Investor Worries Slide from Greece to Oil

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
Markets breathed a collective sigh of relief as European leaders finally signed off on an agreement to bailout Greece — yet again. Although this development was good news, the market’s response was tepid yesterday as focus shifted from the Greek bailout to the rise in oil prices. Iran’s recent cut in European oil sales has put the squeeze on oil prices the past two weeks, causing nearly a 10% jump in oil futures.

The S&P 500 rose 0.77% last week as the Dow Jones posted a nearly identical 0.71% gain. The MSCI Emerging Markets index lagged slightly, gaining just 0.30%. The Dow briefly tangled with the psychologically significant 13,000 price level, before pulling back by day’s end. Although the market’s rise has slowed over the past week or two weeks, no one seems ready to jump off of the train just yet. The market’s slow and steady “melt-up” continues.
Your Alpha Investor Letter portfolio closed out another profitable week with nearly all of your positions ending in the black. Las Vegas Sands Corp. (LVS) was the week’s big winner, rising 3.90%, with iShares MSCI Hong Kong Index (EWH) coming in a close second, with a 3.88% gain. All positions remain BUYs.
That said, with the pace of the market’s rise slowing, I remain cautious over the short term. With Greece out of the headlines until its next inevitable crisis, the markets will look to consolidate their recent strong gains. Your recently tightened stops will, however, protect much of the gains you have reaped year-to-date.
Take a step back and appreciate that the news in 2012 has been surprisingly good. More importantly, you’ve made some substantial gains already this year. Many hedge funds struggle for an entire year to capture the gains your Alpha Investor portfolio has in just the first two months of 2012. In theory, you could sell all of your positions today, head to the beach and still have a solidly profitable year. That said, I’m confident you’ll be adding to your already big gains in our future picks in the coming months.

Portfolio Update

WisdomTree Japan SmallCap Dividend Fund (DFJ) fell 0.75% over the past week. The Bank of Japan’s recent efforts to push down the yen continue to spell good news for the broader Japanese economy. Even renowned bear Marc Faber recently stated that Japan “was his favorite equity market” and expected “Japanese stocks to surprise to the upside.” DFJ is a BUY.
Las Vegas Sands Corp. (LVS) gained 3.90% over the past four trading days, hitting another 52-week high last week. An improving infrastructure is drawing more gamblers into Macau and this increased demand is keeping the outlook positive for local gambling operators. Analysts expect regional gambling to rise by up to 20% for 2012. LVS will pay a $0.25 dividend on March 16. LVS is a BUY.
MSCI South Korea Index (EWY) tacked on 0.58% last week. EWY is primarily a bet on the South Korean stock market. However, with a 20% allocation in Apple rival Samsung Electronics, EWY also allows you to capitalize on the high-tech boom as well. EWY is a BUY.
MSCI Malaysia Index (EWM) added 0.28%. The Malaysian stock market has moved higher now in three straight sessions, rising almost 15 points or 1% along the way. EWM is a BUY.
Market Vectors Russia ETF (RSX) was flat last week. RSX has been a great play on oil since the beginning of the year. In addition, RSX also has allowed you to capture gains on Russia’s strong commodities production in metals such as nickel, palladium and platinum. RSX is a BUY.
iShares JPMorgan USD Emerging Markets Bond (EMB) rose 0.42% over the past four trading days. EMB continued its slow, steady gain last week. Since bottoming in early January, EMB has managed to make positive gains for your portfolio every week, to date. EMB is a BUY.
Market Vectors Indonesia Index ETF (IDX) gained 0.51%. Although positive for the year, IDX continues to trade sideways as it battles to break the 200-day moving average. IDX did flirt with its 50-day moving average last week, but remains a BUY.
iShares Singapore ETF (EWS) gained 0.94% over the past week. The Singapore economy enjoys a lower debt-to-GDP ratio than nearly any of its Asian counterparts, and is large enough to compete effectively on a global scale. EWS is a BUY.
Berkshire Hathaway (BRK-B) was flat last week, rising 0.24%. You’d think that betting alongside a legendary investor such as Warren Buffett during one of the greatest bull market runs in recent years would reap you great profits. Yet, BRK-B’s Oct 2011 high has proven to be extraordinarily stubborn as BRK-B makes its fifth attempt at rising above the $80 level. BRK-B took a healthy bounce off of the 50-day moving average this week and is a BUY.
Listed Private Equity ETF (PSP) added 0.87% over the past five trading days. PSP tracks nearly 65 investment firms that invest in a wide range of ventures designed to reap profits. PSP broke above the 200-day moving average last week and is a BUY.
iShares MSCI Hong Kong Index (EWH) jumped 3.88%. EWH was a bright spot in your portfolio last week and continued to soar above the 200-day moving average. Although China continues to wrestle with its slowing economy, Hong Kong has managed to stay somewhat removed from the fallout. EWH is a BUY.
Freeport McMoRan Copper & Gold Inc. (FCX) fell 1.55%. FCX bounced off the 50-day moving average last week on reports that it will renegotiate mining contracts with the Indonesia government. FCX owns the Indonesia-based Grasberg mine, the largest gold mine in the world. FCX is a BUY.
Visa Inc. (V) added 1.32% last week. Morgan Stanley just reiterated its “overweight” rating on Visa, setting a $125 price target for the stock. This target is 9% above V’s current price level. V remains a BUY.
Ford Motor Co. (F) was flat for the week. Ford Motor announced it is pouring $3.8 billion into its global pension plan this year and will invest its plan assets more heavily in bonds, in an aggressive move to minimize its pension risks. F is a BUY.
Yum! Brands, Inc. (YUM) rose 1.42% in its first week in your portfolio. CEO David Novak sees a bright future for YUM in China — calling China the “growth opportunity of the 21st century.” YUM is a BUY.

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