Greek Drama Roils Global Stock Markets

Nicholas Vardy

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

Markets closed a tough week, with the Dow Jones down 2.89%, the S&P 500 falling 2.88% and NASDAQ tumbling 3.36%. Global stock markets fared worse, with the MCSI Emerging Markets Index down 3.46%.

Despite the sharp sell-off, two positions — Markel Corp. (MKL) and Illumina Inc. (ILMN) — hit new 52-week highs.

You were stopped out of Union Pacific Corporation (UNP) at a loss.

A whole slew of Alpha Investor Letter positions fell below their 50-day moving average and changed to a Hold. These included the Guggenheim Spin-Off (CSD), Global X Guru Index ETF (GURU), iShares Currency Hedged MSCI Germany (HEWG), Google Inc. (GOOGL), WisdomTree Japan Hedged Equity ETF (DXJ), First Trust US IPO ETF (FPX), AdvisorShares TrimTabs Float Shrink ETF (TTFS) and the Guggenheim S&P 500 Equal Weight ETF (RSP).

It was a dramatic week, with the Greek crisis dominating the headlines. Yesterday, Greece became the first developed country to default on the International Monetary Fund when the Greek government failed to transfer €1.55 billion ($1.73 billion) by the close of business on Tuesday. This was after the government closed the stock exchange as well as all Greek banks for the week. The Greeks are also set to vote in a national referendum on whether to accept the latest austerity package.

The question is how this is set to influence your Alpha Investor Letter portfolio. From a fundamental perspective, the answer is: “very little.” Your only exposure to Greece is through the Cambria Global Value ETF (GVAL), which has a 9.87% holding in Greece. The rest of the holdings in your portfolio are independent of any goings on in that part of the world.

Of course, publicly traded markets are all about market sentiment. And market sentiment today is negative across the board. But as I pointed out in yesterday’s issue of The Global Guru, such situations offer terrific buying opportunities. That said, it does take a deep-seated contrarian instinct to act on these.

On a personal note, the Greek crisis is having an impact on my family’s personal vacation plans. We have a 10-day vacation in Greece scheduled in August, with a one-year-old infant in tow. But with many businesses in Greece not accepting credit cards and cash withdrawals from ATMs limited to 60 euros a day (about $67), it’s going to take some personal financial creativity to pull this off.

Perhaps by the time we get there, we’ll be using a new Greek drachma…

Portfolio Update

iShares S&P Global Timber & Forestry Index (WOOD) lost 3.21% last week as the debt crisis in Greece caused nearly every investment class to fall. As an asset class, commodities had a terrible year in 2014 and are only nearly even for 2015. However, with commodities bottoming and the U.S. real estate market moving higher, the bias is upwards for timber. WOOD is a HOLD.

Global X Guru Index ETF (GURU) fell 3.79%. Currently at the halfway mark for 2015, hedge funds recovered from significant early-year lows to very near 52-week highs as recently as last week. Now resting on the 200-day moving average (MA), GURU is likely to rebound higher once investors get past the summer doldrums and their Greece-induced jitters. GURU dropped below its 50-day MA last week to become a HOLD.

Markel Corp. (MKL) remained relatively flat last week, faring best and dipping just 0.48%. Seemingly impervious to the broader market woes, Markel hit a new 52-week high last Friday as well on a volume spike better than double its typical trading volume. MKL is a BUY.

Skyworks Solutions Inc. (SWKS) lost 5.60%. SWKS is another position just off its 52-week highs. This big winner remains up well over 100% in your portfolio. Skyworks has a penchant for staying above its 50-day MA and has done so for most of the last several years. Once again making a rare move down to the 50-day MA, this should likely be one of the first positions to recover — and one you should buy more of when that happens. SWKS is a BUY.

Google Inc. (GOOGL) gave back 4.14% last week. Google recently announced that its “self-driving” cars took to the streets of Mountain View, California, and are working through real-world driving scenarios. Not to fear, the streets of Google’s hometown are still safe as these prototype vehicles do not travel faster than 25 mph and have live drivers sitting behind the wheel ready to take over if things go awry. GOOGL dipped below the 50-day MA and is a HOLD.

Illumina Inc. (ILMN) dipped 1.08%, faring well despite the market turbulence. ILMN is also just off recent 52-week highs from the prior week. In a vote of long-term confidence for this holding, Standard & Poor’s raised Illumina’s credit rating and kept its outlook at “Stable.” Standard and Poor’s rating action also “reflects our increased confidence in the company’s ability to defend its leading position within the rapidly growing genome sequencing space over the next few years and sustain its above-average profitability benefiting from cost-efficient technology and pricing power.” ILMN is a BUY.

WisdomTree Japan Hedged Equity ETF (DXJ) lost 3.90%. Looking back over the 2015 investment landscape, bets on Japan have been amongst the top winners. Gains have even been stronger when coupled with the power of currency hedging. A simple year-to-date comparison of the unhedged iShares MSCI Japan ETF (EWJ) to your position in DXJ finds EWJ up 16.10%, as compared to DXJ’s super-charged 21.43% gain, through May 31. Nevertheless, DXJ did change to a HOLD last week.

Latest Special Reports

As a courtesy, I want to bring you the new special report, The Top 15 Stocks for 2015, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. Also check out new and updated versions of other reports, including My #1 Investment for the Next 17 Years: Where I am Investing 100% of My Son’s College Education Fund and 300% Greater Returns on my #1 Investment: Turning that Extra $108,849 into $325,000 or More. These reports and others are available FREE on my website to you.

Nicholas Vardy

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