Water ETFs are Correlated to Market Tide
- Sell PHO and PIO around 22 and 24 respectively
Eleven months ago I recommended the water ETFs PowerShares Water Resources (PHO) and PowerShares Global Water Portfolio (PIO). I was specifically seeking an asset class uncorrelated to the broader stock market. However, I think too many traders and funds are buying and selling these assets based on the same signals as broader market indicators. Therefore, the investments have not met my thesis and need to be sold.
This is a good lesson for investing. We have many prospective investments, yet only enough cash to buy a tiny fraction of assets. As a result, we must consider our opportunity costs when holding investments that under-perform. Moreover, we want to cut our losses when a thesis has been proven incorrect. If for some reason these water ETFs start trading as if water is a scarce commodity, then I will happily jump back in the pool.
SmartGuyDH no longer owns shares of PHO or PIO
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