A Week of Solid Gains Across the Globe

Nicholas Vardy

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

It was another solid week for U.S. stocks, as the S&P 500 rose 1.48% and the NASDAQ jumped 2.69%. More encouragingly, the MCSI Emerging Markets Index also recovered 4.28% after many months of underperformance.

Big gainers in your Alpha Investor Letter portfolio included iShares MSCI Singapore Small Cap Fund (EWSS), up 2.21%; iShares MSCI Ireland Capped Investable Market Index (EIRL), rising 2.13%; Guggenheim Spin-Off (CSD), climbing 1.75%; and PowerShares Buyback Achievers (PKW), growing 1.71%.

With global markets recovering sharply, iShares MSCI Ireland Capped Investable Market Index (EIRL) moved from a HOLD to a BUY and WisdomTree Japan SmallCap Dividend (DFJ) moved off the watch list and is back to a BUY.

PowerShares Global Listed Private Eq (PSP) and iShares S&P Global Timber & Forestry Index (WOOD) are also back to their 50-day moving averages, and I may soon recommend that you re-enter these positions, as well.

The market is eagerly anticipating Fed Chairman Ben Bernanke’s semi-annual testimony to a U.S. Congressional panel later today.

Here’s my take on this…

Bernanke’s testimony will likely reaffirm remarks made last week, when he assured markets that bond buying will be wound down only when the economy is strong enough.

Bernanke will say that future monetary policy will depend on the state of the U.S. economy. And although the United States is outperforming most developed global economies, quantitative easing (QE) will stay in place for now. Interest rates will remain low long after QE is halted.

All of the focus on Bernanke’s testimony underlines how much global markets are held hostage to the unwinding of the U.S. Federal Reserve’s massive monetary stimulus.

Bears point out that U.S. stocks are up close to 17% in 2013 on a mere 2.5% earnings rise. So the case for the U.S. stock market rising is tough to make on fundamentals alone.

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That said, the U.S. stock market has been one of the few places in the world where investors are making money.

As I have pointed out, among the 39 global stock markets I track every day, the three top stock markets in 2013 are Japan, Ireland and the United States. And these three markets account for nine out of your 10 current positions in your Alpha Investor Letter portfolio, including today’s re-entry into WisdomTree Japan SmallCap Dividend (DFJ).

So overall, your Alpha Investor Letter portfolio could be hardly better positioned.

Portfolio Update

Berkshire Hathaway (BRK-B) gained 1.21% last week and hit a new 52-week high. Berkshire Hathaway’s book value has increased 19.7% annually over its 48-year history, blowing away the modest 9.4% growth rate of the benchmark S&P 500 over the same period. No wonder, as Berkshire Hathaway employs the best management team on the planet. BRK-B is a BUY.

Visa Inc. (V) gained 1.16% last week. Deutsche Bank reiterated its ‘Buy’ rating for V on Monday and raised its price target to $226. Visa’s board of directors also declared a $0.33 per share quarterly dividend yesterday, payable on Sept. 4, to all shareholders of record as of Aug 16. Visa will report earnings next Wednesday, July 24, after markets close. Analysts’ consensus estimates are for $1.79 earnings per share. V is a BUY.

iShares MSCI Ireland Capped Investable Market Index (EIRL) added 2.13%. Standard & Poor’s upgraded Ireland’s credit outlook from ‘Stable’ to ‘Positive’ last Friday. Developments like this can effectively cheapen borrowing rates for Ireland, thus turning up the heat on its economic recovery. EIRL also moved above the 50-day moving average (MA) last Wednesday and is now a BUY.

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iShares MSCI Singapore Small Cap Fund (EWSS) gained 2.21% last week. EWSS’ stock chart reflects solid support at the $28.00 level over the past three weeks. Moving up past $29.00 this week, EWSS will likely continue to rise as emerging markets “revert to the mean.” EWSS is a HOLD.

WisdomTree Japan Hedged Equity (DXJ) rose 0.54% over the past five trading days. DXJ has firmed up its position above the 50-day MA since its May correction and June consolidation. Up 12% since it began its most recent rise at the end of June, the Japanese recovery is “back on the bull.” DXJ is a BUY.

Google Inc. (GOOG) gained 1.59% for the week. From a marketing standpoint, Apple may appear to be on top as the number-one handheld device maker. However, Google is after a far greater prize, and has the critical component that Apple sorely lacks — a robust and integrated cloud-based “ecosystem.” Currently in the midst of unveiling the next generation of its core products, Google’s offerings include immensely popular applications such as Google Search, Gmail, Google Maps and YouTube. Google will likely emerge victorious in the “battle for digital supremacy” — pushing GOOG to the $1,000 per share price level as its success continues. GOOG is a BUY.

PowerShares Buyback Achievers (PKW) added 1.71% for its first week in your portfolio and managed a new 52-week high. PKW also added 10.7% in outstanding units last week, representing $88.2 million in new fund inflows. PKW is a BUY.

Guggenheim Spin-Off (CSD) rose 1.75%. Also in its inaugural week for your Alpha Investor Letter portfolio, CSD managed a new 52-week high as well. Charging a mere 0.60% expense ratio, CSD falls in line as a “cheap” position to own. CSD is a BUY.

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First Trust US IPO Index (FPX) gained 1.38%. The third fund in the recent triad of new portfolio arrivals, FPX also managed a new 52-week high last week. FPX is a convenient and low-risk way to capture gains from the recent revival of the U.S. initial public offering (IPO) market. FPX is a BUY.

Latest Special Reports

As a courtesy, I want to bring to your attention three of my latest special reports, 3 Ways to Double Your Money While El Toro Slays the Dragon, The “Other China”: Let 60 Million Overseas Chinese Make You Rich and Ivy League Moneymakers: How to Play the Hottest “Megatrends” of 2013 and Beyond. Each of these FREE reports gives excellent investment information on a key segment of the market.

In addition, take a look at the latest version of The Top 12 Stocks You Should Buy Right Now, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. All four of these special reports are accessible FREE on my website.

P.S. Join me for the San Francisco Money Show, Aug. 15-17, at the San Francisco Marriott Marquis. There is no charge for this conference, but you do need to register. Call 1-800/970-4355, and mention code #031736.

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