Saturday, July 21, 2012

Dow Jones Spiders

About a year ago, I recommended to buy a Dow Jones ETF (SPDR Dow Jones Industrial Average ETF) which contains some of the world's largest and best corporations. Over the past 10 years this ETF returned 5.83% per year, over the past 5 years it returned 1.86%. Over the past 12 months it returned, according to my calculations close to 10%.

Even better, dividend yields have grown from 2.13% to 2.44%. In other words, dividends have increased faster than appreciation which on its own was already quite decent.

I repeat my recommendation to invest in the U.S. because over the next decade it will explode. There is pent-up housing demand; it is one of the youngest and fastest growing populations in the developed world; it has innovation and vigor; it has oodles of cheap energy and is no longer dependent on petro-dictatorships. Yes, it has a high debt load but my guess is that it will be outgrowing today's bad ratios at a pretty impressive clip - with or without Obama.

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