U.S. stock markets pulled back over the past week, with the Dow Jones down 0.40%, the S&P 500 falling 0.46% and the Nasdaq dropping 1.06%. The MSCI Emerging Markets Index (EEM) signaled newfound strength in global stock markets and ended the week 2.90% higher.
It’s no surprise then that your two emerging markets bets — the Cambria Global Value ETF (GVAL) and the WisdomTree Emerging Markets Small-Cap Div ETF (DGS) were the past week’s top performers.
On the downside, NVIDIA Corporation (NVDA) had a tough week. But recall that you had raised your stop to $95.00 to lock in at least a 100% gain in this stock.
This week, I am recommending that you close your positions in the First Trust US IPO ETF (FPX) for a slight gain and the PureFunds ISE Cyber Security ETF (HACK) at around breakeven as a way to reduce further your exposure to the stock market.
Overall, 12 of your 14 remaining positions are trading above their 50-day moving averages and remain BUYs.
Pundits have spilled a lot of virtual ink discussing the prospects for the U.S. stock market in 2017. In contrast, very few are focused on global stock markets, which have been lousy performers over the past few years.
Over the past decade, the MSCI Emerging Markets Index ETF (EEM) generated average returns of only 1.09% per year.
That has made the entire sector very cheap compared to the United States.
Today, the U.S. stock market trades at a Shiller-CAPE index price-to-earnings (P/E) ratio of 27.9. That’s an eye-popping 67% above its historical average.
In contrast, the Shiller-CAPE Index stands at a mere 14.4 for emerging markets.
There are signs that the tide already may have started to turn for global stocks.
Your holding in the Cambria Global Value ETF (GVAL) — which invests in the world’s cheapest global stock markets, as measured by the Shiller-CAPE Index –generated an impressive 17.24% in 2016.
And that was against the headwind of a strong U.S. dollar, which lopped a couple percentage points off of GVAL’s dollar-based gains.
Time will tell if 2017 is the year that global investing is back.
Whether it is or not, a rebound in global stocks is long overdue.
Portfolio Update
In column one, you will find the latest closing price of your position (“Last”).
In column two, you will find your position’s performance over the previous five trading days (“5D %Chg”). In column three, you will see whether your position is above or below its current 50-day moving average (“50D MA”).
A position is a BUY if it is trading above its 50-day moving average and is highlighted in GREEN.
A position is a HOLD if it has dropped below the 50-day moving average and is highlighted in RED.
Finally, in column four, I am including the performance of your positions over the past month (“1M %Chg”).
Click here to view the Portfolio Update table.
Sincerely,
Nicholas A. Vardy
