SPDR S&P Metals & Mining ETF (NYSE: XME): This Unloved Sector is a 'Buy'

Investors are often told that the best time to buy is when everyone seems to be excessively negative on a sector or a country. That was certainly true in 2013 for investors who were able to trade in the sovereign debt of Greece. Investors enjoyed a gain of 47% on Greek government debt last year even as fears of Greek default lingered throughout the year and the economic news remained mostly negative.

Of course, most individual investors couldn't actually invest directly in Greek bonds, and returns from investments that were available to individual investors were significantly lower. Global X FTSE Greece 20 ETF (NYSE: GREK), for example, gained 25% in 2013, less than U.S. stocks even though Greek stocks should have benefited from the same factors that drove Greek bonds higher. Given the higher risk Greek stocks provided, buying when the news was negative in early 2013 doesn't seem to have been a wise investment for most individuals.

The example of Greece illustrates some problems with the idea of buying bad news -- there is no way to know when the news is bad enough to drive big gains, and there is no way to be sure the market will respond in a positive way.  (more)

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