SPY And DIA Set To Run As Trucks Full Of Cash Pull Out Of Baghdad?

March 03, 2009

Can I take a moment to be indignant, to be infuriated at where we find ourselves?

Matt's blog takes a look at the stunning fall from grace of AIG in the form of $61.7 billion in quarterly losses. Quarterly losses! Meanwhile, the U.S. government announces it's pouring another $30 billion to add on to the $150 billion we've already poured into the black hole that is AIG.

It all brings to mind images of semitrucks full of hundred-dollar bills pulling out of Baghdad in the wake of the last invasion. I've got a question: How do we, the U.S. government, only own 80% of a company that we've poured $180 billion into when it's only got a market cap (as of yesterday) of $1.13 billion? Isn't anyone in jail yet? Lined up at the gallows? It feels like the biggest heist in the history of the world—and we're lining up to write more checks.

Citibank—a $50 billion welfare check. Bank of America—another $45 billion for this welfare queen. Citibank! Bank of America! Are you kidding me?! It is APPALLING ... and it's not exactly like we're saving the world here, folks, as the Dow has dropped into the 6,000s and there's just bleak on every horizon.

And meanwhile I'm writing my check to the IRS. Why don't I just mail it into Citibank corporate headquarters and cut out the middleman? Is it just me, or is all of this very, very infuriating?

I feel like such a chump. $50 billion here, $150 billion there. Meanwhile, UBS takes what is claimed to be the largest quarterly loss ever by a financial institution at a mere 12.5 billion Swiss francs (a mere $10.65 billion). Chump change.


So am I a capitulator? I hardly have the heart to go in there and buy more of the Select Sector SPDRs - Financials (NYSE Arca: XLF), as I did early in the winter, I'll tell you that. But I AM looking at buying more total U.S. market at these levels ... despite the fact that the dollar makes me very, very nervous on the other side of this crash.

And outside of the U.S., I think some of the opportunities are even more attractive. I'm looking closely at some of the top Asian regional funds:

  • China: I'm looking at the iShares FTSE/Xinhua 25 (NYSEArca: FXI) as one option, or perhaps even better, at some of the broader China ETFs like the SPDRs S&P China (NYSEArca: GXC) or competing funds from PowerShares, which may be the preferred China access despite the popularity (and my ownership of) FXI.
  • Emerging Asia: State Street Global Advisors also offers the S&P Emerging Asia Pacific (NYSEArca: GMF), which I find very appealing.
  • Fundamentals: From PowerShares, for you fundamentalists (and contrarians with recent RAFI performance), there's the FTSE RAFI Asia Pacific ex-Japan (NYSEArca: PAF) or FTSE RAFI Asia Pacific ex-Japan (NYSEArca: PDQ) offerings.
  • Regional: iShares also has some nice regional offerings now like the iShares Pacific ex-Japan ETF (NYSEArca: EPP) or the iShares Asia 50 ETF (NYSEArca: AIA).
  • Currency: And if you want to REALLY make a bet, how about the Chinese yuan in the form of CYB - the WisdomTree Yuan currency fund. Doesn't move much now because of how it's pegged, but look out when the controls come off. Murray's doing a profile on that one in the next ETFR, I believe.

Right now, when your heart is weak and your strength is waning, this is when fortunes are made, right? Right? Anyone?


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