The second group consists of investors who believe they can outsmart the market. They’ve stayed on the sidelines, planning to buy in and make their fortunes when the markets break down a second time. But they may never get their chance.

Both strategies are flawed. And both ignore the single strategy that investors need to employ to profit in the later stages of a recovery rally.

The first group of investors – the indexers – have a unique problem. Broad-based investments such as indices are really only favored in the early stages of any recovery rally, when there’s plenty of easy money to be made.

These investors either don’t know – or choose to ignore – the reality that long rallies tend to change character: Broad-based choices are super when the rising tide is lifting all boats early in the game. But then the game itself changes.

Early on, index investors reap the lion’s share of the market-rally profits. But as rallies mature and capital continues to flow, successful investing becomes more of a stock-picker’s game. This means that specific stocks – not the indices – become vastly higher probability bets.

There are many reasons why this shift occurs, but it really comes down to two key factors: Where the money is going, and where the money is flowing.

This means there’s plenty of fuel to keep the rally alive both here and abroad, and we’re not alone in our opinion.

Beware of the “Golden Period”

Jack Ablin, who helps oversee $60 billion as chief investment officer for Harris Private Bank (NYSE: BMO), says there is still  “an enormous stockpile of liquidity on the sidelines [and] the reinvestment of [that] cash could help fuel the market.”

Unfortunately, this is well-known to investors, which actually makes it a problem. As hedge-fund manager Kyle Bass noted: “We are today in the midst of what economists often refer to as the ‘Golden’ period, where everything feels good and the long-term effects of deficit spending and money printing have not yet been realized.”

This is something I’ve talked about time and again during investor presentations all around the world. People who are already numb from having been pummeled on the way down, have once again become intoxicated with the rally over the 12 – 18 months that such advances typically last. They see a chance to recoup all their losses and be made whole. This makes them more prone to poor timing decisions, or poor investments choices.

Another problem with long rallies like the one we’re experiencing now is that you have be “in” from the get-go or you won’t “go” at all.  Today’s algorithmic trading simply doesn’t allow for the kinds of market pullbacks and corrections we used to see as recently as 10 years ago. I know – I’ve written several of these trading programs. Today, if you’re not in when the money starts moving, you might as well hang it up.

At the same time, you just can’t sit and wait until things get better, either. If you do, you are likely to miss most of the gains.

And don’t bother trying to “time” the market. That’s a recipe for disaster, as reflected by numerous Dalbar studies. The Dalbar data repeatedly demonstrates that investors who try to time the markets not only fail miserably in the near term, over a period of years they tend to fall dramatically behind the market averages.

How much behind? Try 40%-60%, depending on what data period is examined.

Winning Markets – Big and Small

That brings me back to today’s key point. In the early stages of a rally, it’s best to invest using broad, sweeping choices like index funds or exchange-traded funds (ETFs), which are tied to the major indices. Believe it or not, picking the “right” stocks is essentially irrelevant. Sure you always want to have some zoomers in your portfolio, but when the rally really begins, it’s far more important to have broad-based stock-market exposure. It’s a shotgun approach. And it works.

Over the past 118 years, there have been 19 bear-market events in the Dow Jones Industrial Average. The average bear-market drop was 37%. The rally into the next year generated an average gain of 40% from the market bottom – with 70% of the gains coming within the first half of the rally’s duration.

That’s why, for example, I’ve repeatedly told Money Morning readers, as well as subscribers to our affiliated publications, to employ such broad choices as the Vanguard Wellington (Nasdaq: VWELX) or the SPDR S&P 500 ETF (NYSE: SPY).

Today, with the Standard & Poor’s 500 Index having zoomed 57% from its March 9 low, the rebound is 1.5 times bigger than the typical post-recessionary rally.

That means the best choices are now the companies that are backed by trillions of dollars in stimulus spending and that operate in growth markets that support real earnings, real cash flow and real purchasing power.

That makes a lot of sense if you think about it. Fully 78% of the world’s total economic activity now takes place outside U .S. borders, which means that if you really want to “follow the money,” you’ve got to look in areas that you might traditionally have considered as “off limits.” In fact, you may find that you are looking at companies whose names you can’t easily pronounce. But many of those companies not only have double- or even triple-digit growth, they are still viewed as compelling values – because of the torrid growth rates of the markets they sell to.

Take Iceland. After its financial travails, the country once again has positive gross domestic product (GDP) growth. It’s unemployment rate of 7.7% is not only dropping, it’s now well below the U.S. jobless rate of 9.8%.

Iceland was the first nation to have its currency destroyed and its finances and political government replaced.  It embraced its pain, and focused on doing what was necessary to fix its issues. Now its exports are booming, and its outlook is much better than it was just a few months ago.

Iceland has turned into an example of growth following a situation that most people thought was unfixable. From September 2008 to August 2009 – a period in which most economies were shrinking –the Icelandic economy actually expanded 2.4%. For global investors, economic growth – in the face of some of the toughest economic issues in generations – is the Holy Grail in surviving an economic crisis.

Tourism is flourishing in Iceland, as international citizens flock to that country’s shores to enjoy having a strong currency to spend.

Icelandic vocalist Bjork, 32, a former fashion model wearing silver snakeskin leggings, black boots and blond ponytail, recently told a journalist that “business is growing.” Thanks to the utsala – “SALE” – signs that were everywhere, “tourists are buying a lot these days, and even Icelanders are buying more at home.’

Granted, shopping for designer duds in Iceland with a snake-skinned model may not be your notion of a conservative-economic recovery play, but don’t miss the real point here: What Bjork was shrewdly observing was that consumers in her part of the world are no longer panicking. They’re back from the brink of almost-total collapse and have now come to terms with their nation’s economic recovery.
This demonstrates just why investors need to be looking at markets where there is real growth – from the smallest economies like Iceland, to some of the largest – such as China.

Speaking of which, with a population of 1.3 billion, a personal savings rate of 35%, and a government that isn’t suffering from a fiscal hangover, it’s no wonder the world’s leading companies are beating a path to the Red Dragon’s doorstep.

In China, the government’s focus is growth, and banks are looking for projects to invest in.  Those in positions of power and authority understand the need for balancing savings, growth and long-term investments. China’s stimulus plan focuses on infrastructure development, which will generate long-term growth, while the United States had had to use its balance sheet to prop up “zombie banks” – just to keep things from getting worse than they already are.

If this sounds a bit complex, the reality is that it’s actually quite basic. Limiting yourself to index investments at this stage of the market cycle is not your best bet. We’re now at the stage where the world’s stock markets have already delivered the broad, indiscriminate gains that benefit index-investors to more specific opportunities that require more-careful analysis and some specialization. Follow that game plan and you’ll be a long-term winner.

Source: The Two Investing Mistakes to Avoid at all Costs

Field Reporter: Are they slow-moving, chief?
Sheriff McClelland: Yeah, they’re dead. They’re all messed up.
– Night of the Living Dead (1968)

In B-grade horror movie lore, Tokyo has to fend off attacks from rampaging monsters like Mothra and Godzilla. If the cinema were more true-to-life, however, Japan would be less worried about overgrown fire-breathing lizards… and more terrified of zombies instead.

In response to a recent Taipan Daily asking what brought us out of the Great Depression, a number of you responded with a good question. “What about Japan?” Or rather, “What about Japan’s extraordinary rate of consumer savings – and why hasn’t it helped?”

The Nikkei chart above shows the extraordinary extent of Japan’s pain.

After putting in a massive blowoff top to cap a truly insane 1980s bull market, Japanese stocks proceeded to head lower… for the next twenty years. The Nikkei is now less than a quarter of its value at the 1990 peak – a 75% decline over two decades in which the rest of the world boomed. Meanwhile Japanese real estate, depending on location, is down anywhere from 50%-80% from the 1990 peak. And depending on how things play out, prices might fall lower still before all is said and done.

(By the way, just as an aside – the next time someone extols the virtue of passive index funds and “stocks for the long run,” consider showing them this chart. As legendary natural resource investor Rick Rule likes to say, “You’re either a contrarian or a victim.” Few markets showcase the brutal truth of this statement like Japan.)

How in the World…?

So how in the world did this happen? How did the second largest economy in the world – and the benchmark index for one of the richest, most prosperous countries in the world – wind up in a two-decade slump?

In a word, “zombies.”

George Romero’s zombies liked to eat brains. Japan’s zombies prefer to eat wealth. In the past 20 years, as the Nikkei outlook went from ugly to bad to worse, Japan proved itself to be a world champion wealth destroyer…

The Rise and Fall of Japan Inc.

Japan first established itself as an economic powerhouse in the aftermath of World War II. Once known for shoddy, low-quality, knock-off type goods, Japan eventually morphed into a juggernaut in high-tech areas like robotics, electronics and automobiles. Today, companies like Toyota and Honda remain the standard for cutting-edge efficiency, quality control and incremental innovation.

In the 1980s, when the country reached the pinnacle of economic might, Americans feared that “Japan Inc.” would soon dominate the West – and perhaps even own the United States outright. Television programs like “Lifestyles of the Rich and Famous” spoke breathlessly of unknown Japanese businessmen worth untold billions (back when “billion” was still a big number). Western minds were concentrated by the spectacle of Japanese buyers snapping up real estate icons like Rockefeller Center. The Japan Inc. juggernaut looked unstoppable.

And what exactly is “Japan Inc.,” you ask? Investopedia defines it as “a nickname for the corporate world that came about during the 1980s boom, when Western business people saw how closely the Japanese government worked with its nation’s business sector.”

On the whole, one could think of Japan like a giant aircraft carrier. In the 1980s, the aircraft carrier was chugging along in exactly the right direction, with MITI (Japan’s Ministry of International Trade and Industry) plotting the course.

The trade-off for running such a concentrated top-down plan, however, is an utter lack of flexibility. An aircraft carrier can’t turn on a dime. It can’t even turn on a football field. It has to go miles and miles out of its way just to make a small adjustment in course.

By the end of the 1980s, the global economic landscape (or seascape rather) had shifted. For the first time in years, flexibility was once again at a premium over relentless focus. Given this sea change, the “Japan Inc.” mindset turned from blessing into curse. The country lost its way.

Mega-Boom and Mega-Bust

In the go-go 1980s, Japan also experienced a fantastically epic stock market and real estate bubble. At the height of this bubble, Japanese companies were trading at 60 or 70 times earnings as the Nikkei climbed towards 40,000. The real estate situation got so out of hand, the patch of land under the Imperial Palace in Tokyo was at one point deemed more valuable than all the real estate in California.

This insane mega-boom led to an equally insane mega-bust. And this is where Japan’s problems really began. When market forces turned against it, the country didn’t know how to handle it.

There is a saying (attributed to various sources) that “capitalism without bankruptcy is like Christianity without hell.” That is to say, it just doesn’t work. Without the threat of punishment, sinners have no reason to repent from their wicked ways. And without the discipline of bankruptcy, a market has no means of cleansing and renewing itself.

One of the major problems Japan has wrestled with these past 20 years is the need to liquidate and start fresh – and the consistent refusal to do so. The Japanese “zombies” mentioned earlier in the piece are zombie banks and zombie corporations… “living dead” type organizations that shamble on aimlessly, gobbling up manpower and resources, kept from their natural graves by routine capital injections from the state.

The Nail That Sticks Up Gets Hammered

Part of the problem, it seems, is the distinctly Japanese preference for unity and harmony over diversity and discord. I am no expert on Japan, but everything I have seen, heard and read seems to emphasize this preference.

There is a phrase that encapsulates Japanese corporate culture: “The nail that sticks up gets hammered.” In other words, it’s better not to make waves… to keep your head down and stay loyal to the organization.

For a long time the unofficial mascot of Japan was the sarariman, or “salaried man” – the white collar Japanese worker who rose through the ranks of a single company and stayed with that company for life.

The deep desire to remain loyal and not make waves influences Japanese corporate culture at the higher levels too. Another distinctly Japanese concept is the keiretsu, which Wikipedia defines as “a set of companies with interlocking business relationships and shareholdings.”

For many decades – from the post-World War II renaissance through the end of the 1980s – the “Japan Inc.” system worked and worked well. The loyal sarariman found lifetime employment with his parent corporation, which in turn strengthened its business ties via the keiretsu. And the Japanese government coordinated the efforts of the keiretsu through MITI (which has since been replaced by METI, the Ministry of Economy, Trade and Industry).

Here Come the Zombies

The “zombies” arose from Japan’s desperate need to preserve not just a way of doing business that had long worked well, but also a culture and a way of life. To let loose the raging forces of creative destruction would be an uncouth, uncivil, unloyal thing to do in the Land of the Rising Sun. It was simply not the Japanese way.

And so Japanese corporations held on to their workers as long as they could. It was not an unheard of thing for a hapless sarariman, no longer with work to do but still supported by his employer, to come in and sit at an empty desk for eight hours, then go home.

The Japanese government kept exactly the same mindset. Banks and corporations were to be rescued, not liquidated. Meanwhile, in the hopes of stimulating the Japanese economy back to growth, staggering sums were plowed into useless construction projects – highways, roads, tunnels, “bridges to nowhere” all over the country. None of it worked.

Paradoxically, Japan’s wealth worked against it in this case. The country was able to afford such expensive measures – in effect, to pour money down a huge rathole for 20 years – because Japan was (and still is) rich.

A Vicious Deflationary Circle

Now we can circle back to the original inquiry, as to why accumulated Japanese consumer savings couldn’t break the two-decade slump.

As best as this observer can tell, the problem was something of a vicious circle that kept Japan’s economy in the dumps. This bogged-down state of affairs was created by wealth-destroying government policy and enabled by a wealth-destroying corporate mindset.

Japan is unique in that something like 95% of Japanese government bonds are domestically owned by Japanese institutions with ties to the government. Unlike America, which has borrowed staggering sums from the rest of the world, Japan has more or less borrowed staggering sums from itself.

This habit of borrowing huge sums, pouring them into the maw of zombie banks and corporations, and then repeating the process all over again, has managed to keep Japan’s domestic economy in an almost permanent state of funk. No liquidation of zombie companies means no room for vital new growth. An overhang of stagnant bureaucracy means a lousy employment situation, which in turns encourages Japanese consumers and companies to save.

Consumer and company savings then go into JGBs (Japanese Government Bonds), which pay painfully low interest rates, because there are few better places for it to go. Meanwhile, when Ms. Watanabe looks around she sees prices gradually falling, not rising… and so the Japanese economy gets saddled with a deflationary mindset on top of everything else.

A Cautionary Tale

All in all, Japan presents a cautionary tale. Without a vital center of “creative destruction,” capitalism simply cannot work.

In a forest, dead trees eventually fall to the ground and decompose. This natural birth-death process gives nutrients to the soil and opens up the leafy canopy to sunshine and new growth. But without death you don’t get rebirth… you just get stagnation.

Interestingly, too, people forget that 20 years is not the same as forever. Japan has been able to go on for decades as it has precisely because the country is so rich. Via issuance of JGBs and the propping up of unproductive enterprises, the government has been able to squander wealth on an epic scale because Japan had so much stored wealth to squander in the first place.

But there will come a day – perhaps not all that far off – when Japan runs out of capacity to borrow. At some point, no one will lend more money to debt-laden, zombie-prone Japan… not even the citizens and corporations of the country itself.

When that happens, we may well see a “big bang” of supernova-style proportions as the Japanese government is forced to do something drastic. Wouldn’t it be ironic if, after 20 years of fearing inflation and pursuing muddy stagnation-type policies, the Japanese Central Bank were forced to bring about one of the most explosive currency devaluations of all time?

Thankfully, there are reasons why America will not automatically be consigned to Japan’s interminable fate. A taste for creative destruction, a diehard entrepreneurial spirit, and the opportunity to benefit from breakthrough technology are three possible “escape hatches” that come to mind.

The pressing lessons for Western policy makers (currently hoping to circumvent the Japan experience) are ominous: Do not assume that a fat checkbook is the answer. Beware the politics of consensus and the grasping hand of bureaucracy. Short-circuit creative destruction at your peril.

Will they get it right? Guess we’ll see…

Source: The Zombies That Ate Japan’s Recovery

This from a recent interview with Steve Forbes, which you can watch in full on Forbes.com

But then even buying Treasuries, you have the risk of under-performing inflation at today’s rate that you’re getting on Treasuries, right? Certainly with today’s yield, relative to the stock market, I would think Treasuries would be a terrible investment. In fact, we’re short an ETF that owns 20-year Treasuries because we think rates are going up. My point, though, is you can do one of two things.

Generally speaking, to the extent that you can, you can own bonds and stocks, and then within stocks you can pick stocks on your own or you can own a mutual fund or an index fund. I think that picking stocks and doing better than the market over time is very, very, very difficult. Most professionals can’t do it and most individual investors can’t do it. Human beings are hardwired to do precisely the wrong thing, which is buy things when they’re high and popular, and sell them when they’re low and unpopular. And of course to be a successful investor you have to do the complete opposite. I think most average people, who don’t have the time and the training to pick stocks, would be better off in mutual funds or index funds.

Tilson is right that we are “hardwired” to buy high and sell low. That’s why here at Notes we follow only contrarian investors – those that take advantage of the crowd’s uncanny ability to do the wrong thing when it comes to their money. As our commodities investing guru Rick Rule puts it, “You’re either a contrarian or a victim.” Amen to that…

After all, this could easily just be a bear market rally. And bull markets rarely begin with a bear market rally and head straight higher.

Beware The Bear Market Trap

It makes sense to hedge against a renewed decline. Here’s why smart investors are doing so using inverse ETFs. Read on to find out what they are, how they work, and why you should consider adding one or two to your portfolio in order to protect it…

ETFs: A Safer, More Effective Way To Short The Market

Just a few years ago, investors who wanted to profit from a market/stock downturn had to borrow shares from their broker to short the asset in question. But today, betting against banks, small-cap stocks, or even entire market averages, is just one convenient ticker symbol away.

You can short the market by using an inverse exchange-traded fund (ETF).

And while I’m generally an investor who subscribes to the fact that stocks ultimately rise and produce solid, long-term gains, there are certain times when using inverse ETFs can be very appealing – particularly in the current market environment.

Exchange Traded Funds: A Brief Overview

Before we talk about the hedging advantages of inverse ETFs, let’s quickly review what ETFs are, and how they work…

• Exchange-traded funds are securities that closely resemble index funds, but are more flexible because you can buy and sell them during the day, just like common stocks.
• ETFs give investors a convenient way to purchase a broad basket of securities in a single transaction, offering the convenience of a stock along with the diversification of a mutual fund.
• From a humble start in the early 1990s, the ETF industry has exploded, particularly over the past several years. There are now over 700 ETFs, with $450 billion in assets.

And the advantages? ETFs boast several major ones over mutual funds and common stocks…

• Better diversification
• More flexibility
• Lower costs
• More liquidity
• Tax efficiency

Going Short The Smart Way With Inverse ETFs

Inverse ETFs (or short ETFs) are designed to move in the opposite direction of an underlying index. That means you profit when the benchmark tanks. The lower the underlying asset goes, the higher these funds advance.

Perfect for a bear market like this one.

Think of inverse ETFs as a type of insurance policy for your portfolio. Investing a modest amount in one of them can be a useful way to hedge against market declines, or protect your profits in certain asset classes.

And when an index or stock heads south (as we’ve seen many do with a vengeance recently), an inverse fund can help soften the blow – and in some cases, even generate enormous profits.

For example, on September 30, 2008, four days before the Dow went below 10,000, I sent a special newsflash to my ETF Authority readers identifying 14 securities that could skyrocket as the market heads south.

*Source: Bloomberg. Total returns from 9/30/08 – 3/5/09

As you can see, most of the inverse ETF have done exactly what they were designed to do in this rough market. And it doesn’t stop there…

Double Your Money with Inverse ETFs

Some ETFs can even return double the inverse of the underlying security. For example, if you buy shares of the ProShares UltraShort S&P 500 (NYSE: SDS) and the S&P 500 declines by 5%, SDS gains 10%. (Keep in mind that these funds compound daily, so if you invest for longer, the returns won’t line up exactly).

So how are these ultra-short funds able to double the inverse performance of indexes? Simple… by using leverage. The math doesn’t always work out exactly, but you can usually expect it to return double the inverse within a reasonable range.

The trade-off, however, is that these funds can be incredibly volatile – and if you’re wrong, you lose twice as much. So only consider going ultra-short if you have the stomach for it.

Why You Haven’t Missed Out on Short ETFs…

You may think you’ve missed the boat on short ETFs… but think again.

With the market coming off depressing lows, the current rally may simply be a “dead cat bounce” (which have been known to soar), as the market attempts to form a new bottom.

With this in mind, you may want to consider adding an inverse fund or two to help smooth out some of this unprecedented market volatility.

Good Investing!

Nathan Slaughter

Source: Inverse ETFs: How To Profit From The Bear Market Trap

He goes on to say, “But this talk will shift soon to the ‘now what’ questions of what to buy when we do reach that magical point.” Here Scott discusses the Mutual Fund’s cousin, the ETF, and how to take advantage of investing in one.

Many will shun individual stocks for the safety of mutual funds. And with the explosion of index funds, we’ve never had a larger variety of options to help us diversify. These index funds are designed to yield a return equal to that of a particular index. They allow you to purchase a variety of assets as a low-cost, passive-investment strategy. And there are a number of indexes that specify sectors, stock indexes and international markets.

It’s a powerful strategy that allows you to slice and dice the global economy in a risk-managed approach. But we don’t like to stop simply at reducing risk and diversification.

There’s another cousin to the mutual fund and index fund families that many investors have heard of but haven’t taken advantage of. If you own mutual funds, indexed or otherwise, you need to know if using exchange-traded funds (ETFs) makes more sense for you. Here’s what you need to know about ETFs, the close relative to your mutual funds…

Exchange-Traded Funds – Index Mutual Funds on Steroids

Exchange-traded funds (ETFs) were first introduced in 1993, and are based on index mutual funds. They use similar principles, but have fewer management and transaction costs associated with them.

Unlike mutual funds, which can be bought or sold only at the end of the day when NAV is calculated, you can trade ETFs throughout the day, just like a share of stock.

• Exchange-Traded Funds are a portfolio of shares that can be bought of sold as a single unit.
• You own a proportionate amount of the shares held, with some ETFs even allowing transfers-in-kind.
• They can range from portfolios that track broad global market indexes all the way down to very narrow industry indexes.
• Exchange-Traded Funds are becoming a preferred way for investors to get all of a mutual fund’s benefits, with none of the downsides.

Think of ETFs as mutual funds on steroids.

Exchange-Traded Funds Becoming More Popular

While exchange-traded funds are becoming more popular by the day, they weren’t always so highly regarded. In fact, the creator of The Vanguard 500 Index Fund was against them and vigorously attacked the possibility of their success. In the end, John Bogle ended up adding a whole series of ETFs to the Vanguard family.

ETF investments quickly competed against indexed mutual funds. By early 2007, over $400 billion was invested in over 300 ETFs in three general classes:

• Broad U.S. market indexes,
• Narrow industry or “sector” portfolios,
• And international indexes.

The first ETF, like the first indexed mutual fund, matched the S&P 500 index and was given the symbol SPDR for Standard and Poor’s Depository Receipt. Many know it by its nickname, the “spider.”

Spiders spawned many new exchange-traded fund products like “Diamonds” that are based on the Dow Jones Industrial Index DJIA, Qubes based on the Nasdaq 100 index, and WEBS based on the World Equity Benchmark Shares of a portfolio of foreign stock market indexes.

The Advantages of Exchange-Traded Funds Over Indexed Funds

A big advantage of an exchange-traded funds over a conventional index fund is that they trade continuously throughout the day. You can buy and sell ETF shares just like a share of stock, while with an indexed mutual fund – where the net asset value is quoted – you have to place an order to buy or sell but that doesn’t transact until after the market.

This can be frustrating if your technical analysis indicates a buy or sell trigger at some point during a trading session but the market moves too far for you to take advantage of it by the end of the trading day.

And unlike mutual funds, exchange traded funds can be sold short of purchased on margin like a share of stock.

When you analyze these factors in light of the fact that options also trade on exchange-traded funds you can place positions in the general market, global market, or industry sectors, where you can:

• Employ protective hedges with puts or calls on your long or short ETF portfolio.
• Use combined buy-write options strategies where you collect premium from the short sell of an option to compensate for the cost the long options – bull and bear spreads, calendar spreads, diagonal spreads, butterflies, iron condors and so on, are all available to you trading ETFs but NOT with indexed mutual funds.

Exchange-traded funds also have tax advantages over mutual funds:

• When large numbers of mutual fund investors redeeming their shares – but you don’t – the fund has to sell securities to meet the redemptions. This creates a capital gains tax that is passed on to the remaining shareholders.
• Which means you end up paying the other guy’s tax obligation!
• In an exchange-traded fund, when somebody else sells, they have to pay the tax, not you.
• And when very large trades redeem their positions in the ETF, the transactions is settled with shares of stock in the underlying portfolio – not triggering a stock sale by the fund sponsor and no bogus tax bill to you.

Using Exchange-Traded Funds: How to Put Your Index Mutual Fund on Steroids