I was doing some Christmas shopping for the wife this weekend (since she has no interest in my blog, I'm not worried about giving away any gift secrets) and stopped in a Borders to check out some books. In past years, the status quo would have been for me to identify some books I think she'd enjoy, check out and that would be that. This year, being the year of the smart phone - I have an iPhone with both a ShopSavvy App (free App that allows you to scan UPC bars and get an immediate price comparison on the web) and the Amazon App.

I was amazed to see the obnoxious premium that brick and mortars retailers carry on their books. Cooking books are quite expensive for instance. I was able to the same hardcover books at Amazon for 19 and 21 bucks vs. over 30 in the store. The store version even gave the "appearance" that the books were discounted by putting a new label on the back with a new price. Get real - this was over a 30% premium compared to online options. I identified a couple books for myself for vacation reading as well, and before I knew it, I would have been looking at a $120 bill plus tax. What I ended up doing was entering each of them into my Amazon App, quickly dropping them into the cart and just simply checked out - all in the matter of minutes. There wasn't a single book of the 6 that was even close in price. While I did pay shipping through Amazon, there was NO TAX! So, that piece was a wash - I traded shipping for Tax. I paid ~80 vs. ~120 in store. Not too bad.

While you can save money at Borders on a single trip when you sign up for the Borders Book club, you don't get a % discount for subsequent trips - they just send coupons in the mail for occasional use in the future.

So, that brings us back to the Question:

Why Would you EVER Buy a Book from a Bookstore for 30% Premium?

I believe the answer lies in one of the following 3 realities:

1) Lack of information - without a price comparison tool at your fingertips, many people (including myself during that shopping trip) impulse shop and don't know what competitors are charging at the time of purchase.

2) Lack of Preparation - Notice that I shopped well ahead of Christmas. The books I ordered from Amazon have already shipped and will arrive well ahead of schedule. When you delay, you pay. That's the truth. People pay for convenience all the time and end up paying substantially more as a result. If I had waited until Dec. 23 to shop, I would have had no choice but to buy the books at Borders and bring them home for a 30% premium.

3) Apathy - Many people just don't really care what they pay (within reason). Often times, people know they're paying more for something, but they're too lazy or apathetic to put forth the effort to do anything about it - they don't have good money habits. I'm sure there were dozens of people there that day that walked out of the store with books that had their smartphones on them. They just wanted to go home with a book that day and didn't want to be bothered. I'm guilty of this within reason (i.e. I won't drive across town to save 1 cent per gallon on cheaper gas), and everyone's got their threshold. For me, 40 bucks or so was well worth it.

If you already know what you want, you could always just go right to Amazon and pick up an awesome book like SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance instead and save yourself the trip. I don't know of another online retailer that can routinely beat their pricing and service for books.

Would You Still Buy In-Store After Reading This?


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With 2009 seeing a turbulent year from the continuation of a market selloff from 2008 to complete investor capitulation in March to an unprecedented 65% runup from the pivot low, you'd expect to see the leveraged ETFs on this list since volatility erodes their value considerably and to add insult to injury, there are 8 New Leverage ETFs on their way at this time. Therefore, I've included only a few from that genre, then included some conventional sector funds as well. If you held on to any of these dogs for the full year, it's time to ask yourself whether buy and hold is right for you and whether any of these were actually suitable "investments" (very few would agree that leveraged ETFs are anything more than a trade).

Worst of the Worst - The Worst 5 ETFs of the Year are all Leveraged:

Direxion Daily Financial Bear 3X Shares (FAZ) -94.33%
Direxion Daily Emrg Mkts Bear 3X Shares (EDZ) -92.33%
Direxion Daily Technology Bear 3X Shares (TYP) -84.41%
UltraShort Real Estate ProShares (SRS) -83.81%
Rydex Inverse 2x S&P Select Sector Fincl (RFN) -81.89%

Worst Commodity ETF of 2009

United States Natural Gas (UNG) -60.21%

Worst Bond ETF of 2009

Vanguard Extended Dur Trs Idx ETF (EDV) -32.62%

Worst Sector Fund of 2009

SPDR KBW Regional Banking (KRE) -25.62%

*Wildcard - Worst ETF that Never Should Have Been Invented

AirShares EU Carbon Allowances (ASO) -14.89%

Worst Country ETF of 2009

iShares MSCI Japan Index (IJP) -1.67%

Conversely, make sure to also check out the Hottest ETFs of 2009 up over 100% on the year.

Disclosure: No positions in the aforementioned ETFs (thankfully).

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Since I missed my weekly Hottest ETFs post (here are 18 Hot ETFs up over 100% YTD to make up for it), I wanted to share some niche ETFs that you may not have heard of otherwise. Given a possible market top/correction in the works following the most dramatic uninterrupted rise in equities in decades, it's worth considering if your portfolio is adequately diversified, requires rebalancing and whether some of these niche ETFs may help to offset some volatility with lower correlation to US equities than a standard S&P500 or large cap ETF.

*For context, year to date, the S&P500 is up 22%.

Name: Claymore/BNY Mellon Frontier Markets
Ticker: FRN
Background: This ETF seeks to replicate the Bank of New York Mellon New Frontier DR Index. What makes this ETF especially unique is the country holdings. The top 5 Holdings are companies hailing from: Chile, Poland, Egypt, Colombia and Kazakhstan (Borat would be proud). Seriously though, with BRIC ETFs taking the lion share of emerging market dollars, as investors find the next frontier of emerging market economies to satiate appetite for high Beta returns, it may be worth hitching a ride on this Frontier Market ETF.
Performance YTD: 57%

Name: United States Gasoline
Ticker: UGA
Background: This ETF seeks to replicate the percent change in US gasoline prices. I've covered this one before and have personally sold puts against UGA as one of several ways to employ gas hedging for my family finances. There are few ETFs that provide retail investors with such a natural hedge for such strategies. If gasoline is a significant expense in your personal finances, perhaps it's worth buying UGA, selling puts or employing another similarly themed hedging strategy, especially in light of a weak dollar and increasing commodity prices.
Performance YTD: 80%

Name: Dollar Bear/Dollar Bull ETFs
Ticker: UDN/UUP
Background: Depending on whether you think the US Dollar is going to collapse or there's going to be a rush for the exits when the carry trade reverses, you may want to employ one of these ETFs which basically pits the strength of the American currency against a bucket of other major currencies. When the US Dollar strengthens, UUP gains in value; when the USD falls, UDN appreciates.
Performance YTD: UDN +8% UUP -9%


Name: Van Eck Gold Miners Juniors
Ticker: GDXJ
Background: If you're looking to jump on the gold bandwagon, given the speculative/hedging nature of such an investment, you might as well do it in grand style. This ETF is even more volatile than the price of gold itself given the nature of some of these "juniors: that explore for years with no finds and then spike massively upon a find announcement. Country representation: 63%, of the components are based in Canada, followed by the U.S. with 22%, Australia 11%, South Africa 2%, China 1% and the U.K. 1%
Performance Since Launch: The ETF just launched in Novemeber. Against Gold's 3.2% move in that period, GDXJ is up 4.8%.

Name: Claymore Beacon Global Timber Index
Ticker: CUT
Background: This ETF seeks to replicate the return of the Clear Global Timber index. What's especially attractive about this ETF is the lower correlation to US equities offered. Years back when the Harvard endowment was returning 25% a year plus in rocky markets, timber was one of the types of non-correlated investments that helped buoy the fund in turbulent times. This year, CUT has outperformed broader equities even given the recent run.
Performance YTD: 50%

See this full ETF List of over 800 listed ETFs, which may inspire you further to investigate new sector, country or leveraged ETFs.

Disclosure: Long GDXJ, Hedged Sold Put position on UGA.


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November was a great month from several aspects:

• Traffic at my new blog Darwin's Finance broke another record and exceeded 40,000 views for the month even with the slow holiday week. Considering the fact that it's less than a year old and is growing by 10-20% per month or more, I'm excited as ever about the long term prospects. That's not to say I'm not excited about Everyday Finance as well, but things are more steady here as opposed to exponential growth given the constraints of the .blogspot platform and whatnot.

• I had my first-ever triple digit day on Adsense. In effect, Google's Adsense is one of the ways bloggers earn income on the content which motivates us to create and disseminate the posts you've come to know and love. For whatever reason, everything just came together on the same day with respect to traffic, high income pages, etc. and resulted in a $127 day.

• I have to eat my hat because after trashing gold multiple times in my posts on gold hype, better ways to invest in weak dollar trends, and the carry trade, I ended up buying a speculative/volatile gold miner Juniors ETF (GDXJ) anyway. I did fully disclose immediately via twitter and admit my shame in doing so (see my Trades), but I couldn't ignore the trend, regardless of the lack of fundamentals in my view. Since entry last week, GDXJ is up 16%.

• The home finances are going well - continuing to invest in retirement plans and the kids' 529 plans and I put in place some home energy saving initiatives for the winter.
• I'm loving the several hundred dollars per month we saved on our refi into a 4.625% mortgage. But I was blown away when I saw that you can now get a 0% down loan AND enjoy the home-buyer tax credit compliments of the USDA rural loan program.
• The one caveat with my financial management is that I put aside a few hundred more than we spent in the Flex Spending Account this year. So, I've got to get creative and spend the remainder on these eligible FSA expenses by Dec. 31.
  

Aside from these tidbits, here are a few additional popular posts in Money and Investing from November I think you'll enjoy:


Investing:

$100 Signup Bonus at OptionsExpress Now!

787 ETFs Listed – Every Exchange Traded Fund Known to Man and Woman

Do You Invest in Companies You Find to be Morally Repugnant?

Advanta 11% Yield Investment Notes – Going, Going, Gone!

Time for High Yield Investments if Market has Peaked?


Money and Finance:

Today’s Financial Priority: Get a Free Credit Score from myFICO

Review: Flex CD Offers High Yield if the Dollar Tanks Against BRIC Currencies

Energy Saving Tips from the Dept of Energy – Pretty Darn Good!

Working Long Hours – Is it Worth it?

Cash for Caulkers – I’m Not Kidding. Latest Gov’t Giveaway Program

Abysmal Survey Results: Americans Don’t Understand Basic Financial Concepts

Why Do People Pay More Money for the Top of the Line Model? Incremental Value Analysis

Why do Pharmas Call Themselves Biotechs? You May be Surprised...And Annoyed


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While investors that hung in there during the tumultuous March lows and beyond are surely satisfied with their 60%+ returns in the S&P500 from the bottom, there are several factors that make one question whether this rally has more legs and whether it's reasonable to assume stocks will continue to outperform other asset classes in the intermediate term from here. What am I talking about? Well, there are a few things working against another 15% leg up in US equities:

• The intrayear runup we've seen is the most pronounced that we've seen in 75 years. It's unlikely it will continue unfettered by at least a single significant correction.
• The market is not being driven solely by fundamentals. Mutual fund managers are playing catch-up for their year-end holdings disclosure, money's coming off the sidelines from Treasuries and savings accounts back into risky assets, and the Fed's creating another bubble with cheap money which will snap back as soon as the market senses a rate hike. It's easy to show year over year employment with flat sales and 10% fewer employees due to layoffs.
  
• Unemployment is over 10% and rising. No government intervention seems capable of artificially turning it around. In fact, the constant government meddling and bailout philosophy may only result in prolonging the recovery since decision makers and managers simply cannot predict which tax law changes or bailouts are coming next.
• The weak dollar has been great for multinationals (many S&P500 stocks) since earnings overseas will translate into higher profits denominated in US Dollars. However, the dollar cannot drop forever and on a long term basis, a very depressed dollar is not good for the economy in terms of inflation, energy costs, cost of living depression and the reverse effect when the dollar recovers.
• Take a look at the chart from the March lows. While SPY (S&P500 ETF) barely broke past the prior October high of 111, it has dipped back below and hasn't been able to break out. We've been range bound for several sessions now and with so many emergent issues from Iran laughing in the face of international pressure to stop their nuke program to a prolonged stay in Afghanistan to potential passage of a massive health care bill that will burden the economy for generations with debt that will be difficult to repay.
  

If these factors give you pause but you have liquid cash to invest, there are several high yield options at your disposal, which in some cases, present a compelling bargain from historical prices even in light of the recent runup in equities and the current low interest rate environment.

• Highest Yielding Savings and CD Accounts - There are a few interesting CD alternatives out there. First, here's an Ally Bank review demonstrating what happens when a bank doesn't play nice with competitors. Apparently, their rates are "too high" compared to their peers, so they had to file a complaint to Sheila Bair, Chairman of the FDIC. That alone is an endorsement for above-market rates worth considering. Additionally, with the dollar continuing to slide against foreign currencies, there's an interesting currency flex CD that will return more when BRIC economies see their currency rise against the dollar. In the event the dollar rallies, you still get your principal back, with FDIC insurance to boot.
  
• Municipal Bonds - This article on high yield muni bonds and their various investment vehicles provides plenty of options to capture tax-free income with diversified risk in some top performing muni bond ETFs. While the yields are not what they used to be as markets recovered from the abyss, and you'll want to avoid focused muni ETFs for particular states like California, which adequate protection and research, good tax-free bargains can be had, which may see an additional boost in share price if taxes go up next year.
• High Yield Bonds - I reviewed the High Yield Bond ETF (HYG) that I favor and hold currently, which was yielding 12% upon entry, but still yields 10%. Now, these high yield ETFs are otherwise known as "junk bond" ETFs and we've seen historically that at the tail end of a recession, junk debt defaults do rise considerably, so the party may not last forever. For a more conservative approach to much larger names with BB ratings and above check out this list of high yield corporate bonds with payouts over 8%.
  
• High Yield Stocks - There are some great high yield stocks out there. Recently, I compiled this list of high yield large caps that with dividend yields over 5% and market caps over $25Billion - and they're not Financials for the most part, since most of them had to cut dividend payouts upon receipt of TARP funds.
  
• Stock Option Speculation Strategies - There are various means to derive income from selling options in a peaked market for the premium that come with varying degrees of risk. I've outlined some low cost option strategies that span the range of high risk to lower risk, all of which requiring very low initial cash outlays to open the position.
  

Disclosure: Long HYG (High Yield Corporate Bond ETF) and PMF (muni bond ETF); also a put ratio spread position on SPY.

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Each week, I like to publish the past week's hottest ETFs to share some new trends and niche ETFs (and ETNs) out there (check out this ETF Ticker List full of ~800 - every exchange traded fund I could find) and give investors some new investing/diversification ideas. Last week, it was metals and natural gas taking the lionshare of gains. I made sure to include both conventional and leveraged ETFs in this week's hot list:

Hot List Leveraged ETFs

FAZ - Direxion Daily Financial Bear 3X Shares - Up 8% - You can always count on having either FAS (triple long) or FAZ (triple short) Financials on the list given the volatility in the Financial sector and the constant news cycle regarding either more government oversight, more leadership turnover, TARP paybacks and more. In the near term, it's conceivable that Financials just continue to run. After all, it's looking as though they'll be borrowing at zero and lending for much more for at least another year and the comps from the year prior will continue to look stellar. Amazingly, the mortgage market continues to be propped up by the likes of mortgage modification programs, home buyer tax credits and amazingly, home buyers can still get 0% down loan programs (actually make money on a purchase when considering home buyer tax credit) under an obscure USDA farm loan program (and no, most people taking advantage of this don't own a farm). The question is, when (or if) the government assistance dries up, what that portends for the financial sector at large, which still has skin in the game. YTD, FAS is up 175% and FAZ is down 41%. Not for the faint of heart.

SRS - ProShares UltraShort Real Estate (ETF) - Up 6% - In a flat week for the S&P500, as noted above, Financials didn't fare well, nor did Real Estate. Jitters over redefaults and a breather from recent runups in the sector led to a mild decline for the week in this leveraged ETF.

* Be mindful that there are several leveraged ETFs (by sector/ticker), but investors that are unfamiliar with these instruments should be aware that they lose value over time due to the mechanism of daily rebalancing, which isn't intuitive until you see an example. Therefore, these should really be treated as trades over perhaps a few days, as opposed to "investments" for any great period of time.

Hot List - Sector ETFs (no leverage)

PGM - iPath DJ AIG Platinum TR Sub-Idx ETN - Up 12% -This Platinum ETN continues to run. For a non-leveraged play on precious metal strength/weak dollar trending, PGM is up 88% YTD vs. 33% for GLD, the predominant gold ETF.

GAZ - Barclays iPath Natural Gas - Up 7% - Natural gas has been depressed for some time given that its demand profile is divergent from that of oil and demand in the US has been very light given the recession. GAZ has actually lost half its value YTD. However, there are attempts from various camps to turn the US economy into a natural gas economy and move away from imported oil. Whether this ever comes to fruition in our lifetime is yet to be seen. But, if the administration signals that there's interest in considering a heavier reliance on natural gas, you could expect to see a rapid snap upward. As a consumer, if your expenditures for energy are influenced heavily by natural gas, you may want to consider this or other methods to hedge energy prices for your household.

GLD - SPDR Gold Trust - Up 5% -You can't turn on the TV or radio these days without hearing a pundit espouse the benefits of gold, the gold bubble forming, or whatever gold-oriented agenda their pushing...followed by commercials for gold exchange/retail companies. While gold is correlated with a weak US dollar trend, there are a multitude of weak dollar ETF plays including other precious metals that actually have real-world utility, as well as currencies, treasuries and a even flex CD that rises in value as the dollar declines against BRIC currencies (innovative!). GLD has gained 12% over the past month and 23% over the prior 3 month period.


Disclosure: No position in the aforementioned ETFs.

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With Black Friday upon us, I thought I'd share some useful resources and online deals since most of the brick and mortar Black Friday come-ons are scams just to get you in the store. If you don't catch the fine print, that $400 LCD TV is often only one of 4 in a store with 500 people in line since dawn. You might as well just shop online to get the real deals.

Start with Amazon: They have a weeklong sale with massive discounts - it's pretty cool to see what's up on the front page, how many items remaining, etc. Lots of great items. I'd start by opening a window with Amazon, then trying out some of the sales below to see if you can beat what you're looking for - click below for the Black Friday Page:





Stores with Great Black Friday Deals:

Electronics:

Newegg.com: BLACK FRIDAY! Ready, Set, Shop at Newegg.com, expires 11/29

Buy.com: Black Friday 2-Four Day Sale Blu-ray Movies from Buy.com! Exp 12/17/09

Dell: Dell Small Business Black Friday Sale

At MacMall, you can actually get better pricing than through the Apple Store Direct!

Must-Have iPhone Apps for Black Friday if you Must Shop in the Real World:

ShopSavvy, a free app for the iPhone: The app allows users to scan the barcode of an item with the iPhone's camera. It then pulls up listings for that item at competing retailers with prices and reviews. This is pretty incredible technology. Try it out!

Mall Maps ($2.99) - You Are Here, a portable database of mall floor plans, store lists and other information intended to help shoppers avoid some headaches this holiday. Pretty cool; I hate having to go find the stupid map in the mall to find out I just went 10 minutes out of my way.


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