Friday Randoms

S&P has created an index that tracks the S&P 500 hedged with gold. The idea is US equity exposure for US based investors that offers protection against a decline in the US dollar. The catalyst for this was a "response to the current interest surrounding gold." Over the last ten years the gold hedged SPX would have outperformed the regular SPX buy 1000 basis points annually.

No kidding.

I think the idea is innovative, very innovative actually, but an attempt to market it based on the last ten years is a woefully incomplete look. Measured over 20 year it would probably not be so compelling and over 30 years it would probably look lousy. If there is utility here, and there very well could be, it would be because in the future the dollar might really get away on the downside.

If S&P is responding to investor interest, so be it, but be wary that this is coming after a fantastic multi-year run for gold. For my money it would just be easier to own foreign equities. To be clear, for now this is just an index, there was no mention of an ETF or other trade-able product.

David Kuo a director of research at Motley Fool called ETFs the lazy man's way to invest as part of an interview with Deborah Fuhr on Asia Squawk Box on Friday. Amusingly Fuhr had no reaction to the statement; a statement that I believe belies a general lack of understanding of the product at Motley Fool.

I wrote for Motley Fool for most of 2004. Back then ETFs got nowhere near the coverage they do now and I made a genuine effort to get them interested in covering ETFs early on but they had no interest. They were very slow to recognize what was happening and I believe they, like several other big sites, don't really understand the product.

Unless we are talking about broad based funds, and since the conversation between Kuo, Fuhr and anchor Mandy Drury was about the GCC region they were not talking about broad based funds, then the only thing easy is the access. The work that that should go into investing (as opposed to trading) into a country, sector or theme should be detailed and ongoing.

Obviously no one can account for everything that might happen but the suggestion that there isn't much work needed with ETFs is simply wrongheaded.

A quirky item; The other morning I noticed a name on the screen crawl on European Closing Bell; New Britain Palm Oil. The screen indicated that it is UK listed but in doing a little research the company's plantations and facilities are in Papua New Guinea. The London ticker is NBPO and Yahoo Finance has the US five letter designator as NBPOF but pinksheet.com doesn't know the symbol. In doing a little bit of reading its growth in productive hectares along with its technology for getting trees to produce fruit sooner are interesting.

So it would appear to be an economically sensitive ag stock in a part of the world that is likely to grow much faster than the US, because it is traded in London it is easy to access and the website is in English so this would appear to be a reasonable stock to consider.

Unfortunately, and this is where the quirks come in, there seems to be quite a bit missing from the website. The first thing I noticed was a forward looking statement that by the end of 2008...oops, well maybe they just haven't gotten around the updating that page. In looking at the page for downloadable reports there was no annual report for 2008 or any quarterly reports for 2009 although I did see something about a dividend announcement. As a rule of thumb [understated font] it is a good idea to take a peek at the reports that companies file[/understated font]. It is possible that I missed the info but I did look in a lot of places on the site and I also emailed the company to see if they could email me the reports but have not replied yet.

Next Monday and Tuesday I am participating in the Super Bowl of Indexing down in Phoenix. I am moderating a panel about foreign investing and sitting as a panelist in a session about regulation of investment products but this will probably drift into alternative investment funds. Obviously I do not know who from the industry will be there but if there is anything you would want to bend someone's ear about WRT to ETFs leave a comment and I'll try to direct it to the correct person.