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Investing in Hospitals – Healthcare Mutual Funds and ETFs

It’s often said that in a world where unemployment runs rampant, having a job in the healthcare industry is about as secure as one can get. So how does investing in hospitals and the healthcare sector fare on Wall Street? The healthcare sector itself is vast and is made up of everything from health insurance providers to pharmaceutical companies. With such a variety of companies in which to invest, knowing the trends can greatly help any investor looking to diversify. Trends to look for include the age of the population, particularly baby boomers, diabetes and obesity epidemics, people living longer, fuller lives with chronic diseases, technology advances, personalized medicine, and the global reach of diseases. Negative trends that would keep investors away from the healthcare sector include a single-payer healthcare system such as Medicare and any United States government-sponsored healthcare program, an uninsured population, consumerism, and cost controls.

Investors interested in pharmaceuticals should know the difference between pharmaceutical and biotech companies. Pharmaceutical companies create smaller compounds while biotech companies deal with larger protein compounds. Both types spend vast amounts of money on research and development endeavors in order to create a drug and have it go from development to FDA clinical trials.

With everything from the creation of pills to advanced healthcare technologies and everything in between, the healthcare sector is vast which makes it confusing to beginning investors. A great place to start is to look into ETFs or healthcare mutual funds that will reduce the risk associated with holding individual stocks. ETFs are exchange-traded funds that are essentially securities that track a commodity or index. ETFs act like any index fund but are traded like products on the stock exchange. Purchasing an ETF gets an investor the diversification needed in any portfolio.

Similarly, healthcare mutual funds allow investors to diversify while having the added bonus of giving the investor access to equities, professionally managed bonds, and other securities. This is an investment that is created from a pool of collected funds and is operated by professional managers, so mutual funds are great alternatives for novice investors. Medical technology is constantly improving and science is paving the way for the creation of all sorts of artificial organs and more effective pharmaceuticals. As with any investment, the healthcare sector does come with some risk, but ultimately this is one service that everyone will need access to on a regular basis, making it an attractive opportunity for investors.

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Investing in Hospitality – The Recovering Tourism Sector

With unemployment still a problem in America and families skipping vacations in order to save money, tourism may not seem like a sure bet in the investment world, but investing in hospitality technology and foreign opportunities may be a great way for any investor to diversify a portfolio. Even as tourism may be taking a hit here at home, some areas abroad are flourishing. As of November 2011, tourism in India has enjoyed a resilient phase of prosperous growth. Foreign tourists are traveling to India and spending money, and it’s becoming a major international destination for people all over the globe. This equates to a lucrative hospitality sector that many American investors are looking into.

India’s middle class has grown tremendously over the years, and this is the main group driving tourism in any country. India has welcome IT jobs thanks to outsourcing and plenty of foreigners are making India their stop for business trips. Recent government initiatives have made travel in India easier, especially since tourists from countries like Singapore, Japan, Finland, and Luxembourg now have access to special tourist visas. There has also been an increase in medical tourism since foreigners are finding health services in India to be more accessible than in their own countries.

Aside from foreign investments, investing in hospitality here at home could prove to be fruitful, even in the wake of the recession. Like most other major tourist countries, the United States boasts an industry in which accommodations, food and beverage, and other aspects make up this huge business. Researching individual hotel chains, food services, and even hotel suppliers may be a good way to break into the hospitality sector. As unemployment levels off and jobs are brought back to America, tourism will once again pick up and investors who get in it now will have purchased stocks and other investment products at less expensive prices.

After the hotel industry virtually imploded for two straight years, the industry managed to pick back up in late 2010 and is only expected to grow once again. Even so, investors could face risks with hotels and lodging companies that are facing debt restructuring and even bankruptcy, but any hotel chain that was suffering under the short-term loans and rock-bottom room prices would have already succumbed to the devastated economy. Those left are slated to thrive. It may be a while before investors start to see a high rate of return on their investments, but hospitality is one sector that has no place to go but up.

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Investing in Gold – One of the World’s Most Precious Commodities

People have been investing in gold since ancient humans first discovered the valuable metal. Unlike most investments, gold saw a 470% increase in value from 2001 to 2011, a feat that no other investment, except maybe silver, can even begin to claim, but why does investing in commodities like gold draw in so many people each year? It’s quite simple. Gold, the most precious of all metals, is the world’s most popular investment. It’s recognized around the world as a source of value and currencies are backed by it across the planet. The dollar bill wouldn’t be worth what it is without it. Buying gold is one way to protect oneself from political and economic upheaval, inflation, social unrest, war, and currency failure, because gold will always be recognized as a currency, even if the dollar bill one day is not.

Gold is at an all-time high, which means it’s not exactly the ideal time to buy, but inflation will soon pick up once again, meaning that the current gold prices could go up even more. With food and gas prices going up, investing in commodities has become something the everyday person can do by going to the local pawn shop. Like other commodities, how much gold costs is ultimately affected by supply and demand. The more people want to invest in gold, the higher the price, but speculation does play a part. But gold is ideal for anyone wanting to make an investment but worried about the stock market. Gold almost always does well and, even if the value depreciates slightly, it will always go back up. It’s also easy to invest because you don’t need to purchase gold bricks to do it. Collecting scrap jewelry, tangled gold chains, broken clasps, and gold coins could add up to a nice sum when traded in at shops that buy gold with cash.

When investing in gold, serious investors should consider gold equities. Rather than owning the gold physically, investors can buy into gold and precious metal companies like Avino Silver and Gold Mines Ltd., Claude Resources Inc., and Paramount Gold and Silver Corp. This type of investment offers more leverage than owning tangible gold. Buying coins and bullion is more conservative and less risky, but don’t settle for a gold certificate or other note over the physical ownership of the metal itself, and buy enough of it each month or at least quarterly to produce a significant investment.

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Investing in Entertainment – A Breakout Hit?

Before the economic recession, investing in entertainment was hailed to be predictable and without much risk. It was easy to believe consider the sheer numbers that major motion pictures draw in each year and the masses of people that head to the theater on any given day, but this type of investment has taken on a higher risk description in more recent years. Despite the portfolio risk, there are plenty of reasons to look for the entertainment industry, especially when you consider the low level investing into which anyone can break.

Any non-insured investment will carry some amount of risk, and the entertainment industry is often considered one of the riskiest businesses. But this is one area in which the underdogs often rise above the rest. There have been plenty of musical examples which were slated to do horribly but ended up running on Broadway for several years. The reality is, although risk is involved, it is shared risk between multiple investors, so the amount being risked is quite small compared to other endeavors. On that same note, the rate of return will be more modest than aggressive investments. There’s also the ability to feel personally satisfied that you had the chance to participate in the creation of a film or theatrical piece. That personal payoff is something you won’t find in traditional stock investments.

Independent films are great places to start, and plenty of those have risen through the ranks in recent years to take center stage with other major motion pictures. What’s more, investors can look locally for up-and-coming bands that need help financing recording sessions, local productions that need investors, and much more. Mutual funds also carry different levels of investment opportunities on a wider scale. The great thing about investing in entertainment is that one success in this industry could mean a long payoff. Modest investors who bought into a musical called The Fantastiks back in 1960 are still reaping the rewards from that endeavor today.

This isn’t to say that all local and small-time plays or musicals will become hit Broadway productions. Chances are they won’t, so evaluate your risk before getting involved. It can be quite rewarding becoming a benefactor to a struggling drama group or musical band, even if the payoff will be quite low. Those already knowledgeable and involved in trading stocks may consider buying entertainment industry shares from major productions, television networks, and other media outlets.

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Investing in Consumer Goods and Retail – Think Like a Consumer

Seasoned investors are constantly on the lookout for the next big thing, and experience and intuition often guide them into making choices others may not even consider, but what about novice investors? Someone not used to buying stocks or considering the difference between one sector and another may have a difficult time grasping the art of buying low and selling high, especially with so much risk involved. One trick is to ask yourself what kinds of goods and services you yourself use on a daily basis that are likely to stay in high demand. The answer, more often than not, is investing in consumer goods and retail.

Think about it. How often do we buy toilet paper? New clothes? Automobile parts? What time of the year do we manically beat crowds to be the first in line for that new electronic device at 4am? Although consumer goods may slow down during a recession, there are certain times of the year, like holidays, when the buying frenzy begins again, and some products are simple must-haves any time of year. Investing in something like food and beverages may not seem glamorous, but it’s often a smart move. The same can be said for paper products, automobile companies, electronics, and other companies that produce everyday items.

Investors that focused on consumer goods during the start of the recession likely saw a loss of investments as consumer spending declined. This doesn’t mean that all companies suffered, however, and necessities like toilet paper, soap, and shampoos sold as steadily as ever. Diversifying your portfolio in various retail and consumer sectors is ideal, so choose a variety of companies from groceries and frozen food products to health and beauty aids.

The number of return on total assets will vary widely in retail, and often depends on the type of business. Larger chain retailers require greater assets to function. Knowing when to invest is also important. Consumer confidence is a huge factor in driving the success of any retail business, and consumers often shop around holidays, when reports of unemployment numbers begin looking favorable, and during stimulus initiatives and tax season. Adequate advertising also affects how well a retailer will do, so take note of commercials to see what catches your eye. Think like a consumer and you can begin investing like a consumer. Even though few retail opportunities seem worth the while, it can make for an exciting and more diversified portfolio.

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Investing in Commodities – Something for Everyone

Betting on commodities has historically been a good move, and plenty of individuals have considered investing in commodities since the economy tanked. Serious investors will find that having multiple commodities in their portfolios will seriously cut down on that looming portfolio risk because it balances out the rollercoaster ride we’re familiar with seeing in stocks and bonds. Something like gold and oil could bring a nice level of stability to any investor’s repertoire, but how should you go about investing in commodities?

The easiest way to get involved in commodities investments is to look into commodity markets. These markets make it easier for the everyday Joe to invest without requiring the extensive knowledge that this sector once required of investors. Many beginning investors opt for something called futures contract which is essentially an agreement the investor makes to buy or sell specific quantities of the commodity in the future. The types of commodities available in futures contracts are gold, natural gas, crude oil, corn, and cattle. It may be easier to invest in these types of commodities if the investor is an active user of or participant in the specific commodity. Many individuals who participate in this sector are speculators.

The future market is prone to volatile swings, however, and stocks may be a better investment. Carefully research companies to make sure they would be good investments, and determine where you would like to focus your portfolio. Oil companies, for example, have stocks in tanker companies, drillers, oil refineries, etc. These stocks are easier to trade and buy and fit right in with an already established brokerage account. Public information on these companies is readily available but the stock price has the potential to be influenced by market conditions and other company-related factors.

An exchange-traded fund is another option. ETFs trade exactly like stocks and allow the investors participation in commodity cost fluctuations. Similarly, exchange-traded notes mimic commodity price fluctuation. These are unsecured debts that do not require brokerage accounts. There are also no fees to deal with or management hurdles. Mutual and index funds are other commodity options that deal with industries like agriculture, mining, and energy, although management fees could be high and funds often come with fees. Alternative energies is one sector that is up-and-coming, so investing in solar, wind, and other types of alternative power may be a smart move at this point. Beginning and experienced investors have a variety of investments in commodities to consider.

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Investing in Coal – Things to Consider

Coal mining has had an extensive history on our planet. The Industrial Revolution of the 18th century was directly based on the ability to mine coal in massive quantities. Modern techniques involve surface mining, which takes advantage of exposed coal seams on the surface, area mining, which blasts open earth to get to the coal, and the controversial mountaintop removal mining, which essentially cuts off the top of a mountain to get to the coal. Although labeled a dirty source of energy that alternative energy industries seek to replace, coal is still a major part in modern everyday life. This could make investing in coal a lucrative option.

The filthiest of all energy sources, coal emits hazardous pollution when it is burned, but energy is scarce around the world and gas and oil prices are always on the rise. Coal is proving to be a cheaper, more reliable energy source and is being used all over the world. In the United States, coal accounts for as much as 45% of generated electricity which is nearly twice the electricity that natural gas produces. Recent legislation even encourages clean-coal technologies, which means that the demand for coal will stay around, at least for a while.

Coal ETFs come with plenty of advantages. ETFs are cost-effective, they come with lower capital gains taxes, there are derivatives involved, and an ETF can be purchased with a single transaction. Coal ETFs have plenty of flexibility and prices are updated throughout the day just like stock market equities. The passive management and strong accountability factors make ETF investments attractive, and the immediate dividends are almost irresistible. Coal ETFs can be used as a hedge to cut down on portfolio risk. With any investment, it’s a great way to diversify your portfolio and exposing you to the energy sectors, which could lead to diversification into the alternative energy sector.

Of course, with any investment, coal assets are potentially risky. Buying opportunities for coal currently exist because people are becoming more energy conscious and coal has gone into a surplus, meaning that supply outweighs demand right now. This could mean buying coal investments at rock-bottom prices, or could be an indicator of a bear market. It’s up to the individual to decide and go with his or her intuition. Consider other energy ETFs if you are in the market for investing in energy, and consider renewable energy sources as demands rise.

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Investing in China – What You Should Know

China has over 1.3 billion people, all of whom maintain low levels of debt. With a strong middle class that is only growing each year, the Chinese economy is becoming important to the Western world, especially to investors. Investing in China is becoming more and more popular as people and companies are looking outward for potential growth opportunities, but how can you cut down on your portfolio risk while investing in American Depositary Receipts from foreign countries like China? Ask yourself first if the ADR is from an industry leader. You may be surprised to find familiar companies like Apple doing quite well in the Chinese market.

Does the company use major global accounting firms like Ernst & Young or KPMG? Are big investment funds sponsoring them or do they have venture capital funds backing them? Are there plenty of Americans on the board? Knowing the answers to these questions can help cut down on the risks that come with poor auditing, lack of support, and other red flags that could put your portfolio at risk. The good thing is that there are plenty of options to choose from.

As of 2011, there are more than 300 companies in China with market caps all totaling $900 billion, almost all of which are available in the major American stock exchanges. It’s almost impossible for personal investors to verify the authenticity of a Chinese company’s claim of being an industry leader in China, but anyone familiar with China may have an easier time recognizing major businesses. It’s also good to know if big chunks of the company’s equity are owned by internal management. This would indicate that it is a suitable investment. Having Americans on the board of directors is a bonus because it suggests that the Chinese company is concerned about gaining foreign insight.

Investing in China now can prove to be an incredible opportunity. The economy is on the rise and China’s growth as a country is expected to remain strong. Looking for highly-recognizable companies to invest in like Apple may be a good start, but certainly plenty of other opportunities exist in this flourishing market. Unlike in America, the Chinese middle class still seem to consume products at higher rates, even during slow economic growth and recession levels, making it one of the most robust middle classes in the world. That is certainly something that any American investor would want to take advantage of.

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Investing in Carbon Emissions – Trading Greenhouse Gases

Everyone has heard the term “carbon emissions” but few know exactly what that entails. Put simply, anytime gas, oil, coal, or other fossil fuel is burned, carbon dioxide is released, or emitted, into the air. Plants and trees naturally absorb this carbon dioxide, but our emissions have been at such great levels that they cannot possibly re-absorb it all. This means that the carbon dioxide stays in the atmosphere and increases the planet’s temperature, making the climate more unpredictable and the weather more unstable. Investing in carbon emissions is essentially taking advantage of the attempt to control those emissions by the government that sets limits on them. Certain companies and businesses may be given a set limit of carbon credits which can be traded freely. Large corporations that need more leeway to emit more carbon can purchase additional credits on the carbon trading market. The theory is that the emissions allowed in any given year will be reduced slightly over a certain number of years until they are decreased to a safe level for the environment.

AIG (American International Group) is one major insurance company that explored carbon trading and currently provides valuable carbon trading insurance products to investors and companies. Climate Exchange PLC is the biggest carbon trading entity in the entire world while the privately held APX Inc. gives real-time information to banks and utility companies that need to stay in the know on energy trading.

Anyone with investments in companies like American Electric Power Company may stand to lose from carbon trading because AEP produces the most CO2 than any other US company. It’s unlikely that the carbon cap will be met to the regulators’ standards, and the company will need to buy carbon credits on the market.

Some companies, like the Global Climate CTA Fund, provide greenhouse gas and CO2 emissions hedging and trading with partners like Eurex. These entities work with European emission allowances, certified emission reduction credits, voluntary emissions, carbon financial instruments, sulphur emissions, and nitrogen emissions. In the United States, the Chicago Climate Exchange (CCX) is the nation’s only cap-and-trade system. With only one exchange in the entire country, it’s obvious how new this industry group is and how foreign the concept of trading energy products may be to most individuals. Even so, there has been an increase in demand for liquidity and transparency for carbon emissions in the investment world, which will prove fruitful for major investors.

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Investing in Bottled Water – A Precious Commodity

Water is the ultimate commodity. We all need water to survive, but rather than take our water straight from the tap, Americans are drinking more bottled water than beer, coffee, or even milk. In 2007, the average individual in the United States drank well over 28 gallons of the bottled commodity. That was a staggering difference from just 1.6 gallons back in 1976. The sad reality is that bottled water has become such a valuable commodity that some companies like Fiji Water produce as many as one million bottles a day while half of the residents on Fiji don’t have access to their own drinking water. Around the world, entire populations are being cut off from having access to clean drinking water, and here it is a $50 billion industry across the globe.

Only soft drinks outsell bottled water, and with the health conscious spending their dollars more wisely at the grocery store, bottled water may very well outpace sodas within the next decade or so. Industry leaders include brand names like Saratoga Springs, Poland Springs, Arrowhead, and Crystal Geyser, but Aquafina (owned by Pepsi) dominates the market with Coke’s Dasani coming in at a close second. Even soft drink companies are taking advantage of the bottle water phenomenon, as are plenty of investors.

Investing in water is a smart option because it’s a limited commodity, even if it doesn’t seem like it. There is a limited supply of water throughout the world and no substitute exists that can make up for a shortage. This means that people will pay a premium for water in just about any form. Companies are always seeking out ways in which they can develop better purifying technologies, more efficient infrastructures and transportation methods to get the water to the masses. Water conservation and sanitation is always at the forefronts of people’s minds, which makes water mutual funds attractive investments.

A major player in water mutual funds is the Calvert Global Water Fund (CFWAX). Unlike other investments that focus on bottle water, Calvert seeks to address concerns surrounding recycling waste and creating better sustainability, which is one trend that is only projected to go up. With so few mutual funds investing in the water industry, it would seem like most investors don’t see water as a viable investment opportunity when, in fact, few things on Earth are as precious as water, and growing assets in the sector may begin proving that.

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