I am retired and take educated guesses on all things financial.

October 10, 2006

October 11, 2006: Stocks, ETFs and why

Today seemed a good time to review a few stock and EFT picks made in prior posts, and give readers an informed view of generic drugs - especially those manufactured in the EU.

I have been a long term holder of the Bank of Nova Scotia (BNS).The present general flatlining of price is a good time to consider visiting the stock for possible purchase. I added a bit to my holdings today. BNS is a stock that is not widely traded and not as well-followed as many other banks.Not even MSN Stock Scouter has a rating on it. Why this is so has eluded me for years. It's excellently managed,profitable,transparent, shows steady dividend growth and is international in scope. Especially noteworthy are BNS positions into India, China and South America. BNS. of course, has a strong, diverse footprint in North America.Trading at $42.36. I believe it will easily go to $50.00 (US) over the next three quarters.

Purchasing newly minted ETF's is generally too daunting a research task for me. However, I have followed my thoughts posted earlier and purchased positions in two unique Claymore ETFS, EEB and CVY.

The Claymore BRIC Fund is a basket of stocks from four energing giants: Brazil, Russia, China and India =BRIC. EEB does not have a peer that I am aware of in the ETF field. Expenses are very low for a fund invested in these markets, and the benchmark Bank of New York index for tracking is logical and reasonable. I view this fund as a core holding,not for speculative trading. It provides zest for your international portfolio component. Trading at $25.99 with about 30,000 shares traded per day.

The Claymore Dividend Hog fund tracks Zack's international high dividend roster.
Having an ETF dividend fund not dominated by GE and another company or two is unusual. I like their portfolio for diversity and quality and recommend this as a core holding in a balanced portfolio of investments that needs some yield with international currency protection. Trading at $25.32 with approximately 29,000 shares per day.

I have received some nice reader e-mail comments regarding one of my favorite ETF's, iShares Switzerland (EWL). I really like the stability and quality of the portfolio. What's not to like when your top holdings are Nestle, Roche, Novartis, UBS, Zurich Financial and Credit Suisse. Even if the Mullahs conquer Europe this fund should do well! Trading at $23.03, this ETF is a way to play the one strong link in Europe politically and financially.


I have been reading research reports on generic drugs. I thought it was a good way to play "pharma", as "big pharma" is in the gunsite (oops, wrong term for the Democrats)....LITIGATION AND PRICE CONTROL realm once the mid-term elections turn over legislative power, perhaps, to Pelosi and....Soros. I believe I was wrong on this issue. It turns out that national healthcare policy worldwide is going to come down hard on generic breaks for the old drugs. With lower levels of innovation at research and big pharma due in large part to litigation and national healthcare policy, there will be far fewer drugs for the generic pharma industry to replicate off patents. Sadly, the politicians are beginning to choke off new generations of pharmeceuticals through dis-incentive social policy, which hits big pharma, to prop up social welfare and other government deficit issues.Pondering this premise, I think that this may be a bit too much doom and gloom. I do want some pharma in my portfolio. Therefore, I own some ishares U.S.Pharmaceutical(IHE).I believe that individual generic stocks are a poor choice, and a basket of the great names in US pharma is a good bet. If any two countries can be innovative quickly, it is the U.S. and Switzerland. Pharma will have to be nimble and quick over the next decade and ishares Switzerland to a degree, and ishares US Pharmceuticals for sure, are the answer.

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