Shotgun ETF approach keeping me in the game

The market put a nice finishing touch on the week Friday with the Dow's surge of more than 300 points. 

Whether it was renewed dollar strength, crude's drop to a three-month low, or the magical powers of 08-08-08, I don't really care. I'm just glad it happened. 

I picked up about 2 percent for the day in my portfolio consisting of four ETFs: Dow Diamonds Trust (DIA) and State Street Global Advisors SPDR S&P 500 (SPY), S&P MidCap 400 (MDY) and Financial Select Sector (XLF). I'm still staying away from individual stocks  — with the exception of American Public Education Inc. (APEI), which I bought and sold in the span two days, because I wasn't convinced (although it was up over 5 percent on Friday). 

I've also resisted jumping in with both feet in terms of allocation to stocks, despite our rise of more than 6.5 percent in the Dow since hitting a low of 10,900 in mid-July. Jobs are still being lost, banks are still revealing their dirty secrets and retailers — even the discounters like Wal-Mart (WMT) and Target (TGT) — are reporting soft sales. 

Caution is still the rule of the day for me, even though the market of late seems to be saying that all is not lost. I believe the ETFs I hold give me a fairly broad exposure to the market while it sorts itself out. 

That doesn't mean I'm going to shun individual stocks. But with the volatility of late, these baskets of stocks help me sleep better. Here are the top five holdings of each, with the ticker symbols omitted for the sake of space: 

DIA: IBM, Chevron, ExxonMobil, 3M and Caterpillar. 

SPY: ExxonMobil, General Electric, Microsoft, Procter & Gamble and Johnson & Johnson. 

MDY: Arch Coal, Cleveland-Cliffs, Activision Blizzard, FMC Technologies and Pioneer Natural Resources Company. 

XLF: Bank of America, J.P. Morgan Chase, Citigroup, Wells Fargo and Goldman Sachs. 

I've also thought about adding a medical/health care component through an ETF like the SPDR Health Care Select Sector (XLV). 

Medical stocks have recently overtaken energy stocks in the first-place spot on Investor's Business Daily's sector performance ratings. 

Harvard endowment beats brutal market 

The Wall Street Journal reported last week that the Harvard University endowment, with about $35 billion in assets, returned 7 percent to 9 percent at the fiscal year ending in June — no small feat given the ups and downs of the market during that period. 

Most institutional investors posted lower or negative returns during the same period, the article noted. The Harvard endowment boosted returns by investing in commodities, Treasurys and hedge funds. Through part of the year, the endowment was headed by Mohamed El-Erian, who stepped down in December to go back to work at Pacific Investment Management Co., known as Pimco, according to the Journal. 

El-Erian just released a book titled, "When Markets Collide: Investment Strategies for the Age of Global Economic Change," which I just picked up, thanks to a Borders birthday gift card from my in-laws.

Brian