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Nothing Like Other People's ETF Research (Cestrian Stocks Bulletin #112)

Cestrian Stocks Bulletin
Nothing Like Other People's ETF Research (Cestrian Stocks Bulletin #112)
By Cestrian Capital Research, Inc • Issue #112 • View online
We have a new freemium service launched today. And a deeply discounted offer for you, dear reader. More below!

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
Cestrian ETF Select
This is the highly creatively-named new service, ETF Select, from Cestrian Capital Research, Inc. Below, we post our launch article from the service which started today. It’s a freemium service just like Cestrian Stocks Bulletin which you are reading right now. Free notes mainly blarney, pay notes actionable. Our usual mode of operation.
We’ve been delighted at the rate at which we’ve added free and paying subscribers here in the Stocks Bulletin service, and to say “thank you” for joining up, we’d like to offer you a deeply discounted subscription to ETF Select.
The free subscription is, to you, er, still free. You can register here for free content.
The pay subscription, usually $79/yr (yes, per year - we are keeping it cheap as cheap can be), is yours for a fifty percent reduction on your first year. You can get that by simply clicking HERE and signing up before the end of January. Less than forty folding ones for a year’s worth of actionable ETF research from your favorite dead-inside independent research shop. Have at it folks!
Now for that launch article, reprinted below and up live in the service here.
We Promise Not To Mention Fee Ratios
Exchange-Traded Funds (ETFs) are wonderful instruments in our view. At the highest level of abstraction they provide a low cost way to invest in the market without spending your every waking hour fretting about company A or stock B or regulatory change C. Remember Warren Buffett’s exhortation from 100 years ago, being, most folks if they want to invest in the market should just buy a low-cost S&P500 tracker and go play golf. And of course $SPY enables you to do just that. To the great frustration of financial advisors everywhere.
Nowadays you can find an ETF for most anything. The more obscure the sector the less liquid the fund and the more uncertain the outcomes. But in fairness, usually the more amusing the ticker. So you have to decide why you are playing the ETF game.
Ticker bingo? Nothing wrong with that. Have at it. Our favorite tickers, branding-wise that is, include $UFO (space), $BOIL (energy), $NAIL (home improvement) and of course $NUGT (er, gold, of course).
Making money? Now that’s more interesting to us. Our ETF strategy in staff accounts is very simple and this is the strategy that sits behind this, our latest newsletter, Cestrian ETF Select. We like to use ETFs to obtain:
  • General market exposure to indices - the S&P500, Nasdaq, Dow Jones, Russell 2000 and so forth.
  • Sector exposure to markets where we lack in-depth stock-specific expertise - healthcare, financials, industrials, uranium, energy … in essence, if it’s not tech, telecom, defense or space, we’re likely to use ETFs for exposure. If it is tech, telecom, defense or space, well, we better know our stuff on a stock specific basis, this being our core business and all.
  • Short exposure - either by taking short positions in regular ETFs, or long positions in short ETFs (clear as mud right? - all will become so once you start reading this newsletter, which we aim to be the Plain Speaking Guide To ETFs newsletter as opposed to the Allow Us To Bamboozle And Attempt To Impress You With Our Analysis Of Fancy Tax And Fee And Allocation Drift Stuff newsletter).
  • Leveraged exposure to market moves - ie. to obtain better swing returns from the leveraged ETFs like $TQQQ or $UDOW than are available from their decaffeinated brethren.
Here’s what we won’t be doing in this new service.
  1. Stressing about exactly what % allocation each ETF has to each specific stock. That is what we’re paying the fund manager to do.
  2. Digging into fee ratios. Because, you know, if the thing is going up, it’s worth the fee, and if it isn’t, it isn’t. We literally do not care a fig about fee ratios. (Disclaimer: we have fund manager DNA in our building so we think fees are a good thing lol).
  3. Investigating complex tax outcomes from fund structures. In our experience if you invest by starting with a target tax rate and then go looking for securities, you are likely to make less after-tax coin than if you just gun for great returns and pay the tax that falls due. Life’s too short and so, again, we could care less about ETF tax setups.
Here’s the stuff that we most certainly will be doing.
  1. Monitoring around 20-30 ETFs regularly looking for short-term (weeks) or medium term (months) long and short opportunities.
  2. Actually putting staff personal account money to work in pursuit of those gains.
  3. Putting these ideas in front of you to consider in your own investing work.
In keeping with the whole ETFs-are-low-cost-investing thing, we plan to make this service very low cost. We’ll start out at just $9/month or $79/yr, with a free version as well of course.
We can promise you one thing - just as our stock-specific research work is Nothing Like Wall Street Research (must trademark that), our ETF coverage will be Nothing Like Anyone Else’s ETF Coverage. Because most of it bores us to death. So we’ll be very focused on the Prime Directive being, try to make some money.
Join us!
Cestrian Capital Research, Inc - 6 January 2022
DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts hold long positions in, inter alia, $FAS, $FAZ, $TNA, $UDOW, $URNM, $URA, $XLE, $XLV.
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