It was the first negative week in a month or so, with the S&P 500 down 0.38% and the MCSI Emerging Markets Index tumbling 2.14%.
Big gainers in your Alpha Investor Letter portfolio included the First Trust US IPO Index (FPX), rising 3.27%; iShares MSCI Ireland Capped Investable Market Index (EIRL), climbing 1.75%; and Visa Inc. (V), up 1.52%.
Your positions in Japan were hit hard, however, with Wisdom Tree Japan Hedged Equity (DXJ) sliding 7.15% and WisdomTree Japan SmallCap Dividend (DFJ) falling 4.62%. This was due to a combination of a pullback in the Japanese stock market and a bump up in the yen’s strength. Both of these positions are now technically oversold and due for a bounce.
Your new position in the Vanguard Global ex-US Real Estate ETF (VNQI) slipped back below its 50-day moving average and is now a HOLD.
Overall, I am not worried about the prospect of a major correction. That said, August often harbors negative surprises in the markets — and it was two years ago that the markets suffered a sharp sell-off subsequent to the U.S. credit downgrade by ratings agency Standard & Poor’s. With the benefit of 20/20 hindsight, that sell-off was a terrific buying opportunity. Any sustained drop this year would offer a similar opportunity.
The U.S. stock market continues to hold up better than its global counterparts. Ireland continues to be the top-performing market of 2013. With Japan pulling back over the past week, the broader U.S. market has advanced to #2, and Japan slipped back to #3.
Otherwise, among the 39 markets I survey, only Germany and Switzerland have generated 10%+ gains for U.S. investors in 2013.
With your six positions based on the United States, two in Japan and one in Ireland, your Alpha Investor Letter portfolio is well positioned to profit from this quite concentrated strength in global markets.
Finally, I want to update some stop prices for your newest positions that came off of your watch list over the past two weeks.
WisdomTree Japan SmallCap Dividend (DFJ) — place your stop at $43.00.
iShares S&P Global Timber & Forestry Idx (WOOD) –place your stop at $43.50.
PowerShares Global Listed Private Eq (PSP) — place your stop at $10.70.
Vanguard Global ex-US Real Estate ETF (VNQI) — place your stop at $49.80.
Berkshire Hathaway (BRK-B) gave back 2.05% last week. Berkshire’s book value has gained every single year of its 50-year existence, with the exception of 2001 and 2008. Berkshire Hathaway remains as a cornerstone in your portfolio, allowing your investments to be “buoyed by the expertise of Buffett.” BRK-B is a BUY.
Visa Inc. (V) gained 1.52% last week and hit a new 52-week high on positive earnings results that beat analyst estimates. Visa reported earnings of $1.88 earnings per share (EPS) vs. a $1.79 EPS analysts’ estimate. This is a 21% increase from the same quarter last year. Revenue was $3 billion vs. a $2.89 billion analysts’ estimate. Sales increased 17% year-over-year. Several analytical firms raised price targets on the good news. V is a BUY.
iShares MSCI Ireland Capped Investable Market Index (EIRL) added 1.75% and hit a new 52-week high early last week. The positive news keeps coming for Ireland as Standard & Poor’s (S&P) recently upgraded its outlook on Ireland from “stable” to “positive.” Standard & Poor’s also remarked that it expects Ireland to “over-achieve its fiscal targets and reduce its government debt faster than expected.” EIRL is a BUY.
iShares MSCI Singapore Small Cap Fund (EWSS) dipped 0.72% last week. EWSS continued a third week of sideways trading as the bulls and bears struggled to gain the upper hand. With a low 1.6% inflation rate and an amazingly low 1.9% unemployment rate underpinning the country’s economy, Singapore remains an excellent bet in your Alpha Investor Letter Portfolio. EWSS is a HOLD.
WisdomTree Japan Hedged Equity (DXJ) fell 7.15% over the past five trading days. DXJ is designed to profit in two ways — on the general re-inflation of the Japanese economy and from the government-engineered weakening of the yen. However, the yen surged over the past few days, leading to last week’s fall in DXJ. DXJ is now a HOLD.
Google Inc. (GOOG) dipped 1.43% last week. Although you wouldn’t know it based upon GOOG’s performance last week, Google released two of the hottest technology items of 2013 a week ago. Google’s new high-powered Nexus 7 tablet hit store shelves last Friday, becoming the number one device currently available in its class. Secondly, if you have not read about Google’s new Chromecast media player device, I would suggest that a quick Google search may be in order. This little, 2” wonder-device seamlessly delivers media directly to the world’s living room TV sets in a simple manner never before seen. And, its revolutionary technology, coupled with an amazingly low $35.00 price tag, puts Google on course to literally change the way the world views electronic content. To put a measure on this new device’s popularity — every unit available through common retail channels was sold out within 48 hours of launch. GOOG is a BUY.
Guggenheim Spin-Off (CSD) pulled back 2.06% last week after hitting a new 52-week high. Historically, spin-off companies tend to out-perform the company they are spun-off from, as well as broader market-index funds. In fact, CSD has handily beaten the performance of the S&P500 since the fund’s inception. CSD is a BUY.
PowerShares Buyback Achievers (PKW) traded flat last week. PKW may be as close to legalized “insider trading” as most investors may ever get. PKW holds companies that have repurchased more than 5% of their own shares over the past year. “Insiders sell for many reasons, but buy for only one.” There is no greater vote of confidence by a company’s management than when it repurchases its own shares. PKW is a BUY.
First Trust US IPO Index (FPX) jumped 3.27% over the previous week. After two weeks of sideways consolidation trading, FPX took off once again on its bull run. FPX ended the week at a new 52-week high on above-average trading volume. FPX is a BUY.
WisdomTree Japan SmallCap Dividend (DFJ) fell 4.62% last week as it too suffered a fate similar to that of DXJ. Although small caps can be fast runners in a bull market, they also tend to be the first to jump out the window at any sign of lost momentum — no matter how slight the negative news may be. DFJ is just under its 50-day moving average and is now a HOLD.
iShares S&P Global Timber & Forestry Idx (WOOD) ended its first week in your portfolio flat. After spending a few weeks on our “Watch List,” and completing a healthy correction and recovery, WOOD appears ready to continue reflecting the bullishness that the housing sector has enjoyed over the past year. The recent S&P/Case-Shiller home price index reported the biggest annual gain since March 2006, matching a record set back in April 2013. WOOD is a BUY.
PowerShares Global Listed Private Eq (PSP) dipped 1.70% last week. PSP is another “Watch List” position that re-joined your portfolio last week. Private equity has also completed a correction over the past six weeks, making a full recovery from its visit to the 200-day moving average. President Obama offered his version of a new “grand bargain” yesterday, outlining essentially a trade-off of lowered corporate taxes for increased infrastructure spending. Should this effort actually succeed, lowered corporate tax rates would certainly be a large boon for private equity investors looking to profit from their corporate investment activities. PSP is a BUY.
Vanguard Global ex-US Real Estate ETF (VNQI) gave back 2.52%. VNQI is finding support at its 50-day moving average. VNQI will likely move higher in the weeks to come, for the same reasons given for WOOD. Dipping just below its 50-day moving average, VNQI is now a HOLD.
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.
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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.