Stockchase Opinions

Kim Bolton First Trust Dow Jones Internet Index Fund FDN-N COMMENT Jun 10, 2020

ETF recommendation? There are a number of them out there. The ones he uses add diversification and are used primarily as a short term trading vehicle for him. He mostly uses SOXX, IGV and FDN.

$168.102

Stock price when the opinion was issued

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TOP PICK
He's sold off half his position, and is looking to reacquire. Good buying opportunity. The internet will continue. Trying to get the beta of the internet without the alpha. Exit below $114. Expense ratio 0.54%, average P/E is 82x.
PAST TOP PICK
(A Top Pick Jul 03/18, Down 1%) Half of this are the FAANGs which took a bigger than deserved hit.
BUY
Should I buy the ETF or individual stocks? Unless that you are an expert you should buy the ETF. This one is fairly expensive. Other than that nothing wrong with this one.
PAST TOP PICK
(A Top Pick Jul 03/18, Up 7%) Half of it are the FAANGs; half are dividend-paying small-caps. Both were badly hit in Q4 -2018, but the FAANGs have yet to recover fully. But if the market continues to rise, the FAANGs will recover. Hold onto FDN.
BUY

A tech ETF for an RRSP? There are three. SOXX for semi-conductors, the ammunition which drives tech around the world. IGV is a great way to get diversification in software. FDN is the internet index is extremely liquid and massive. These ETFs cover the three pillars that drive tech today. He uses these ETFs to offset volatility. When an ETF approach 5-7% of his price target, he sells a third off. Holding single stocks isn't as nimble. For example, he sold a lot of these ETFs in early-spring, then bought them back in the May swoon.

COMMENT
How to take advantage of a recession? There has been a great run in the market. He would buy into an alternative offering that allows the manager to be long or short or to get an active manager. You need to be disciplined on your entry and exit levels. His minimum to get into his fund is $50k. He could suggest two ETFs: IGV-T and FTN-N. He thinks it is dangerous to get into a long only ETF at this stage of the cycle.
PAST TOP PICK

(A Top Pick Jan 04/19, Up 17%) It was a low point when he recommended it. He switched out of this for VGT, a Vanguard IT ETF. It's more on the hardware than software side. He thinks there are other sections of tech other than internet that could grow this year.

BUY

He likes it a lot. He loves Amazon, which has a 9% weighting in this. FANG is doing well because their fundmental businesses are doing so well. You'll be fine owning this. He doesn't see a tech bubble like 1999. There's room to run in tech.

COMMENT

Facebook is the top holding and there are bearish calls (from Michael Levine). FDN has a different valuation method from other ETFs. It's actively managed, though he hasn't watched FDN in particular. First Trust ETFs do okay. He's not worried about it, though it may depend on FB's weighting; for instance, 30% would be a problem.