It was yet another positive week for global markets, with the S&P 500 up 0.96% and the MCSI Emerging Markets Index ending the week 1.52% higher. The tech-heavy NASDAQ did slip 0.53% with its large position in Microsoft (MSFT) weighing on the overall index.
Big gainers in your Alpha Investor Letter portfolio included iShares MSCI Ireland Capped Investable Market Index (EIRL), up 1.68%, as well as two of your new “Warren Buffett-beating” U.S. stock picks — the PowerShares Buyback Achievers (PKW), jumping 1.52%, and the Guggenheim Spin-Off (CSD), rising 1.42%.
Three of your positions on your watch list — PowerShares Global Listed Private Eq (PSP), iShares S&P Global Timber & Forestry Idx (WOOD) and Vanguard Global ex-US Real Estate ETF (VNQI) — moved back above their 50-day moving averages and now are BUYs once again.
Overall, markets have settled nicely over the past four weeks, with U.S. markets breaking out to record highs. In a bull market, a correction of 3-8% is quite typical, and that is what we’ve seen since the markets’ previous peak in May.
Less obvious is that, as of yesterday, emerging market stocks have outperformed the S&P 500 over the past month, if just barely. Given emerging markets’ massive underperformance over all of 2013, this is a big change. The rebound in global markets is also percolating through your Alpha Investor Letter holdings, as all three of your new positions (above) have a substantial international weighting.
With the broad U.S. stock market outperforming global developed markets by 12% and emerging markets by close to 30% in 2013 alone, there is still plenty of opportunity for global stocks to catch up.
I enjoyed speaking with you and answering your questions last week on our quarterly Alpha Investor Letter conference call. In case you missed it, you can listen to it by clicking here.
Finally, on a personal note, this morning I am writing to you from Potsdam, Germany, a small city right outside Berlin, where Truman, Churchill and Stalin met in July and August 1945 to divide the spoils of war after Germany’s surrender in May of that same year.
This morning, I rode by the villas in which Truman, Churchill and Stalin stayed during the negotiations. They stand on one of the most impressive streets of villas I have ever seen.
The center of Potsdam, however, remains a huge construction site, still recovering from the bad luck of ending up on the wrong side of the Berlin Wall.
Portfolio Update
Berkshire Hathaway (BRK-B) gained 0.86% last week and hit a new 52-week high. Berkshire Hathaway is sitting on a pile of cash worth nearly $49 billion. Buffett also recently sold $1 billion worth of bonds, thus raising another billion in cash that he does not need. With the Federal Reserve still buying $40 billion worth of bonds each month, the “Oracle of Omaha” is clearly taking the opposite side of this bet. BRK-B is a BUY.
Visa Inc. (V) dipped 0.42% last week. Jefferies reiterated its ‘Buy’ rating for Visa, Inc. on Wednesday and raised its price target to $220 — nearly 17% above Tuesdays close. Visa will pay a $0.33 per share quarterly dividend on Sept. 4 to all shareholders of record as of Aug. 16. Visa will report earnings today, 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 1.68% and hit a new 52-week high last week. Members of the “troika,” including the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) met for the 11th time recently to discuss Ireland’s progress on its bailout plan. Their verdict? Ireland’s recovery remains “on track,” its unemployment is down to a three-year low and it expects positive growth to continue. EIRL is a BUY.
iShares MSCI Singapore Small Cap Fund (EWSS) gained 0.69% last week. Singapore’s Ministry of Trade and Industry reported that Singapore’s Q2 gross domestic product (GDP) growth rate exploded at an annualized 15.2% rate. This figure handily beats the 8.3% expectation and represents the strongest growth figure recorded in over two years. EWSS is steadily climbing towards its 50-day moving average, but remains a HOLD.
WisdomTree Japan Hedged Equity (DXJ) rose 0.93% over the past five trading days. DXJ held the number-one spot for 2013 in dollar inflow up until last week, recording a whopping $9 billion gain to date. DXJ is a BUY.
Google Inc. (GOOG) dipped 1.72% last week on the heels of its quarterly earnings report, presenting investors with an excellent buying opportunity right at the 50-day moving average. Google reported profits of $9.54 per share vs. a $10.80 per share analyst estimate, up from $8.42 per share for the same period last year. Revenue was $11.1 billion vs. an $11.37 billion analyst estimate, up significantly from last year’s $9.61 billion for the same period. Perhaps most interesting was Google’s announcement to continue making “significant capital expenditures.” This means continued investment in groundbreaking research and development, allowing Google to continue producing technological breakthroughs and untold billions in future profits. GOOG is a BUY.
First Trust US IPO Index (FPX) gained 0.90% and hit a new 52-week high. FPX made its second attempt yesterday at breaking up through its $38.00 resistance level and all-time high. Appearing ready to go higher, FPX is a BUY.
PowerShares Buyback Achievers (PKW) added 1.52% last week and hit a new 52-week high. PKW has managed to beat the benchmark S&P 500 every year, with the exception of last year, since 2008. Demand for PKW shares has been growing at a record pace over recent months. Sales volume averaged less than one million shares per month just six months ago. However, monthly sales volume for PKW now exceeds eight million shares. As history has shown repeatedly, a boost in demand normally leads to higher prices. PKW is a BUY.
Guggenheim Spin-Off (CSD) rose 1.42%. CSD is a bet on “value” like no other. In some cases, spin-off companies are very profitable entities simply weighed down by unprofitable parent company segments. CSD aims to cash in on these newly free companies, investing in the early stages before full value is realized. CSD is a BUY.
WisdomTree Japan SmallCap Dividend (DFJ) rose 1.03% for its first week in your portfolio. DFJ rejoins your portfolio after a brief stint on our “Watch List.” DFJ, along with your position in DXJ, will super-charge your ability to gain from the Japanese recovery by doubling your exposure to Japan. In addition, DFJ not only pays a dividend, but also brings exposure to the higher-beta small cap sector, thus further enhancing your ability to profit. DFJ 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.
