Global stock markets ended the week broadly flat with the Dow Jones down 0.98%, the S&P 500 up 0.42% and the NASDAQ rising 0.48%. The MCSI Emerging Markets Index pulled back 0.79%.
Your Alpha Investor Letter portfolio was also largely flat. The one exception was Icahn Enterprises, L.P. (IEP), which jumped 11.57%. This position is now up 45.61% just since Oct. 18 — making it one of your biggest and quickest winners ever.
In addition, two positions — Berkshire Hathaway (BRK-B) and iShares S&P Global Timber & Forestry Index (WOOD) — slipped below their 50-day moving averages and are now back to a HOLD.
After a strong end to November, December started with a whimper, with the stock market selling off three consecutive days.
Nevertheless, you will likely hear pundits debating whether we will have a “Santa Claus rally” in the U.S. markets over the next few weeks. Of course, much will depend on the outcome of the upcoming Fed meeting, and the hints it may offer on future tapering. But I also wanted to share with you the actual statistics on this phenomenon over the last 30 years.
Source: Sentimentrader.com
As you can see, the market tends to rally quite often starting around the 15th after a weak start to the month. There is little reason to think this year will be any different, unless there is materially bad news from the Fed.
Overall, you’ve had a terrific year with the Alpha Investor Letter, with several big winners in your portfolio.
As the year winds down, the single-biggest disappointment of 2013 has been the poor performance and lack of a sustained rally in emerging markets. Although many emerging markets are off of their lows from late August, global stocks have not taken off as I had expected — or as they tend to in Q4. This year — like 2012 — the United States has continued to be the place to be. Fortunately, your Alpha Investor Letter portfolio is well-positioned in this regard, with only selected exposure to global stock markets in Ireland and Japan.
Portfolio Update
Berkshire Hathaway (BRK-B) dipped 1.54% last week. Detroit was once one of America’s greatest cities. After the collapse of the U.S. automakers, and decades of financial mismanagement by politicians, Detroit is now bankrupt. While others have abandoned Detroit, Warren Buffett, in partnership with Goldman Sachs, is launching a program designed to foster small business to lead Detroit back to greatness. BRK-B dipped below its 50-day moving average (MA) yesterday to become a HOLD.
Visa Inc. (V) gave back 0.87% over the holiday-shortened week. Bloomberg reported yesterday that Visa experienced Thanksgiving e-commerce sales transactions totaling nearly $1 billion. Just days later, Visa charges totaled $2.6 billion on “Cyber Monday.” Due to the proliferation of online shopping and our beloved mobile devices, this trend will likely continue higher. V is a BUY.
iShares MSCI Ireland Capped Investable Market Index (EIRL) dipped 0.49%. EIRL is up a whopping 42.3% year-to-date, and up 21.5% in your portfolio. Ireland remains on track to be the first European country to exit the bailout-funding programs. EIRL is a BUY.
iShares MSCI Singapore Small Cap Fund (EWSS) closed flat. The latest Singapore forecast from Zacks Equity Research calls for better days ahead. Zacks upped Singapore’s 2013 gross domestic product (GDP) growth forecast yesterday, from the 2.5% – 3.5% range to 3.5% – 4.0%. The economy also grew at a robust 5.8% year-over-year rate for the third-quarter 2013, beating the 5.1% forecast. EWSS is a HOLD.
Google Inc. (GOOG) also ended flat last week. Google took another first place recently, by simply selling more online advertisements on more Web sites than any other entity in the world — and this is a trend that is unlikely to reverse any time soon. As more and more folks come online, through the billions of Internet-connected devices across the globe, Google’s potential audience will simply grow larger and larger. Although Google’s #1 position in online advertising alone is enough to drive profitability, don’t overlook all of the other world-changing pursuits Google is undertaking — many quite profitable in their own right. GOOG is a BUY.
WisdomTree Japan Hedged Equity (DXJ) rose 0.59% over the past four trading days and hit a new six-month high. If Japan is able to maintain its current trajectory of recovery, and continue towards the goals set by the Bank of Japan, there is plenty of upside in DXJ. DXJ is a BUY.
Guggenheim Spin-Off (CSD) gained 0.57% last week to hit yet another new 52-week high. CSD’s holdings cover several major market sectors, including Consumer Cyclicals, Energy, Industrials and Technology — each representing nearly 20% of the total holdings. CSD is a BUY.
PowerShares Buyback Achievers (PKW) gave back 0.53%, but managed to hit a new 52-week high late last week. With interest rates stuck at all-time lows over the past several years, investors have been on a persistent hunt for dividends. However, corporations have returned more dollars to investors via buyback programs than dividends over recent years. From the period of 2004 to 2012, S&P 500 companies paid out $2.1 trillion in dividends vs. $3.1 trillion in buyback spending. PKW is a BUY.
First Trust US IPO Index (FPX) added 0.33% last week and hit a new 52-week high. Investors seek out initial public offerings (IPOs) due to the high rewards they offer, yet actually getting in on an IPO can be a major challenge. This has led droves of investors to FPX, as assets have soared from $21 million to $250 million in just this year alone. FPX is a BUY.
WisdomTree Japan SmallCap Dividend (DFJ) dipped 1.00%. DFJ traded along its 50-day moving average over the past week, but took a slight dip yesterday as the broader markets experienced a bit of a pullback. DFJ is a HOLD.
Vanguard Global ex-US Real Estate ETF (VNQI) lost 1.16% over the Thanksgiving holiday week. VNQI tracks the performance of the S&P Global ex-U.S. Property Index. This index measures the performance of international real estate stocks in both developed and emerging markets, giving you exposure to a wide array of real estate investments. VNQI is a HOLD.
iShares S&P Global Timber & Forestry Index (WOOD) dipped 0.22% last week. WOOD has been trading sideways for nearly one month, sticking tightly to its 50-day MA. WOOD dipped below this line once again yesterday, making WOOD a HOLD.
PowerShares Global Listed Private Eq (PSP) closed the week flat after making a second attempt to break above the $12.40 resistance price level and 52-week high. PSP pulled back over the past two days, in line with the broader markets. PSP remains a BUY.
Market Vectors Biotech ETF (BBH) gave back 0.77% on the heels of a strong gain the week prior. TheStreet.com currently rates BBH as a ‘Buy’ and S&P Capital IQ rates this ETF as “MarketWeight.” MarketEdge lists BBH with an “Improving” outlook. BBH is a BUY.
ProShares Ultra-Short 20+ Year Treasury (TBT) rose 1.18% last week. As the Federal Reserve’s stance on the economy continues to come into focus, TBT may become more volatile. Currently, all eyes are on the upcoming employment data due out over the next few days. These numbers will feed directly into the Fed’s decision on tapering, due out at the next Fed meeting on Dec. 18. Any hint that the Fed may begin to pull back on its stimulus could move TBT significantly. TBT remains a BUY.
Icahn Enterprises, L.P. (IEP) jumped 11.57% on news that Carl Icahn gained two seats on Talisman Energy Inc.’s board of directors. The two new directors also happen to be Managing Directors of Icahn Capital L.P., which holds a 7% stake in Talisman’s outstanding common shares. This could turn into another big win if Mr. Icahn gets his way. IEP is a BUY.
Global X Guru Index ETF (GURU) inched 0.16% higher and managed to hit a new 52-week high. The year-to-date (YTD) returns of GURU’s top-10 holdings reveal why GURU is such an excellent pick for your portfolio. In short, of the top-10 GURU holdings, the lowest YTD gain comes in at a “meager” 47%. Four of the top-10 positions boast returns of 160% or more, and GURU’s highest YTD gainer, Pandora Media Inc., tops the charts with an astronomical 209% YTD gain. GURU is a BUY.
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