There are three words that I would use to describe the market’s behavior this past week: “noise, noise, noise” — and lots of it. Our Global Stock Investor holdings endured some eye-popping volatility, with stocks like Potash (POT) selling off more than 20% on Friday and Monday, before bouncing sharply on Tuesday. And all this took place in the absence of any news specific to the stock.
Our top performer of the week was the Currency Shares Japanese Yen Trust (FXY) as the dollar hit record lows against the yen. At times like this, it is best to take a deep breath and try to remember that all of our global megatrends are still intact. Mr. Market’s manic mood swings are the price we pay to be in the global investment game.
PORTFOLIO UPDATE
Anglo American (AAUK), Our commodities supercycle play, closed at a record high of $37.02 on Nov. 8 to soar 15% on a single day. The reason? Rival BHP Billiton made a bold $142 billion bid for commodities giant Rio Tinto — a move that was swiftly rebuffed. That has boosted speculation that Anglo American itself may become a takeover target. The stock has pulled back a bit since then, but it remains a BUY.
ABB Ltd. (ABB) sold off sharply this week on general market weakness. Think of this buying opportunity as a gift from Mr. Market. ABB is a BUY.
America Movil (AMX) ended the week down and hit our stop price of $55.50 on Nov. 12. However, we held the position long enough to qualify for a special dividend payment. The stock technically is oversold, so look for a strong bounce here. With America Movil (AMX) now trading at a bargain price, I am recommending it again with a stop price of $49.50. AMX is a BUY.
iShares MSCI Sweden Index ETF (EWD) closed this week flat. Sweden stays a HOLD.
iShares MSCI Brazil Index ETF (EWZ) was a real rollercoaster as oil giant Petrobras’ shares (which makes up 22% of the ETF) shot up 26% to an all-time high last Thursday upon announcing the discovery of a new oil reserve with as much as eight billion barrels of crude. The find could increase the company’s reserves by 40%, according to Deutsche Bank. That said, by Monday, the ETF had dropped back sharply, before rallying to end the week flat. Brazil remains a BUY.
Currency Shares Japanese Yen Trust (FXY) thrives in periods of market turmoil, as it shot up to a closing price of $91.07 on Nov. 12 — a record high — before settling at $90.00. Market action this past week confirms why this is a terrific hedge against market downturns and remains a defensive BUY.
ICICI Bank (IBN) had a volatile week by dipping sharply last Friday and this Monday, before rallying hugely yesterday to end back where it started. This is all (rather loud) market noise. “India’s Citibank” is a BUY.
Millicom International (MICC) ended the week up slightly after falling below the $100 level for the first time since its blowout earnings announcement. Millicom remains a BUY.
ArcelorMittal (MT) posted net profit of $2.96 billion — a 35.8% rise from the pro forma $2.18 billion in the same period the year before. That figure easily beat market expectations of $2.45 billion. Earnings per share came to $2.10, beating analysts’ expectations of $1.79. The company also reported net revenue of $25.5 billion, a 15% rise from the $22.07 billion pro forma net sales figure for the third quarter of 2006. The steel giant also announced Wednesday that it intends to increase its base dividend by $0.20 to $1.50. ArcelorMittal is a BUY.
Potash (POT) hit a record high last Thursday, before plummeting 20%+, and staging a comeback yesterday. As I said above: “Noise, noise, noise.” Potash is a BUY.
Tesco (TSCDY) climbed back up over $30. Click here to take a look inside Tesco’s new U.S. store format. Tesco remains a BUY.
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