Folks, something is wrong in the world of exchange-traded funds (ETFs)...

Beat the S&P 500 With Its Less Risky Cousin By Marc Gerstein, director of research, Chaikin Analytics Folks, something is wrong in the world of exchange-traded funds (ETFs)... I bet you already know about it. But you likely have no idea that it's even a problem. You see, the issue is a little wonky to begin with. And ETF providers disclose the problem so often and in such a routine way that you probably gloss right over it. So it's no wonder that most folks just take for granted these days that "this is the way it is." But as I'll explain today, this assumption can swing your portfolio in a big way... Recommended Links: Until MIDNIGHT: How to Make More Money With Less Worry in 2022 Hundreds have signed up to get access to the brand-new 2022 Capital Portfolio – the easier, lower-risk way to finally learn how to beat the market and sleep more soundly at night. If you ever wondered how top financial minds would build a "perfect" portfolio against what we're facing in 2022, this is it. Click here to get access BEFORE this shuts down at midnight tonight. I Found 'THE ANSWER' to Retirement... I never worry about my retirement income, no matter what happens with politics or the markets. My money's practically guaranteed by law. Now, a once-in-a-generation opportunity to see 700%-plus potential in my favorite strategy just opened again. I explain everything right here. I'm talking about market cap-weighted ETFs and indexes. It simply means that the biggest stocks make up the biggest portions. That's how the ubiquitous S&P 500 Index is calculated. A multitude of issuers build their ETFs this way, too. But that's a lot different from how many people intuitively think about stocks. The following table shows two portfolios. One is market cap-weighted like many ETFs. And the other is equal-weighted – meaning everything is the same allocation. Take a look... Suppose Apple falls 10% in a month while the other three stocks don't move at all... The market cap-weighted portfolio would drop 9% overall (a 10% loss for 90% of the portfolio). Meanwhile, the equal-weighted portfolio would only drop 2.5% (a 10% loss for 25% of the portfolio). This is an extreme example. I wanted to make it easy to see. But the thing is, this problem crops up in real life, too... Apple, Microsoft (MSFT), and Amazon (AMZN) make up more than 16% of the S&P 500-tracking SPDR S&P 500 Trust (SPY) today. So when these companies get hit hard, this market cap-weighted ETF gets hit hard, too. Of course, over the past five years, these big-name, high-flying tech stocks powered the ETF higher... It has outperformed one of its equal-weight cousins, the Invesco S&P 500 Equal Weight Fund (RSP), by about 20 percentage points over that span. But importantly, this period has been an exception... Over the longer term, the equal-weight ETF has outperformed the market cap-weighted ETF in a big way. Here's a comparison of the two ETFs since RSP launched in April 2003... As you can see, over the past 19 years, RSP is up around 510%. Meanwhile, the S&P 500 is only up about 390% in that span. The small, short-term differences add up! Looking to the future, if stocks falter, expect market cap weighting to make things worse than equal weighting would. The big-name, high-flying tech stocks would likely suffer the most. And they would drag the market cap-weighted indexes and ETFs down, too. It just comes down to basic math. When overpriced stocks with large weightings fall, that's what happens. It isn't too noticeable from day to day, but it adds up over time. Consider switching from SPY to RSP today. It's an easy way to trim some risk out of your portfolio. And over the long haul, it's likely to lead to outperformance as well. Good investing, Marc Gerstein Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 -0.06% 8 20 2 S&P 500 +0.44% 88 334 75 Nasdaq +1.26% 9 74 16 Small Caps +0.44% 182 1142 537 Bonds -1.47% Consumer Discretionary +2.84% 1 38 21 — According to the Chaikin Power Bar, Small Cap stocks are more Bearish than Large Cap stocks. Major indexes are mixed. *  *  *  * Top Movers Gainers AMZN +13.54% NLOK +8.71% TTWO +7.35% TWTR +7.14% LNC +6.38% Losers CLX -14.47% F -9.70% NWL -8.53% PHM -7.76% APD -6.34% *  *  *  * Earnings Report Reporting Today Rating Before Open After Close TSN TTWO AMGN, EXC, L, PFG, SPG ZBH HAS No earnings reporting today. Earnings Surprises RCL Royal Caribbean Cruises Ltd. Q4 $-4.78 Missed by $-0.86 REGN Regeneron Pharmaceuticals, Inc. Q4 $23.72 Beat by $3.42 AON Aon Plc Q4 $3.71 Beat by $0.37 BMY Bristol-Myers Squibb Company Q4 $1.83 Beat by $0.03 APD Air Products and Chemicals, Inc. Q1 $2.52 Beat by $0.02 *  *  *  * Sector Tracker Sector movement over the last 5 days Energy +4.94% Financial +3.56% Discretionary +3.54% Health Care +1.36% Information Technology +1.01% Utilities +0.77% Industrials +0.41% Staples +0.28% Materials -0.12% Real Estate -0.28% Communication -1.58% *  *  *  * Industry Focus Pharmaceuticals Services 4 31 12 Over the past 6 months, the Pharmaceuticals subsector (XPH) has underperformed the S&P 500 by -16.69%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #13 of 21 subsectors and has moved down 2 slots over the past week. Indicative Stocks PRGO Perrigo Company plc RETA Reata Pharmaceutical AXSM Axsome Therapeutics, *  *  *  * Chaikin Analytics LLC is not registered as a securities broker-dealer or advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Chaikin Analytics does not recommend the purchase of any stock or advise on the suitability of any trade. The information presented is generic in nature and is not to be construed as an endorsement, recommendation, advice or any offer or solicitation to buy or sell securities or any kind, but solely as information requiring further research as to suitability, accuracy and appropriateness. Users bear sole responsibility for their own stock research and decisions. Read the full disclaimer at https://www.chaikinanalytics.com/disclaimer. You have received this e-mail because you subscribed to PowerFeed, published by Chaikin Analytics. To stop receiving PowerFeed daily, click to unsubscribe. For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Chaikin Analytics 1500 JFK Blvd Suite 220 Philadelphia, Pennsylvania 19102 United States +1 (877) 697-6783