Workshop: Tame your Portfolio with Sector & ETF Strategies

09/06/2007 12:00 am EST


Jim Farrish

Founder and CIO, Jim's Notes

Creating a Disciplined Strategy with Sectors & ETFs

In this workshop, Jim Farrish of Money Strategies, Inc., showed attendees how practicing a disciplined strategy of investing in sectors and exchange-traded funds (ETFs) can tame even the most unruly of portfolios and help investors achieve their life goals.

Farrish advised investors to keep it simple. Their primary focus should always be on money management-not performance. And he warned that knowing their psychological makeup was a crucial component of wise money management. That begins with an analysis of the risk you can and cannot live with, as well as your ultimate investment goals. Then, it's time for you to take control of your money, as well as your investing process. After all, no one knows your financial position and goals like you do.

Farrish examined the ten sectors that make up the Standard & Poor's 500, highlighting the lepers, the losers, and the leaders and opining that an analysis of the sectors allows you to visualize and breakdown the market into over- and under-weighted pieces.

He noted that the advent of ETFs has given investors much more control over the weightings in their portfolios, although with 500+ ETFs, worth more than $560 billion, the waters are getting muddy in terms of defining exactly which ETF you may need to balance out your portfolio. And he suggested that investors allocate their weightings based on what they are trying to accomplish with their money.

As for current sectors he favors, momentum buys in energy (especially clean energy) and technology make the top of his playlist. Some of his recent picks include: Oil Services HOLDRS (OIH), ConocoPhillips (COP), Chevron (CVX), iShares MSCI EAFE Index (EFA), and iShares IBoxx $ High Yield Corporate Bd (HYG).

He also thinks investors can benefit by buying gold, and prosper internationally by spreading their investment dollars to Australia, Canada, and the UK. As research into global investments can be very difficult, Farrish suggests investors stick with funds and ETFs.

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