Global Markets Correct and We Prune Our Portfolio for Profits

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Global markets endured their first correction of 2011 this past week, as markets took a breather from their relentless rise upward.

You were stopped out of the Market Vectors Indonesia ETF (IDX) exchange-traded fund (ETF) with a gain of 10.51%. As the frontier markets — Chile, Colombia Poland — all have weakened substantially over the past few weeks, I also am recommending that you sell the Claymore/BNY Mellon Frontier Markets (FRN) as well.

We also had sharp pullbacks in Universal Display Corp. (PANL) and Freeport-McMoRan Copper & Gold, Inc. (FCX). Though I continue to believe that both companies will make you money, I am putting FCX on a temporary HOLD.

Among global stock markets, country-specific ETFs with a heavy technology weighting like the iShares MSCI Taiwan Index (EWT) and the iShares MSCI South Korea Index (EWY) continue to do well.

From a risk-management standpoint, our overall investment strategy remains the same. If a position has fallen below its 50-day moving average, I am moving it to (or keeping it at) a HOLD. If a position rises back through its 50-day moving average, then I have moved it back to a BUY.

The country you love to hate, Russia, through the Market Vectors Russia ETF (RSX), continued its outperformance, shaking off Monday’s terrorist attack on a Moscow airport with remarkable swiftness.

On a related note about Russia, I am having breakfast next week with American billionaire Bill Browder — formerly the biggest Western investor in Russia. Bill has found himself in the middle of a high-profile scandal in Russia, which sadly cost one of his lawyers, Sergei Magnitsky, his life. (I was one of Bill’s lawyers in the 1990s myself.) You can see a dramatic and scary video on the scandal here.

Finally, I will be having a special private meeting for my subscribers during The World MoneyShow in Orlando, Fla., on Friday, Feb. 11, at 11 a.m., in the Destin Room of the Gaylord Palms Hotel. If you want to attend, please click here to sign up. I look forward to seeing you there.

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Portfolio Update

Agrium Inc. (AGU) dropped sharply this past week, briefly trading below its 50-day moving average yesterday. This diversified play on the agriculture boom remains a BUY.

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) was flat this week. China’s recent moves to internationalize the yuan are expected to result in a huge demand for fundraising through yuan-denominated debts or the so-called “dim sum bonds.” Trading above its 50-day moving average, CYB is a BUY.

iShares MSCI Malaysia Index (EWM) pulled back 3.35% this week, as Google announced it is opening an office in this country, one of Asia’s fastest-growing economies. EWM remains a BUY.

iShares MSCI Taiwan Index (EWT) traded flat this week. Boasting two of the world’s largest semi-conductor manufacturers, this tech-heavy index has proved immune to the pullback in global stocks. EWT remains a BUY.

iShares MSCI South Korea Index (EWY) ended the week down 1.75%, bouncing off of its earlier lows in the week. Still trading near its highs, and with close to 20% of the ETF invested in red-hot tech play Samsung, EWY remains a BUY.

Freeport-McMoRan Copper & Gold, Inc. (FCX) had a rough week, dropping more than 10%, as the price of both gold and copper plummeted. At the same time, Freeport’s earnings grew 60% last quarter, and some analysts have put a target price of $160 on the stock. Having sliced through its 50-day moving average, this volatile (but extremely profitable) stock is now a HOLD.

Global X FTSE Nordic 30 ETF (GXF) traded broadly flat this week. Despite its socialist image, the Nordics are a dynamic set of economies. This year, Sweden overtook the United States and Singapore to move into second place in the World Economic Forum’s ranking of global competitiveness. GXF is a BUY.

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JinkoSolar Holding Co., Ltd. (JKS) ended the week slightly lower after a sharp drop late in yesterday’s trading. It also announced that it has entered into a “strategic cooperation agreement” with the Bank of China (“BOC”). That’s China-speak for more (illegal) subsidized loans for a Chinese company that is favored by the government. JKS remains a volatile BUY.

Las Vegas Sands Corp. (LVS) dropped 4.54% this past week. Dropping below its 50-day moving average, this bet on Asia’s Las Vegas is now a HOLD.

Market Vectors Russia ETF (RSX) dropped 3% this past week — and barely budged on the news of the terrorist attack at the Moscow airport. Due for a ratings upgrade later this year, and technically one of the strongest markets in the world at the moment, the “bad boy” of emerging markets, RSX, is a BUY.

Universal Display Corp. (PANL) dropped a whopping 14.13% this past week, as investors took profits after the recent run up. A play on exploding cell phone use globally, and still trading above its 50-day moving average, PANL remains a BUY.

Vale S.A. (VALE) dropped 4.26% this past week. It will release its 4Q 2010 results on Feb. 24, after the market’s close. Zack’s upgraded Vale to outperform, based on the rising iron-ore demand in China and the expectations of higher iron-ore price in fiscal 2011. As the world’s biggest iron ore producer, Vale is a BUY.

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