U.S. stock markets broke out to the upside last week, with the Dow Jones hitting 16,000 and the S&P 500 1,800 for the first time ever, before pulling back slightly. The Dow ended the week up 1.37%, and the S&P 500 rose 1.14%. Global stock markets also found their footing with MCSI Emerging Markets Index soaring 4.03%.
Big gainers in your Alpha Investor Letter portfolio included the Market Vectors Biotech ETF (BBH), up 2.28%; the Wisdom Tree Japan Hedged Equity (DXJ), rising 2.74%; the Guggenheim Spin-Off (CSD), adding 2.31%; and Berkshire Hathaway (BRK-B), bouncing 1.43%.
Three of your positions — Berkshire Hathaway (BRK-B), Vanguard Global ex-US Real Estate ETF (VNQI) and Market Vectors Biotech ETF (BBH) — moved above their 50-day moving averages and back to a BUY.
Overall, the market is unfolding mostly as I expected, and ending the year on a positive note.
Notably, emerging markets bounced strongly this past week, and should continue to rally into the end of the year. This is due in part to bullish news on continuing market-led reforms in China.
More importantly, Fed Chairman Bernanke yesterday reiterated the Fed would maintain its ultra-easy policy for as long as needed and taper bond-buying only when central bank officials were sure that labor market improvements were self-sustaining. This was bullish news as some pundits had been thinking that the Fed could begin tapering in December.
While continued loose money is good news for almost all of your Alpha Investor Letter positions, it is not good news for ProShares Ultra-Short 20+ Year Treasury (TBT), your current bet against U.S. Treasuries.
Recall that I had made this recommendation in anticipation of the Fed launching its tapering of bond repurchases in September. As this did not pan out as expected, I may have to reconsider this position in the coming weeks. That said, any launch of tapering would cause this position to soar as it did in May. Thus, this position is a hedge against your long positions in Alpha Investor Letter portfolio.
Finally, I thought it was also interesting see how Carl Icahn’s comments on the market to Reuters caused the market to tumble on Monday. Although Icahn insists his comments were misconstrued, it does show how much of an impact his views can have on the market.
A few years ago it was utterings by George Soros that would move the market. That role seems to have been taken on by Carl Icahn. The difference is of course that you can invest with Icahn through your position in Icahn Enterprises, L.P. (IEP), while Soros’ Quantum Fund was always off limits to U.S. retail investors.
Berkshire Hathaway (BRK-B) added 1.43% last week. Warren Buffett recently purchased a 40 million-share stake in Exxon Mobil (XOM). Although Mr. Buffett is well-known for taking on very large investments, this one is of particular note since it constitutes a full 1% of XOM’s shares, and equates to 4% of Berkshire Hathaway’s total holdings. BRK-B rose above the 50-day moving average and is now a BUY.
Visa Inc. (V) remained flat last week. Although Visa pays a smaller 0.80% dividend yield, this was good enough to earn the #3 spot on the most recent list of “Top dividend yielding large-cap business services stocks.” Although Visa’s higher stock price makes this dividend appear comparatively smaller, last Wednesday’s $0.40 dividend is a nice bonus to this stock’s recent stellar performance. V is a BUY.
iShares MSCI Ireland Capped Investable Market Index (EIRL) dipped 1.05% last week. Markets pay close attention to bond yields as an indicator for purchasing stocks and general overall market health. When Ireland was at the peak of its economic troubles, bond yields rose into double digits. Today, bond yields are down near 4%, indicating much higher investor confidence. EIRL is a BUY.
iShares MSCI Singapore Small Cap Fund (EWSS) gained 0.28%, but continues to remain stubbornly flat as it once again dipped to test its nearly impenetrable $28.00 support level. Keep collecting the 20% dividend yield until EWSS decides to move higher. EWSS is a HOLD.
Google Inc. (GOOG) added 1.33%. Many large hedge funds are posting their third-quarter “13F filings” as of late, revealing where these “masters of the universe” are investing their billions. Billionaire Daniel Loeb’s hedge fund, Third Point LLC, disclosed a new 100,000-share position in Google. Google and investment partner KKR & Co. invested $350 million in a Sacramento-based solar project in late 2011. The companies are now involved in a second joint venture with plans to invest another $400 million in a California and Arizona solar power project. GOOG is a BUY.
Wisdom Tree Japan Hedged Equity (DXJ) rose 2.74% as the dollar/yen currency pair moved in DXJ’s favor over past weeks. The U.S. Federal Reserve will release its latest meeting minutes today, possibly giving some clue as to its thoughts on tapering. Its views will have a long-term impact on the dollar once more definitive news emerges in the coming months. DXJ is a BUY.
Guggenheim Spin-Off (CSD) added another 2.31% to hit a new 52-week high. CSD continues to be a winner in your portfolio through its simple strategy of holding securities that have spun-off in the past two years. CSD’s cumulative three-year return is over 110%, and I expect this position to be a winner in your portfolio for quite some time to come. CSD is a BUY.
PowerShares Buyback Achievers (PKW) gained 0.73% and managed a new 52-week high last week. PKW’s strategy of holding U.S. companies with a 5% (or greater) buyback over the past 12 months brings some excellent names to the fund. ConocoPhillips, Amgen, Oracle, AIG and Time Warner constitute the powerhouses that are PKW’s top five holdings. PKW is a BUY.
First Trust US IPO Index (FPX) rose 0.79%. FPX has endured a bit of volatility over the past few weeks, flattening out its recent strong gains. However, FPX has firmly held the rising 50-day moving average and should move higher in the weeks to come. FPX is a BUY.
WisdomTree Japan SmallCap Dividend (DFJ) gained 1.54% over the past five trading days. The technical chart for DFJ reveals a third recent touch at the $52.00 price level. And, each rotation lower takes a near-perfect bounce up from the 50-day moving average (MA). With the 50-day MA in a firm uptrend, it is likely DFJ will push definitively up through $52 very soon. DFJ is a BUY.
Vanguard Global ex-US Real Estate ETF (VNQI) lost 1.92% last week. VNQI’s second bounce from the 200-day MA spells good news for VNQI. VNQI also popped above its 50-day MA last week, moving VNQI back to a BUY.
iShares S&P Global Timber & Forestry Index (WOOD) gained 0.52% last week as it continued to struggle along the 50-day MA. WOOD’s top-ten holdings include some big year-to-date (YTD) winners for 2013. UPM-Kymmene Oyj is #5 on the list and is up 40% YTD, Packaging Corporation of America is #9 with a 60% YTD rise, while the big winner is Smurfit Kappa Group PLC at #7 with a 95% YTD gain. WOOD remains a HOLD.
PowerShares Global Listed Private Equity (PSP) gained 0.75%. A trailing returns chart for PSP reveals significant growth in every single time period since its 2006 inception. This is a remarkable achievement. PSP has a “Buy” from TheStreet.com and a “Long” rating from MarketEdge. PSP is a BUY.
Market Vectors Biotech ETF (BBH) gained 2.28%. BBH has taken two modest dips over the past two months, each proving to be an excellent buying opportunity. Yet, in the world of biotech investing, “modest dips” often mean double-digit percentage drops in a heartbeat. However, BBH’s diversified portfolio helps even out much of the volatility that is characteristic of the sector. BBH rose above its 50-day moving average and is now a BUY.
ProShares Ultra-Short 20+ Year Treasury (TBT) dipped 2.08% last week, coming to rest just above the 50-day MA. Keep an eye on yields today as any clues gleaned from the Federal Reserve meeting minutes may significantly move TBT. TBT is a BUY.
Icahn Enterprises, L.P. (IEP) ended the week flat. IEP’s quarterly 13F filing revealed a large purchase of 44.4 million shares of Federal Mogul Corp, followed by a 20.1 million-share purchase of Nuance Communications Inc. However, the most interesting purchase was IEP’s 1.2 million-share repurchase of its own stock — bringing the fund’s own IEP holdings to a total of $8.3 billion. IEP is a BUY.
Global X Guru Index ETF (GURU) pulled back 1.43% during its first week in your portfolio. GURU consolidates the insights of the brightest money management minds in the business to generate even more gains in your Alpha Investor Letter portfolio. GURU is a BUY.
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