FMD Capital Management

Growth Investing

The Anomaly of Gold ETFs: Big Assets, Negative Returns

Written by David Fabian, June 27th, 2017

ETF investors are generally split into one of two crowds. Those that seek out the lowest cost funds for reliable correlation to the capital markets and those that jump on the hottest trends to try and ride a new wave of top-tier performance. The former is typically sticky money in the most diversified and time-tested indexes on the planet. The latter tends to jump around with every new cycle by reducing exposure to the weakest asset classes and increasing position size in areas showing the greatest momentum.

Then there are the anomalies. The outliers. The unexplainable trends driven by perception, fear, or some other phenomenon. It’s this category that I find so interesting to observe because of the unwavering conviction that flies in the face of normal behavioral patterns.

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State Of The Market In 5 Charts – June 2017 Edition

Written by David Fabian, June 25th, 2017

The halfway point of 2017 is nearly upon us and as investors consider market dynamics, there is much to be both excited and worried about.  The following are some of the most interesting charts on my radar right now and their implications for your portfolio.

PowerShares QQQ (QQQ)

In my opinion, no other major index can define the resilience of growth stocks better than the NASDAQ-100 over the last several years.  This ebullient group of the 100 largest non-financial stocks on the NASDAQ Stock Exchange has now spent 137 trading days above its 50-day moving average.  That’s a new all-time record according to Charlie Bilello of Pension Partners. Read more

Sector Rotation: Sell Tech and Buy Energy?

Written by David Fabian, June 15th, 2017

Every year brings with it new challenges with respect to sector leaders and laggards.  This is particularly acute for investors that own individual stocks or that like to add tactical exposure via sector-focused ETFs.  Sometimes you are in the sweet spot and other times you miss the mark entirely.

That scenario perfectly encapsulates the recent divergence between the top and bottom performing sectors this year.  Technology has been the big outperforming growth theme that has been driven by tremendous momentum and enthusiastic sentiment.  Conversely, energy stocks have languished by the wayside as falling oil and natural gas prices weigh on valuation prospects.  Read more

Investors May Not Be Worrying About Downside Risks, But ETF Issuers Are

Written by David Fabian, June 06th, 2017

Complacency in the stock market is almost palpable as $300 billion has flowed into ETF coffers since the U.S. presidential election just seven months ago.  With domestic and international indices hitting new all-time or 52-week highs, there continues to be a pervasive sense of calm in stock markets around the globe.

While many investors may be ignoring the risks of a pullback, there are some select ETF issuers who are thinking of the bigger picture and delivering tools to ride out future storms. Three fund companies have released diversified equity strategies this year with built-in hedges or risk management measures to reduce downside volatility.  These risk-aware funds will provide active investors greater options to consider if capital preservation or minimizing volatility is a top priority.

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Will Small Cap ETFs Regain Their Glory?

Written by David Fabian, May 30th, 2017

Small cap stocks are often thought of as the growth engines of strong market cycles.  Investment in these companies engenders the notion of higher risk and magnified price fluctuations compared to their larger peers.  As a result, these stocks tend to have streaky performance that can experience periods of strong relative gains or lagging returns.

The latter characteristic is what many would use to describe the current price action of exchange-traded funds that track small cap stocks.  These passive index funds have meaningfully underperformed traditional large-cap benchmarks as price patterns meander in a sideways trend.

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