What current investment vehicle will allow me to invest in the Retail Industry as a whole. Perhaps a fund that is 80% or better funded with Retail industry securities? Also, is there currently an investment vehicle that will allow me to invest in a “declining” Retail Industry?  

Robert from Retail, OH.


Robert, the short and simple answer to both your questions is the acronym, “ETF,” which stands for Exchange-Traded Fund. You can trade ETFs both long and short. These funds act much like a mutual fund, but one trades them as if they were individual securities. One benefit of trading an ETF over an individual security is the “safety through diversification” approach to trading. It appears you already understand this based on your question. So here’s your answer.

Check out a site called ‘Seeking Alpha.” When you go there, you will see myriad choices for ETFs that focus on the Retail Industry, as well as a plethora of other information related to ETFs. Herein is your work. You have to select one that fits your profile, ascertain its quality, and then determine the potential trade. If you are familiar with trading ETFs, this should not be too much work, but if you are not familiar with ETFs (and your question implies you are not), then you need to learn how to trade ETFs. Let me recommend a book that will help you figure out this dynamic and growing field of trading. Please read Trading ETFs by Deron Wagner.

The subtitle to this book is, “Gaining an Edge with Technical Analysis.” The focus is on technical trading because the author feels fundamental analysis will not work for ETFs because of the aggregate nature of ETFs. Thus, if you want to succeed trading ETFs you must understand technical analysis, according to Wagner. If you are a technical trader, then this book will send you a long way down the road to learning how to trade ETFs. If you are not, this book will at least help you understand the world of ETFs and how to trade within it.

By the way, some other benefits of trading ETFs versus individual securities are: access to more markets; lots of liquidity; lower trading commissions, and; greater likelihood of success when trading within a particular sector or industry.

Keep in  mind, although there are benefits to trading ETFs, they are no magic bullet. You still have to do all the work necessary to make trading a successful venture.

Trade in the day; invest in your life …

Trader Ed