It was another solid week for global stock markets as the memories of Mr. Market’s mood swing in January fade. The Dow Jones was up 0.85%, S&P 500 rose 1.15% and the NASDAQ shined by rising 1.95%. The MCSI Emerging Markets Index also rose 0.41%.
Your Alpha Investor Letter portfolio’s big gainers included the Guggenheim Spin-Off ETF (CSD), which added another 3.61%; the Market Vectors Biotech ETF (BBH), which jumped 3.10%; Las Vegas Sands Corp. (LVS), which added 3.09%; First Trust US IPO Index (FPX), which recovered 3.07%; and the iShares MSCI Ireland Capped Investable Market Index (EIRL), which rallied 3.05%.
Several of your Alpha Investor Letter positions rallied back above their 50-day moving averages and are back to a BUY. These include your positions in Berkshire Hathaway (BRK-B), Guggenheim Spin-Off (CSD), Vanguard Global ex-US Real Estate ETF (VNQI) and Global X Guru Index ETF (GURU).
In addition, I am also moving PowerShares Buyback Achievers (PKW) off of the watch list and back to BUY, as it has crossed back above its 50-day moving average. Set your stop price for PKW at $38.00. To finance this trade, sell your bet on rising interest rates by selling ProShares Ultra-Short 20+ Year Treasury (TBT). The lack of strong direction in interest rates, combined with the effects of the daily re-setting of this position, is just whittling away our investment — and those funds can be put to better use elsewhere.
Buyers’ persistence was unabated yet again this past week. The push is especially impressive in tech-related indexes. As of yesterday, the Nasdaq Composite has notched its eighth consecutive gain. You see this kind of tech stock-related momentum in two of your recommendations — the Market Vectors Biotech ETF (BBH) and Google Inc. (GOOG). Yet, the broader U.S. market has yet to break through to new highs. Formerly red-hot small-cap stocks have cooled down and are now lagging substantially behind their tech counterparts. If the broader U.S. market does break out to the upside, however, I think the market will take it as very good news and head higher before we hit the summer lull.
International markets continue to trade below recent highs — with the exception of the iShares MSCI Ireland Capped Investable Market Index (EIRL) and the Market Vectors Gulf States Index ETF (MES), both of which are trading at 52-week highs. Japan, in particular, continues to disappoint, with the devaluing yen putting pressure on your U.S. dollar returns.
As I look at my travel diary, I’ll be heading out to Tallinn, Estonia, in early April. The home of Skype, and as the most radically free market (and successful) of the European countries, I am interested to see what progress this former Soviet Republic has made since I was last there a decade ago. I’ll be staying with the honorary consul of Croatia while I’m there.
I also expect to be heading out to Amman, Jordan, for this year’s CFA Institute Conference, which should give me more color on the latest developments in the Gulf States I wrote about last month. But for now, it is back to writing alumni interview reports for the Stanford University applicants I’ve been interviewing over the past week here in London. With over 42,000 applications this year for 1,600 spots, I can only wish the kids luck. Among the 20 or so I’ve interviewed over the past four years, I’ve never had a single applicant get in. But it’s a good experience for them. It’s still better odds than getting a decent job.
Berkshire Hathaway (BRK-B) gained 0.99% last week. Railroads, insurance companies and financial companies immediately come to mind when one thinks of Warren Buffett’s investment style. However, Mr. Buffett has always held an interest in electronic media companies such as DirecTV, Liberty Media, SiriusXM and Viacom, saying, “they have better economic characteristics than the average American business.” BRK-B is back above the 50-day moving average (MA) and is now a BUY.
Visa Inc. (V) added 1.68% over the holiday-shortened week. Visa already employs “smart card” technology in many countries around the world. With “identity theft” data breaches becoming larger and more commonplace in the United States, Visa and the other major credit card companies are attempting to bring smart cards to America by October 2015. V is a BUY.
iShares MSCI Ireland Capped Investable Market Index (EIRL) rose 3.05% last week. EIRL has made a tremendous upwards move from its 50-day MA over the past two weeks, once again repeating a common chart pattern dating back to mid-2012. Buying at this common support level has proven to be a winning strategy for EIRL many times over. EIRL is a BUY.
Google Inc. (GOOG) gained 1.74% last week to hit both 52-week and all-time new highs. Google consumes massive amounts of computing power every year by running all the servers that power the company’s worldwide operations — and this takes a massive amount of electricity. Google’s response to this is an aggressive renewable energy effort that includes $1-billion worth of wind and solar power projects. These projects total two gigawatts of power generation, matching the total output of the Hoover Dam. GOOG is a BUY.
WisdomTree Japan Hedged Equity (DXJ) gained 0.63% last week. Investors have been net buyers of this symbol for nearly every day of the past two weeks, pushing it above the 200-day MA as of yesterday. DXJ is a HOLD.
Guggenheim Spin-Off (CSD) added another 3.61%, continuing its rise for a third straight week. CSD also moved upwards past the 50-day MA late last week to become a BUY.
First Trust US IPO Index (FPX) jumped 3.07%, hitting a new 52-week high, and turning out another back-to-back winning week. FPX is a BUY.
WisdomTree Japan SmallCap Dividend (DFJ) added 0.58%, falling just short of its 50-day MA. DFJ remains a HOLD.
Vanguard Global ex-US Real Estate ETF (VNQI) gained 0.83%. After nearly touching down to a major point of support three weeks ago at the $50.00 price level, VNQI appears to be firmly back on an upwards trajectory. VNQI is now above the 50-day MA and back to a BUY.
iShares S&P Global Timber & Forestry Index (WOOD) added 1.68% last week, hitting a new 52-week high, as it followed in the footsteps of its real estate-related cousin VNQI. WOOD is continuing a strong rise from its 200-day MA. WOOD is a BUY.
Market Vectors Biotech ETF (BBH) jumped 3.10% to hit a new 52-week high. The biotech bull is charging hard once again. BBH remains a BUY.
Global X Guru Index ETF (GURU) gained 2.67% last week, continuing a sustained move higher in lockstep with the other “smart beta” plays in your Alpha Investor Letter portfolio. GURU also moved above the 50-day MA and is now a BUY.
The Blackstone Group (BX) dipped 0.54% as it continued trading sideways along the 50-day MA. The Blackstone Group is currently meeting with Encana Corp (ECA), a Canadian oil and gas producer. BX may be in talks to buy a portion of Encana’s $1-billion Deep Panuke natural gas stake. BX is a BUY.
Las Vegas Sands Corp. (LVS) added 3.09% last week as it continues to make strong gains after its post-earnings price dip. LVS is a BUY.
Market Vectors Gulf States Index ETF (MES) rose 2.33% for its first week in your portfolio and hit a new 52-week high. MES is a BUY.
An encore presentation of the talk I gave at the Investment Masters Symposium in Orlando on “The Myth of America’s Decline” will be available on demand online through Feb. 22.
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