The U.S. and Japan Continue to Roar Ahead

Nicholas Vardy

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

U.S. markets continued their rise this past week, with the Dow Jones up 1.06% and the S&P 500 jumping 1.50%. Global markets took a breather, with the MCSI Emerging Markets Index ending the week 1.18% lower.

The Japanese market has also gone from strength to strength, with the tumbling yen boosting your position in Wisdom Tree Japan Hedged Equity (DXJ) by 5.37% just this past week. Japan is turning out to be the investment of the year in global markets, and your Japan-related holdings in your Alpha Investor Letter portfolio are profiting handsomely. There is talk of corporate restructuring starting in Japan, which may further boost the market. If you’re a subscriber to my Bull Market Alert trading service, you saw your holdings in Sony (SNE) soar more than 15% over the past two days on just such news.

Two of your U.S.-based holdings — Two Harbors (TWO) and Berkshire Hathaway (BRK-B) — also had a strong week, rising 2.59% and 2.52%, respectively.

Truth be told, I have been surprised by the continued strength of the U.S. markets. Certainly, those with a bullish view of the world have been amply rewarded. One unabashed bull is my fellow Pittsburgh native David Tepper of Appaloosa Management, whose interview on CNBC yesterday is worth watching. If “sell in May and go away” is going to make an appearance this year, it had better do so quickly.

I am heading to Singapore tomorrow for a week at the annual CFA Institute Conference, which starts on Sunday. I’ll be flying one of Singapore Airlines’ giant double decker, A-380 planes for the first time. The conference itself is chock full of high-profile speakers from both Asia and the United States. The speakers include Japan bear Kyle Bass, who must be having a terrible time this year. I’ll also be appearing on CNBC Asia on Monday morning at 9:40 Singapore time.

I’ll be providing you with my thoughts about Singapore in next week’s issue of my free e-letter, The Global Guru.

Portfolio Update

Berkshire Hathaway (BRK-B) gained 2.52% last week, hitting another new 52-week high. Barclays Capital reiterated its “Overweight” rating for Berkshire Hathaway last week and raised its price target to $126.00 — 12% higher than Tuesday’s close. Barclays also reported that Warren Buffett expected to remain the CEO of Berkshire Hathaway for another 10 years. However, his succession plan stands ready when needed. BRK-B is a BUY.

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Visa Inc. (V) was flat last week on the heels of a significant earnings-related jump the week prior. Deutsche Bank reiterated its “Buy” rating on Visa, Inc. yesterday and raised its price target to $196.00 — implying an 8.7% move from Tuesday’s close. Deutsche Bank highlighted Visa’s network as a “huge competitive advantage.” Visa also plans to offer its clients lucrative new services such as advanced marketing abilities, loyalty programs and data analytics. V is a BUY.

PowerShares Global Listed Private Equity Portfolio ETF (PSP) ended the week down just 0.42%, after hitting a new 52-week high one week ago. “Romney’s Revenge” continues to deliver gains on a wave of a slow, but steady, resurgence in the global economy. This position is up a whopping 31% since you purchased it last July, making it one of the top-performing recommendations in your Alpha Investor Letter portfolio. With many of the global markets rebounding strongly, I expect PSP’s strong performance to continue. PSP is a BUY.

WisdomTree Japan SmallCap Dividend ETF (DFJ) was flat last week. The yen closed at a new four-year low against the U.S. dollar last week and managed to hold the “100 yen per dollar” level. The recent pullback in DFJ likely marks an opportunity to purchase more of this bet on the Japanese recovery as the Group of Seven finance chiefs also signaled tolerance last week of the yen’s recent slide. DFJ is a BUY.

Vanguard Global ex-U.S. Real Estate Index Fund (VNQI) lost 2.59% over the past five trading days. Both the domestic and global real estate markets have been on a protracted rise recently as real estate markets rebound. Japan, in particular, is experiencing a sustained and remarkable recovery from historic lows. Aided by VNQI’s largest holding Japan’s Mitsubishi Estate Co. Ltd., a major player in Japanese and U.S. real estate development and leasing, VNQI should benefit, as well. VNQI is a BUY.

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S&P Global Timber & Forestry Index Fund (WOOD) rose 0.58% last week. WOOD recently touched the $50.00 price level once again, a high not seen since the end of March. More interestingly, though, WOOD has just formed an “inverse head and shoulders” along the $50.00 price level. This well-known pattern predicts a strong future rise in the share price of WOOD, once investors can push up through the $50.00 level. WOOD is a BUY.

Wisdom Tree Japan Hedged Equity (DXJ) jumped 5.37%, boosted significantly by a drop in the value of the yen. Although DXJ’s equity holdings will benefit directly from Japan’s economic recovery, the recent “Group of Seven” comments regarding Japan’s weakening yen will provide even more of a catalyst for DXJ’s currency-based investments. DXJ is a BUY.

WisdomTree Emerging Markets SmallCap Dividend Index (DGS) dipped 0.18% last week, faring better than the 1.18% drop in its much larger cousin, MCSI Emerging Markets Index (EEM), over the same period. With more than $1.5 billion in assets under management, this popular fund focuses squarely on the higher-beta small cap securities in emerging markets, while paying a 2.85% dividend and keeping fees at a low 0.63%. DGS is a BUY.

Silver Bay Realty Trust (SBY) dipped 0.89%. SBY held to its rigid $19.00 support level after reporting Q1 earnings on Monday at the market’s close. SBY reported a net loss attributable to common stockholders of $0.16 per diluted share versus a $0.08 per share estimate. Total Q1 revenue was $7.7 million versus an estimated $7.9 million. SBY also reported the acquisition of more than 1,200 single-family residences (SFRs), 810 new leases on SFRs and a total portfolio of over 4,600 SFRs in 14 markets across eight states. SBY is a HOLD.

Two Harbors (TWO) gained 2.59% last week. TWO beat Wall Street estimates last Tuesday after reporting better-than-expected earnings. TWO reported $0.47 earnings per share (EPS) versus a $0.32 EPS estimate, up significantly from last year’s $0.28 per share figure. Revenue was $143.7 million versus a $116 million estimate. Last year’s Q1 revenue was $51.8 million. Trading below its 50-day moving average, TWO is a HOLD.

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iShares MSCI Ireland Capped Investable Market Index (EIRL) dipped 1.16%. Unemployment rates for some of the largest and hardest hit euro-zone countries are still on the rise. In fact, as of March 2013, Spain is still experiencing an accelerating unemployment rate above 26% — that’s one out of four people out of work! However, Ireland’s unemployment is decreasing, which is bullish news for this position. EIRL is a BUY.

MSCI Singapore Small Cap Fund (EWSS) rose 0.61% during its first week in your Alpha Investor Letter portfolio. Singapore’s central bank estimates gross domestic product (GDP) will grow at 1-3% for 2013, and recently revised its 2013 inflation forecast from 3.5-4.5% down to 3-4%. EWSS 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. I value your feedback!

Take a few minutes to fill out this survey and let me know how you are enjoying your Alpha Investor Letter service. Your feedback will help me and my publisher tailor this service to your needs. Thank you.

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Yesterday morning, I sent you a Special Alert recommending that you sell half of your Sony (SNE) July $18 call options (SNE130720C00018000) to lock in 75%+ gains. Well, it turns out that I was overly pessimistic. The options actually opened much higher, allowing you to book 312% gains -- assuming you sold the options at the open. Sony stock ended the day a whopping 9.90% higher, and your remaining July $18

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