Since I expressed the lack of understanding about a set of rules or information on when actually to purchase an ETF, I have been making an effort just learn more about the subject.
Read this recently in some article about an financial firm that looks to build client portfolios entirely from ETFs:
A couple of basic rules regarding what ETFs they track before making purchasing decisions:
a) Only be invested in ETFs that are above their 200-day moving average.
b) Only look at ETFs with some track record. Nothing under $75 million in assets.
c) Look for consistent volume and liquidity (not really sure what this would exactly mean when looking at a yahoo-finance page).
Those seem like sensible rules. However I still need to figure out what qualifies as a good time to buy a particular ETF if you have been tracking. There was some mention of selling when the ETF falls below a 200-day moving average or 8% of its high (without going below the 200-day average). Which would imply that if an ETF is above the 200-day moving average (and not below 8% of it's high) and the sector trend is upwards, and the ETF fits the bill into your diversified portfolio, you buy.
1 comment:
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