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Every week in my Money and Markets column, I try to show you how to boost your portfolio by using exchange-traded funds (ETFs). Today I’m giving you an assignment: Know your ETFs.

Specifically, I want you to get familiar with six of the most popular ETFs that track key stock market benchmarks. You need to know their ticker symbols by heart … they’re the bread and butter in your ETF shopping cart.

These six ETFs are large and actively traded; in fact, even with more than 800 other ETFs available it’s not unusual for this small group to account for almost half the value of all ETF trading in the U.S.

Now I’m NOT saying you should buy any of my bread and butter ETFs right now. My point is that if you want to be a successful investor, it’s a big help to know what’s available. If you do, you’ll be able to react more quickly when the time is right.

Ready to get started? Here we go.

Bread and Butter ETF #1: SPY

SPDR Trust is the granddaddy of all ETFs. Introduced in 1993, the SPY (that’s the ticker symbol) was the very first U.S.-listed ETF and tracks the S&P 500. This index of 500 large-capitalization stocks is a standard benchmark for the U.S. equity market.

When you buy shares of SPY, you get an instant portfolio of 500 domestic stocks covering every industry sector. Financials, technology, health care, energy … they’re all in there!

No wonder, then, that when big investors want to get instant, diversified market exposure, they often turn to the SPY. But you don’t have to be a millionaire; you can buy SPY shares even if you only have a few hundred dollars.

Bread and Butter ETF #2: QQQQ

PowerShares QQQ used to be called the "Nasdaq 100 Tracking Stock" until the Nasdaq honchos decided to spin off their ETF business to PowerShares.

This can be confusing, so read closely: The name of the ETF is PowerShares QQQ, with three Q’s. The ticker symbol is QQQQ. That’s four Q’s. Clear enough? Obviously someone wants to keep us all on our toes.

In any case, the QQQQ is based on the Nasdaq 100 Index. Note that this is not the same as the Nasdaq Composite Index that you typically see quoted in the news media. The Nasdaq 100 is a sub-set of the Composite, consisting of the 100 largest non-financial stocks in the index.

Back in the 1990s, the Nasdaq was home to many small technology companies — a few of which grew much bigger. That legacy survives in the Nasdaq 100, which is heavily tilted toward technology stocks. In fact, many traders look at it as nothing more than a large-cap tech benchmark.

If you want exposure to banks, real estate or insurance stocks, don’t bother with the QQQQ. You won’t find them there. Nor will you find the blue-chip companies that call the New York Stock Exchange their home. But if you’re after a highly liquid, volatile trading vehicle, the QQQQ is hard to beat.

Bread and Butter ETF #3: DIA

The DIAMONDS Trust follows the Dow Jones Industrial Average, which is probably the best-known stock market proxy in the world.

Unfortunately, the Dow is also mostly useless as a benchmark, at least in my opinion, and so are products like the DIA that attempt to follow the Dow.

I’ve used the DIA from time to time since it came out in 1999, but it has three big problems …

First, like the Dow, it’s very narrow with only thirty stocks. That simply isn’t enough to reliably represent the U.S. industrial economy, as the Dow purports to do.

Second, the DIA excludes some key sectors like transportation and utilities. Dow Jones publishes separate indexes for those groups.

Third, the Dow and the DIA are weighted by the share price of the component stocks rather than the market value. This was advantageous back in the days when you had to calculate things on the back of an envelope, but now it’s just outmoded.

Despite these issues, there are times when the DIA can come in handy. For instance, if you’re looking for an actively-traded proxy of mega-cap stocks, the DIA might be a good pick.

Bread and Butter ETF #4: IWM

The IWM is the iShares Russell 2000 Index Fund. What’s the Russell 2000? You already know the answer if you’re a fan of small-cap stocks.

Each year, Frank Russell Associates ranks all the stocks in the U.S. by their market value. Chop off the top 1,000 biggest stocks and consider the next 2,000. That’s the Russell 2000.

These are relatively small companies — but that’s the whole point! When the U.S. economy is booming, small-cap stocks usually lead the way higher. And the IWM lets you buy hundreds of tiny stocks in one simple trade.

The IWM should be a staple item for almost every investor. It’s easy to jump in and out as the economy fluctuates, and you get plenty of diversification. There’s no better way to play the domestic, small-cap stock market.

Bread and Butter ETF #5: EFA

The iShares MSCI EAFE Index Fund is international because it’s based on the Europe, Australasia and Far East Index published by Morgan Stanley Capital International.

I know that’s quite a mouthful. Let me break it down for you: The EAFE Index is designed to represent the entire developed world, excluding the U.S. and Canada. It includes Western Europe, Australia, Japan — the countries with modern stock markets and banking systems (in contrast to the emerging markets, which we’ll get to in a minute).

The list of countries in the index can change. Recently MSCI promoted South Korea and Israel to developed-market status, and stocks from those countries were added to the index and to the EFA.

The EFA is useful as a way to round-out a portfolio that already includes enough U.S. stocks. Say you own the SPY and the IWM, but you want to have exposure to the rest of the world. Add the EFA to the mix and you’re almost there.

I say almost because there’s one final piece …

Bread and Butter ETF #6: EEM

The EEM is the standard ETF if you want to trade emerging markets. These are places that only recently established economic ties with the rest of the world and are growing quickly. Markets like Brazil, Russia, India and China are good examples.

MSCI produces an Emerging Markets Index as a benchmark for these markets, and the EEM lets you trade that index. This is a really handy fund because it’s often difficult and expensive to buy individual stocks in emerging markets.

The EEM is a quick and easy way to allocate some of your portfolio to emerging markets. Keep it on the tip of your tongue for the next time you’re ready to make such a move.

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For Active Investors

There you have them: SPY, QQQQ, DIA, IWM, EFA and EEM. These are the six ETFs every investor ought to know. Get familiar with them. Add them to your watch list, and be aware of how they could fit into your portfolio.

Best wishes,

Ron

P.S. I’m now on Twitter. Please follow me at http://www.twitter.com/ron_rowland for frequent updates, personal insights and observations about the world of ETFs.

If you don’t have a Twitter account, sign up today at http://www.twitter.com/signup and then click on the ‘Follow’ button from http://www.twitter.com/ron_rowland to receive updates on either your cell phone or Twitter page.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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"Here the message must be sent that Mr. Madoff’s crimes were extraordinarily evil and that this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll," Chin said.

"Objectively speaking, the fraud was staggering," said U.S. District Judge Denny Chin.

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If you think everything you’ve witnessed in the economy over the last two years is virtually unprecedented, think again.

The People’s Bank of China — the central bank for 1.3 billion people and America’s biggest creditors — has just issued an economic report calling on the world to replace the U.S. dollar as the world’s reserve currency … and for the International Monetary Fund to issue a new, single "super-sovereign currency."

Make no mistake about it: As China and other major nations with surplus reserves move steadily forward with this new mission, it could have massive implications for almost everything you own.

It could impact every single stock traded in the U.S.

It could affect the value of every long-term Treasury bond … corporate bond … and municipal bond.

It’s bound to send gold soaring through the roof … and could spark another rocket ride higher in the prices of oil and gas.

But as much as I don’t like it, it comes as no surprise to me, or to anyone who has been following the patterns of history over the years.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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Have you noticed? Gold is starting another run on the $1,000 mark. From April 17 through May 26, gold bullion jumped from $ 867.90 to $953.90 an ounce – a 10 percent gain in less than six weeks. Right now gold may be a little ahead of itself. But I suspect it will be challenging the all-time high of $1,032.70 hit on March 17, 2008, in the near future.

While it’s always been possible to participate in the gold market by purchasing mining company shares, until recently there were only two ways to get direct access to a rising gold market. One was to visit a dealer and buy physical gold, such as gold coins, and store it somewhere safe. The other was to trade futures and options on gold bullion. If you short on money you might want to get a payday advance.

You can still use these tools to invest in gold. But there are some potential drawbacks …

* A thief could break into your house and find the gold you hid – and your homeowner’s insurance might not cover the loss.

* The high leverage of futures trading is tempting but enormously risky. Read those account documents carefully. You are, quite literally, putting your entire net worth at risk with every trade.

* And although options trading can be wildly profitable, your timing has to be nearly perfect.

Now, however, you have an additional, much simpler way to invest in gold: Exchange-traded funds, or ETFs, that are designed to track gold’s price. That’s right. You can get in on the gold market just as easily as you can buy a stock!

GLD: The First Gold ETF

State Street Global Advisors launched the first gold-based ETF in 2004. Now called SPDR Gold Shares, the fund has the easily-recalled ticker symbol GLD.

GLD was revolutionary. Structured as a trust, each share of GLD is equal to 1/10 of an ounce of gold. State Street had the shares listed on the New York Stock Exchange, and GLD turned into an instant success.

Imitation is the sincerest form of flattery. And GLD didn’t have the market to itself for long. In 2005, iShares introduced a very similar product, the iShares COMEX Gold Trust, ticker symbol IAU. (If you remember high school chemistry, you know AU is the symbol for gold on the periodic table.)

There are some minor technical differences between these two ETFs. But GLD and IAU offer essentially the same thing: An easily-traded security that tracks the price of gold bullion almost perfectly.

As with other ETFs, GLD and IAU allow institutional investors to "create" and "redeem" shares in exchange for the underlying portfolio, which in this case is gold bullion. This creates an arbitrage opportunity. If the share price of GLD drifts too far above or below the actual gold price, professional traders push it back into line very quickly.

Which ETF should you consider buying? It’s really a personal preference. Both are huge and very liquid, though GLD is much larger than IAU. Just remember that every ten shares you buy gives you the equivalent of one ounce of gold. And you don’t have to store it under your bed.

Leveraged Gold!

I mentioned earlier that futures trading involves leverage and risk. I don’t recommend it for most people. However, if you want to use a little bit of leverage to trade gold, there are less-risky ways to do it …

PowerShares DB Gold Double Long ETN (DGP), launched in early 2008, is a quick and easy way to leverage gold’s price movements without the risk of a futures or an options account. DGP tracks an index of gold futures and is designed to return twice the change in the index.

Just as GLD drew competition from other ETF sponsors, DGP has a near-twin in ProShares Ultra Gold (UGL), which also moves two times the daily price change of gold bullion.

These leveraged funds are structured differently from normal ETFs. DGP is actually not an ETF. Instead it’s an ETN: An exchange-traded note. What’s the difference? Functionally speaking, ETFs and ETNs look very similar, but the actual structure is quite different …

An ETN is a debt obligation of a bank, in DGP’s case it’s Deutsche Bank. That means you’re taking credit risk when you buy an ETN. If Deutsche Bank should fail or go bankrupt, you could lose money even if gold goes up. (See my February 6, 2009, Money and Markets column to learn why ETNs may be riskier than they look.)

Meanwhile, UGL is a "commodity pool" rather than an "investment company" like most ETFs. ProShares uses gold futures to get the necessary leverage, but the pool structure insulates investors from margin calls.

Does this mean you should avoid DGP and UGL? No, not at all. It means that with the added leverage, they are different types of funds with different risk factors that you should consider.

Investing is all about risk. The smart thing is to know the risks and use them to your advantage. And when using leverage, understand that if the underlying index or the price of gold goes down, your fund’s share price can fall twice as fast.

DGP and UGL are both good ways to speculate in gold if you are in a position to watch the trade closely and can afford the added risks. But if you want more of a long-term core position in gold, GLD and IAU are probably better choices.

There you have it: Four easy ways to profit from gold with minimum hassle. You can buy GLD, IAU, DGP or UGL from any stock broker, either a traditional firm or an online discount brokerage.

I’ll be back next week with more ETF ideas for you. Good luck!

Best wishes,

Ron Rowland

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

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One of the first signs of financial trouble includes chronic trouble making the minimum payments on credit cards, personal loans, mortgages and other obligations. If you’re unable to make even the minimum payments on your obligations, you need to understand immediately where your money is going. It’s not unusual for people with relatively high incomes to end up with little or no money at the end of the month. Try tracking all of your expenditures for a month. Keep a close tally of late fees, over-limit fees, overdraft fees, and  ATM fees. Also keep track of how much you spend on “incidentals” and “minor purchases.” At the end of the month, you may be surprised to find out how much you’re spending in these areas.

Another sign of financial trouble is falling behind on monthly payments. If your mortgage or rent payments are chronically late, or if you skipped one or more payments, you should consider yourself in financial trouble. Providing a living space is a very basic need, and if you’re having trouble paying the mortgage or rent, you probably need immediate assistance with your to finances and debts.  Developing a budget may help you see how you’re coming up short.

If you’re using a credit card to pay for necessities each month, you’re either in financial trouble or soon will be. Like housing, providing food, medicine, and utility service for your home is a basic expense that should be covered by your monthly income. If you’ve lost your job or your income has been reduced suddenly, you may need to make drastic changes to your lifestyle to accommodate your new, lower income level. Look at your expenses to see if you can shift you’re spending on necessities to a cash-only basis. Then look to see if you can eliminate some of your credit card spending.

If you’re using credit cards to pay off other credit cards, you may have mounting debt problems. This strategy may resolve an immediate problem, but isn’t sustainable in the long term. If you pay your credit card bills with another credit card, you’re probably living beyond your means and racking up some very expensive interest charges in the process. You need to work on more successful debt relief strategies that resolve your debt problems rather than shifting them from place to place each month.

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Should registered users be the only ones allowed to comment ? Listen, if your going to spam us, please say something intelligent. Only use search engine optimized keywords if you say something really smart. If in doute, don’t even dare leave a keyword with your website because I’ll eventually ban you.

Notice, I didn’t say you can’t spam, I’m saying stop making it obvious. Don’t let me detect it.

Why would someone say stupid one liners like “I Agree, blah blah.”. “Very helpful, blah blah” and expect me to leave their keyword optimized links ?
Stop pooping in my yard, and saying thank you.

More examples of spam:

“Thank you for this insightful post. Yes, i think older ones and people working in hazardous environment should be given more attention.”

“Very helpful, thanks so much”

What is considered spam around here ?

1. Keyword obtimized links with no intelligent comments ( Use those keyword carefully !!! Or I’ll ban you and everyone from your ISP)

2. Poor grammar

3. Poor spelling

4. One liner with links to financial websites

5. Comments with links and open invitations to visit your “awesome” website

6. Anything stupid that includes a link or keyword spam.

By the way, I’ll be soon offering an intelligent blog commenting service at Blog Comments For Sale. Our comments won’t look, smell or feel like spam.

Recent comment spammers include

1. Women Boots

2. My PayDay in the UK

3. Talking Home Loans

4. Same Day Loans

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by Mike Larson

I don’t know about you, but I had a great time watching my little girls open their presents on Christmas morning. You should have seen the smiles on their faces! I sincerely hope that you and your family are relaxing and enjoying this holiday season as much as I am.

But soon, thoughts are going to turn from relaxation to reality. Investors are going to focus once again on the wounded real estate market. And millions of homeowners and commercial property owners are going to ask that all-important question:

Will 2009 be “it” – the year when things finally start turning around?

I wish I could say I was optimistic.

But the evidence I’m weighing points to another disappointing year. Indeed, I expect 2009 to be marked by lackluster sales and falling prices in the residential arena, and a deepening crisis on the commercial side of the ledger.

Housing Bottom?
Not That I Can See …

The Treasury Department and the Federal Reserve are doing all they can to lower mortgage rates and stem foreclosures. There’s just one problem: All the government money and manipulation in the world can’t repeal the law of supply and demand.

The overall housing market remains dramatically oversupplied, despite very sharp cutbacks in new home construction. Moreover, demand remains weak due to slumping consumer confidence, tighter lending standards, and rising unemployment. That means anyone looking to Washington for a quick fix to this downturn is going to be disappointed.

Just consider the latest numbers …

New home sales dropped 2.9% in November to a seasonally adjusted annual rate of 407,000. That was the worst sales rate since January 1991, and down more than 35% from a year earlier. Existing home sales plunged 8.6% for the month, with single family sales hitting the lowest level in more than 11 years.

While dramatic cutbacks in housing starts have led to a decline in the raw number of new homes on the market, sales have dropped so much that we’re seeing little net progress overall. Case in point: There were 11.5 months worth of new homes on the market based on the November sales pace. That was only slightly below October’s 11.8 months, which itself was the worst reading ever (Census data goes back to 1963).

On the existing side, we have more than 4.2 million homes on the market – far above the 2 million to 2.5 million considered normal. That’s good for 11.2 months of supply, tying April’s record high.

As far as pricing is concerned, you won’t find any solace in the latest figures. New home prices were down 11.5% from a year earlier, the second-biggest decline ever. Existing home prices dropped 13.2%, the most on record. The median price of a used home is now hovering around $181,300, meaning we have wiped out every penny of gains generated since February 2004.

Don’t be surprised to see the government get even more aggressive next year. We could get tax credits designed to stimulate home buying on top of the direct manipulation of the mortgage backed securities market we’re already seeing.

But until fundamental equilibrium is restored in the housing market – until we work through the vast inventory overhang of houses – home prices aren’t going to stop falling. In fact, I’m expecting further declines throughout 2009.

Commercial R.E. Joining Residential
In the Penalty Box …

The residential real estate business started slowing in 2006, and then really fell out of bed in 2007. But commercial real estate continued chugging along for a while. That’s all changing – and 2009 will likely be even worse for landlords and investors in warehouse, office, or retail property and related securities.

Just consider …

• Construction activity is starting to tank as commercial mortgage credit dries up and the economy slumps. An American Institute of Architects (AIA) index, which serves as a great leading indicator for commercial construction since you need to design a building before you build it, just plunged to a record low of 34.7.
• With credit tighter, commercial real estate sales and prices are now following home prices lower. The final numbers haven’t been added up yet. But it appears that commercial sales plunged by about 70% between 2007 and 2008.
• Meanwhile, the Moody’s/REAL Commercial Property Price Index dropped 2.4% in October, the tenth month out of the last 14 where it declined. Prices are now down more than 11% from their late 2007 peak.
• Finally, sublease space is flooding the office market as companies fire workers. And mall vacancies are surging as retailers like Circuit City and Linens ‘N Things go broke. Even the perennially optimistic National Association of Realtors just forecast that office vacancy rates will rise to 16.4% by late 2009, from 12.5% in 2007, while retail rents will drop by 7.3%.

If you own commercial property, you’re probably already feeling the heat from the slumping economy. Expect further increases in vacancy rates in 2009, and additional pressure on rents when leases come up for negotiation. Lenders are also a lot stingier with credit that they’ve been in the past, meaning it should be tougher to refinance your loans.

Of course, commercial real estate representatives aren’t just sitting idly by. They’re doing what all their other … er … capitalist brethren are doing. They’re going to Washington begging for spare change!

As The Wall Street Journal recently recounted in a story called “Developers ask U.S. for Bailout as Massive Debt Looms”:

“With a record amount of commercial real-estate debt coming due, some of the country’s biggest property developers have become the latest to go hat-in-hand to the government for assistance.

“They’re warning policymakers that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed into defaults, foreclosures and bankruptcies. The reason: according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years – with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.”

Do I think THAT will make a difference? It might loosen credit a bit, sure. But the lesson from the residential industry is that all these bailouts merely ease the symptoms of this crisis somewhat, without curing the underlying disease.

In other words, I expect commercial real estate fundamentals to weaken in 2009, loan defaults and foreclosures to climb, and prices to fall no matter what Bernanke & Co. do in Washington.

The Good News?

I hate to leave you on such a gloomy note, what with New Year’s festivities right around the corner. So let me wrap up with this: Falling asset prices will eventually restore TRUE, intrinsic value to real estate.

This decline will get home prices back to levels that make sense when compared against incomes and rents.

It will make it so home buyers can purchase affordable homes at reasonable debt-to-income ratios, using traditional 30-year mortgages instead of all the junk loans that proliferated during the bubble.

It will make it so you can invest in rental property, or strip malls, or an office building and generate attractive returns again, without relying on pie-in-the-sky projections about future growth.

And most of all, I believe this painful decline will remind us all that we can’t build an economy based on flipping assets back and forth to each other at ever more inflated prices with ever increased leverage. Instead, we’ll save more. We’ll invest more in productive ventures. And the U.S. will once again be the great country it can be.

Have a happy and healthy New Year. I look forward to helping make 2009 your most profitable year ever.

Until next time,

Mike

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

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I would vote for OBAMA. Never for Mccain

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