David Kotok is Bullish on Several Exchange Traded Funds (ETFs)

By on June 4, 2012

David Kotok, the chairman and chief investment officer for Cumberland Advisors and author of From Bear to Bull with ETFs, was the guest market monitor on the Nightly Business Report Friday.

Kotok was optimistic on the economic future of the U. S. He sees three positive trends underway leading to a strategic improvement, 1) housing making a bottom in different places in the country, 2) the energy sector, including natural gas and shale, is growing in the United States, and 3) the manufacturing sector in the United States is improving. Kotok stated housing, energy and manufacturing generate high-paying jobs, boost GDP growth, and are going to be improving for a decade.

The inteviewer, Tom Hudson, questioned Kotok on why he was playing his optimistic outlook with the Consumer Discretionary Select Sector SPDR ETF (XLY) .

Kotok responded there is no recession in their forecast as they see slow growth, low inflation, low interest rates, and a gradual recovery. Kotok added that although Friday’s action on the jobs number didn’t look good, there was job growth, not shrinking employment. He still sees economic momentum, although it will accelerate slowly.

Kotok was optimistic on a resurgence in homebuilding activity which he has and continues to play through the SPDR S&P Homebuilders ETF (XHB). He stated that XHB captures the survivors and has a survivorship bias. Kotok added that the builders had been through the ringer for 4-5 years and the ones that are still in business will benefit from the slow recovery in housing.

Hudson mentioned a couple of previous picks from August 26, 2011 by Kotok including the SPDR S&P Regional Banking ETF (KRE) and the iShares Cohen & Steers Realty Majors (ICF). Kotok said he still liked the regional banks and was now adding the big banks. Kotok indicated they had sold the REIT ETF, as he now prefers the homebuilders. Kotok disclosed that they owned everything discussed except ICF.

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