Reflections on the Smart Money Masters Portfolio

Nicholas Vardy

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

The U.S. stock market closed a mixed week.

The S&P 500 rose 0.49% and the Nasdaq rose 1.2%. The Dow Jones dropped 0.42%, while the MSCI Emerging Markets Index pulled back 1.41%.

Your most recent Smart Money Masters recommendation, Mohnish Pabrai’s Fiat Chrysler Automobiles N.V. (FCAU), continues its relentless rise upward, jumping 4.79%. This position is up a remarkable 33.65% since my Aug. 11 recommendation.

Charlie Munger’s Costco (COST) recovered 3.63% as the market’s love affair with begins to wane. George Soros’ Liberty Broadband Corporation (LBRDK) also rose another 2.48%. Plus, The Priceline Group (PCLN) began what I expect to be the start of a strong recovery, gaining 1.98%.

Since launching in February of this year, your Smart Money Masters portfolio has generated some solid gains.

Five of your positions — PayPal Holdings (PYPL), Restaurant Brands International (QSR)Liberty Broadband Corporation (LBRDK), Fiat Chrysler (FCAU) and Baxter International (BAX) — all boast double-digit-percentage gains.

PayPal is now up over 50%.

A few things have become apparent.

First, the Smart Money Masters portfolio is not an index-hugging portfolio. A specific investment rationale drives each holding, and each is different from the overall market sentiment.

Second, each position is driven by news. Whether its Fiat Chrysler’s (FCAU) remarkable rise in the past three weeks, or Navigator Holdings’ (NVGS) rollercoaster ride, it is news that drives each of these recommendations. That makes each recommendation more volatile than the overall stock market.

That also makes each of these holdings both easier and harder to hold than many others. When a recommendation runs up, it runs up quickly. When it falls, it can fall fast.

Third, there is a compelling story behind each of these positions. And some of the best names in the business have staked a substantial percentage of their portfolios on each idea. Often, these ideas are deeply contrarian. You’ll see the best example of this in next week’s new recommendation.

The lesson?

It is important to view each Smart Money Masters recommendation as part of a whole portfolio. When one position zigs, the other zags. That balance ensures that you can sleep well at night

Portfolio Update

Kraft Heinz (KHC), Restaurant Brands International (QSR), Blackberry (BBRY), The Priceline Group (PCLN) and Markel (MKL) are all trading below their 50-day moving averages and are currently HOLDs.

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