Lumber prices also have fallen significantly.

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