76% of Advisors Use ETFs With Mutual Funds: Virtual ETF Conference Poll

At ThinkAdvisor’s virtual exchange-traded fund conference on Tuesday, a quick poll found that the vast majority of advisors now use some ETFs along with mutual funds and other vehicles in their client portfolios.

During the all-day live trade show, “ETFs: What Advisors Need to Know for Successful Portfolio Building,” 75.7% of several hundred attendees during the first of five panels reported that they now use ETFs with mutual funds and other investments. Only 6.6% reported that they use ETF-only client portfolios, and 17.8% said they don’t use ETFs at all in client portfolios but are considering them.

ThinkAdvisor editor Jamie Green, who moderated the first panel focused on the pros and cons of ETF investing, said that the ETF debate lives on, even though many advisors have become mainstream users of ETFs for their clients.

“Others aren’t fully convinced that they need ETFs at all,” Green said. “After all, index mutual funds have their own advantages, and many advisors are not interested in rapid trading of ETFs.”

Stepping forward to defend the use of ETFs in client portfolios was speaker Ron DeLegge (left), editor of ETFguide, who pointed out that ETFs now total $1.4 trillion under management, with 2008 being the only year in the last 10 years when the market hasn’t grown. In June 2013, assets decreased 4.0%, driven by a $15 billion drop in the international-emerging category.

DeLegge first went over the basics of ETFs, saying they offer the benefits of low expenses, trading flexibility and high tax efficiency, and they cover all major asset classes, including stocks, bonds, commodities, currencies and real estate.

“He who offers the lowest cost usually wins the race,” he said, though he acknowledged that “not everybody is a fan of ETFs out there.”

DeLegge noted that Vanguard founder John Bogle, for example, has said that ETFs are like handing an arsonist a match because they tempt investors to trade too often. But DeLegge then shared a slide of a Vanguard study of its own shareholders in 2012 that refutes the notion that investors have become day traders. Rather, it shows that buy-and-hold ETF investors outnumber buy-and-sell traders, at a rate of 83% for mutual funds and 62% for ETFs at Vanguard. Indeed, he said, Vanguard is an ETF leader, with approximately $300 billion under management.

“There are a number of companies that are now scrambling to offer ETFs,” DeLegge said. “Advisors should learn from their lead. You certainly don’t want to become an outdated relic.”

ThinkAdvisor’s virtual conference involved a total of more than 1,000 attendees, who interacted via private chats and message boards as well as at a conference center with keynote speakers, panel discussions, exhibitors’ booths and a networking lounge.

Learn more about ThinkAdvisor’s Virtual ETF conference.

Investing in equities

If equities tempt you but you are scared to take the plunge during these volatile times, here's a complete step-by-step guide on investing in equities.

Step 1: Understand how the stock market works

When you read you begin with A-B-C. When you sing you begin with Do-Re-Mi. And when you invest in stocks you begin with business-company-shares.

Before you embark on your journey to invest in equities, teach yourself how the stock market works. Read this easy guide .

Step 2: Learn how to choose a stock
Having understood the markets, it is important to know how to go about selecting a company, a stock and the right price. A little bit of research, some smart diversification and proper monitoring will ensure that things seldom go wrong.

It's not that difficult: Just follow these 4 golden rules. And while you are at it< why don't you also check out How to buy low, sell high.

Step 3: Decide how much to invest
Since equities are high risk, high return instruments, how much you should invest would really depend on how much risk you can tolerate.

Once you have done that, use this asset allocation test to calculate exactly how much of your savings you should invest in equities.

Step 4: Monitor and review
Monitoring your equity investments regularly is recommended. Keep in touch with the quarterly-results announcements and update the prices on your portfolio worksheet atleast once a week. You can use Moneycontrol's Portfolio to update the prices of your equity holdings.

Also, review the reasons you earlier identified for buying a stock and check whether they are still valid or there have been significant changes in your earlier assumptions and expectations. And use an annual review process to review your exposure to equity shares within your overall asset allocation and rebalance, if necessary. Ideally, revisit the RiskAnalyser at every such review because your risk capacity and risk profile could have undergone a change over a 12-month period.

Finally, ensure that you avoid these seven most common investing mistakes and sail smoothly into your financial bright future.

Photograph: Jun Kokimura/Getty

Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

Can CVS Continue to Outperform?

With shares of CVS Caremark (NYSE:CVS) trading around $63, is CVS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

CVS Caremark is a pharmacy and healthcare provider in the United States. The company operates in three business segments: Pharmacy Services, Retail Pharmacy, and Corporate. The products and services offered at CVS Caremark stores may be deemed as essential by many consumers in the United States. As CVS Caremark provides an efficient and affordable healthcare and pharmacy experience, look for it to see rising profits.

CVS Caremark announced operating results for the three months ended September 30, 2013. Net revenues for the three months increased 5.8 percent, or $1.7 billion, to $32.0 billion compared to the three months ended in 2012.

T = Technicals on the Stock Chart Are Strong

CVS Caremark stock has been displaying a strong trend in recent times. The stock is now consolidating at all time high prices where it may need to spend some time before making its next move. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, CVS Caremark is trading above its rising key averages, which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of CVS Caremark options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
CVS Caremark Options	21.20%	0%	0%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
December Options	Flat	Average
January Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on CVS Caremark’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for CVS Caremark look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	30.38%	19.75%	30.51%	12.05%
Revenue Growth (Y-O-Y)	5.76%	1.74%	-0.11%	10.87%
Earnings Reaction	2.42%*	-2.80%	-0.92%	0.53%

CVS Caremark has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been pleased with CVS Caremark’s recent earnings announcements.

* As of this writing

P = Average Relative Performance Versus Peers and Sector

How has CVS Caremark stock done relative to its peers, Walgreen (NYSE:WAG), Rite Aid (NYSE:RAD), Express Scripts (NASDAQ:ESRX), and sector?

	CVS Caremark	Walgreen	Rite Aid	Express Scripts	Sector
Year-to-Date Return	31.17%	62.50%	293.40%	16.57%	37.74%

CVS Caremark has been an average relative performer, year-to-date.

Conclusion

CVS Caremark provides healthcare and general products and services to consumers across the nation. The company recently reported earnings that left investors satisfied. The stock has been rising higher and it is now consolidating at all time high prices. Over the last four quarters, earnings and revenue figures have been increasing leaving investors pleased about CVS Caremark's earnings announcements. Relative to its peers and sector, CVS Caremark has been an average year-to-date performer. Look for CVS Caremark to OUTPERFORM.

Wells Fargo Soars as Revenue and Profits Swell

Financials are looking spiffy this morning as banks begin to turn in superb second-quarter earnings. Heavy hitters JPMorgan Chase (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) unveiled some sweet numbers earlier today, and Wells was up more than 2% in midday trading. Though the KBW Bank Index (DJINDICES: ^BKX  ) was in the red early this morning, it too has been buoyed by these excellent reports.

Earnings and revenue estimates easily beat
Wells sailed past analysts' estimates on earnings per share by $0.04, turning in a nifty $0.98 on that metric. Revenue of $21.38 beat by $0.17 billion, as well. To put those numbers in perspective, EPS increased 20% over the second quarter of 2012, with profits up 19%. Revenue was up by $89 million over last year's figures.

The somewhat flat revenue numbers are likely traceable to a slowdown in the mortgage market, particularly refinances. Despite this industrywide headwind, which was noted last quarter by both Wells and JPMorgan, Wells reported both higher mortgage originations and applications from the first quarter. The application pipeline isn't quite as robust at $63 billion, however, as it was at the end of March, when it clocked in at $74 billion.

Similarly, JPMorgan noted that its mortgage banking profit decreased by $179 million, to $1.1 billion, from the same time last year.

Wells trumped JPMorgan in the area of net interest income, a metric that has been compressed by the low-interest environment of the past few years. While JPMorgan noted that its own net interest income decreased by 1% year over year, Wells' increased by 9%  since the second quarter of 2012, because of loan growth and securities investments.

As Wells Fargo nears its 52-week high this morning, it looks like the sky will be the limit as investors celebrate the good news. Though mortgage rates have caused a drop in demand for such loans lately, Federal Reserve Chair Ben Bernanke's calming words on Wednesday, when he reiterated the Fed's commitment to economic stimulus for the foreseeable future, may have halted the escalation, and today's rates have edged down slightly from yesterday. For Wells Fargo, the future just got a little bit brighter.

Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Climate Change Deniers? Follow the Money!

John Vechey of PopCap Games recently joined The Motley Fool for a climate change summit. His first panel guests were Dr. Rachel Cleetus and Dr. Joe Casola. Rachel is a Climate Economist with the Union of Concerned Scientists, where she advocates for effective global warming policies at the state, regional, federal, and international levels. Joe is Program Director for Science and Impacts at the Center for Climate and Energy Solutions (C2ES), which works to assess the current state of knowledge regarding climate change and its impacts, and to promote actions that strengthen climate resilience.

Rachel defines "skepticism," and what it does and does not mean in the climate change "debate." There are some valid issues and questions to be asked regarding climate science -- Joe shares several of them -- but the fact of global warming, and humanity's role in causing the change, are not among them. Their message is important pushback against companies like ExxonMobil (NYSE: XOM  ) , which spend heavily on efforts to deny climate science in the public domain. With growing momentum behind efforts to deal with the climate change threat, ExxonMobil may find itself on the wrong side of history.

One home run investing opportunity has seen the writing on the wall, and is becoming a part of the solution to the climate challenge. It's been slipping under Wall Street's radar for months, but it won't stay hidden much longer. Forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock... because they know it holds the key to the explosive profit power of the coming "no choice fuel revolution." Luckily, there's still time for you to get on board if you act quickly. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!

You Can Thank DISH Network for Free Movies on Southwest Flights This Summer

DISH Network (NASDAQ: DISH  ) may have lost the high-stakes poker game over some serious wireless operations, but the satellite broadcaster has plenty of backup ideas up its sleeve. First up: a fresh marketing agreement with Southwest Airlines (NYSE: LUV  ) that delivers free movies and TV shows to Southwest passengers, courtesy of DISH.

The service delivers a subset of the content you'd get as a DISH customer with a Hopper account. Just like the Hopper deal, you'll watch a limited selection of live TV channels along with "up to 75" on-demand programs via your own mobile electronics. The data stream is powered by Southwest's onboard Wi-Fi service.

DISH suggests using Apple (NASDAQ: AAPL  ) iPads and iPhones, and actually handed out free iPad 2 tablets (a two-year-old model that still sells for $399) to about 100 Southwest passengers in a launch-day stunt. Android users and other mobile platforms are taking a gamble as the service only supports "some" mobile devices without providing a comprehensive list.

For Southwest passengers, it's a pretty sweet deal. The movies stream totally free of charge. You don't even have to pay for the $8 in-flight Wi-Fi service separately, as the DISH media travels on a separate single-purpose network, according to a Southwest blog post.

Free in-flight live TV and on-demand movies, as seen on your own tablet. Image credit: Business Wire.

All told, it's a solid selling point for Southwest flights. The company still trails behind the entertainment options on fellow hub-less airline JetBlue (NASDAQ: JBLU  ) , which already offers multichannel satellite TV via DISH competitor DIRECTV as well as digital radio courtesy of sector leader Sirius XM.

JetBlue's Sirius and DIRECTV media is streamed through the built-in screens, so Southwest is certainly saving some money on hardware installation here.

Mind you, I'm not knocking Southwest's media efforts at all -- most airlines don't come close to either one of these customer-friendly feature packages. It's just worth pointing out what DISH and Southwest are up against in the free market.

Finally, DISH is clearly treating this program as a marketing exercise with a side of target practice. Southwest returns the free-movies favor by including ad spots for DISH in the media stream, as well as in various parts of the in-flight and booking experience. It's a chance for the satellite broadcaster to spread the word about its services, not to mention working up its muscles for a larger Internet-based launch down the line.

In the long run, DISH just might give up on the capital-intensive satellite game to become a pure digital streaming service. That's what the wireless bets are all about, and why the company could use some small-scale digital streaming practice like this project.

The television landscape is changing quickly, with new entrants disrupting traditional networks. DISH is certainly placing its bets early. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!

Housing Heats Up

The following video is from Tuesday's Investor Beat, in which host Chris Hill, and analysts Jason Moser and Matt Koppenheffer dissect the hardest-hitting investing stories of the day.

New-home sales hit their highest point in almost five years in May, rising 2.1% from the previous month. In other housing news, the Case-Shiller index of home prices in 10 major markets increased 1.8% in April. In this installment of Investor Beat, Motley Fool analysts Matt Koppenheffer and Jason Moser discuss how investors should analyze the housing market, and why bank stocks are the hidden winners.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery" outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

The relevant video segment can be found between 0:14 and 2:45.