MARKETS

Investors and traders can both take advantage of year-end seasonality, says Jerry Slusiewicz, who gives five ETF recommendations for each style of trading, describing to MoneyShow.com how technicals might guide a buy decision. He also shares three of his top current stock picks.

Kate Stalter: I’m speaking today with Jerry Slusiewicz. He is a columnist with ETF Profits at TheStreet.com and he also runs Pacific Financial Planners.

So Jerry, let’s start by talking a little bit about the ETF market and what you’re seeing, particularly with regard to some of the market volatility.

Jerry Slusiewicz: There is some negative press out there about ETFs, and in particular about leveraged ETFs. I think the ETF market is a phenomenal place for investors. It’s kind of the new mutual fund.

I’m sure everyone is aware, but there’s more transparency. You can figure out what you own all day long, any day…versus mutual funds, that are kind of that black box where you only know really a couple of times a year what you used to own.

Again, it’s from a tax situation, especially this time of year. In November and December, people are going to start getting their 1099s or their reporting of capital gains and capital losses in mutual funds. Profits they may or may not have realized in the old mutual funds. You just don’t see much of that in the ETF sector.

As well, I’m a big risk-management proponent, a user of stop losses even on entry points—I sometimes buy stops above the market. You can just do that so well with the ETFs. So I’m a big proponent of ETFs, obviously.

In the marketplace right now, there’s a lot of volatility going on. That’s why I think it’s even more important to know what you own using a transparent ETF and to use the stop loss to protect your capital in case we get into these volatile markets where things go down.

Now with that said, people will always refer back to that big meltdown day back in May 2010, in saying that stop losses don’t work. Well, there’s no holy grail, but prior to that there was plenty of opportunity to get out of the market in some of the stops executed, as well as if you use the larger, more liquid ETFs as opposed to some of the smaller, less liquid ETFs. The likelihood is that you’re not going to get into some situation where you get stopped out at a really bad price.

Tickers Mentioned: SPY, TBT, IWM, TZA, MDY