A Remarkably Calm End to a Remarkably Calm Summer

Nicholas Vardy

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

It was a down week for markets last week, with the Dow Jones falling 0.50%, the S&P 500 dropping 0.49% and the NASDAQ pulling back 0.71%. The MCSI Emerging Markets Index also dipped 0.03%.
Big gainers in your Alpha Investor Letter portfolio included the BYD Company, Ltd. (BYDDF), which rose 6.67%, and Phillips 66 (PSX), which added 1.94%. Both BYD Company, Ltd. (BYDDF) and Berkshire Hathaway (BRK-B) hit new 52-week highs.

Several of your positions fell below their 50-day moving average and moved to a HOLD. These include PayPal Holdings (PYPL), iShares MSCI Philippines (EPHE), Costco Wholesale Corporation (COST), Home Depot (HD) and Albemarle Corporation (ALB).

One of the underappreciated aspects of the past three months has been the market’s unusually low volatility. The 50-day moving average of the VIX — a measure that reflects the market’s expectation of future volatility — is now below 14, suggesting a remarkably calm market. This is especially surprising given that August has a recent history of being one of the most volatile times of the year.

One of the many “can’t miss” rules of investing is that things tend to revert to the mean over time.

Put another way, it is unlikely that the current low volatility will last for much longer.

The good news is that an increase in volatility does not necessarily lead to lower stock prices.

The bad news is that September tends to be one of the worst months of the year for stock markets.

Overall, I expect market volatility to pick up in the next few weeks. And these wider market swings may feel a bit uncomfortable, after such an extended period of calm.

Portfolio Update

Exclusive  VIP Alliance Weekly Update

Berkshire Hathaway (BRK-B) rose 0.98% last week, pushing this long-term holding up to a new 52-week high and the $150 price level. This brings Berkshire Hathaway’s gain to 97.70%, putting BRK-B within striking distance of triple-digit percentage gains. BRK-B remains well above its 50-day moving average (MA) and is a BUY.

Google Inc. (GOOGL) closed down 0.59%. Google announced today that it would open a ride-sharing effort in San Francisco using its Waze app and go head-to-head with ride-share leader Uber. Should Google ever introduce its driverless car technology into this endeavor, unmanned vehicles could one day be summoned to locations in an Uber-like fashion. GOOGL is a BUY.

PayPal Holdings (PYPL) fell 2.27%. PayPal is currently evaluating cloud service providers, and Google is at the top of its list. Some investors are speculating that if PayPal becomes technologically integrated to Google’s cloud backbone, it could make an attractive acquisition for the search engine. PayPal dipped below the 50-day MA and is now a HOLD.

Guggenheim Spin-Off (CSD) moved 0.87% lower. Spin-offs continue to be an excellent investment as spun-off companies tend to outperform the broader market. With markets near all-time highs, this makes for a very good time to spin off divisions and get top dollar for new shares. CSD is a BUY.

iShares Currency Hedged MSCI Germany (HEWG) added 0.58% last week. Second-quarter gross domestic product (GDP) rose by 1.6% on an annual basis in the Euro zone, matching estimates. For the same quarterly period, German GDP increased 0.4%, beating expectations of 0.2% growth. HEWG is a BUY.

Apple Inc. (AAPL) lost 2.62%. The European Union (EU) ruled that Apple must pay back over $14 billion in taxes, based upon questionable tax breaks that Apple received from Ireland. With Apple appealing the decision, and the expected announcement of Apple’s new iPhone 7 next week, the current pullback is likely to be nothing more than a short-term blip in Apple’s stock price. AAPL is a BUY.

Phillips 66 (PSX) climbed 1.94%. Warren Buffett has been building a position in Phillips 66 for quite some time now in Berkshire Hathaway, which purchased 704,181 shares of PSX last week, per a recent Form 4 filing with the Securities and Exchange Commission’s (SEC) “Insider Activity” report. PSX is a BUY.

BYD Company, Ltd. (BYDDF) jumped 6.67% last week, making it the top gainer of the week. The company announced earnings on Aug. 29. Net profit rose 38% to $340 million for the six-month period ending on June 30. Revenue was up 44% to $6.55 billion. BYD also expects vehicle sales to double this year. Berkshire Hathaway holds a 9.89% stake in “China’s Tesla.” BYDDF is a BUY.

Sincerely,

Exclusive  Bears, Globalists vs. Protectionists, and Conquering Fear

Nicholas Vardy

Nicholas A. Vardys

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Global investment expert Nicholas Vardy examines the fall of Chile's pension fund system to see how the United States can avoid the same result.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE