Your Portfolio Bounces Strongly

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

U.S. markets recovered strongly over the holiday-shortened week, as the Dow Jones rose 1.84%, the S&P 500 jumped 2.09% and the NASDAQ soared 3.42%. The MCSI Emerging Markets Index had a relatively quiet week, rising only slightly by 0.42%.

Big gainers in your Alpha Investor Letter portfolio included the Market Vectors Gulf States Index ETF (MES), soaring 7.59%; Google Inc. (GOOGL), zooming 6.38%; Las Vegas Sands Corp. (LVS), jumping 4.77%; the Market Vectors Biotech ETF (BBH), recovering 4.35%; WisdomTree Japan Hedged Equity (DXJ), rising 4.35%; and the Vanguard Russell 2000 Index ETF (VTWO), growing 4.14%.

Your bet on India, ICICI Bank Ltd. (IBN), also hit a new 52-week high before pulling back in yesterday’s trading.

A whole slew of your positions moved back above their 50-day moving averages and to a BUY. These include the WisdomTree Japan Hedged Equity (DXJ), Google Inc. (GOOGL), Guggenheim Spin-Off (CSD), First Trust US IPO Index (FPX), WisdomTree Japan SmallCap Dividend (DFJ), iShares S&P Global Timber & Forestry ETF (WOOD), Market Vectors Biotech ETF (BBH), Market Vectors Gulf States Index ETF (MES), PowerShares Buyback Achievers (PKW) and the Vanguard Russell 2000 Index ETF (VTWO).

It was good to speak to so many of you on yesterday’s subscriber call. In case you missed it, you can listen to the replay.

During the call, I provided a short summary of some of my “big picture” views.

Over the past couple of years, it has been all about the U.S. stock market. It was the top-performing major stock market in the world in 2013, and it was the only stock market in the world to show a profit in 2011.

However, 2014 is different, with the U.S. markets ranked #33 among the 45 global stock markets I cover.

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The good news is that you are invested in two of the three top-performing global markets — the Gulf States through Market Vectors Gulf States Index ETF (MES) and India through ICICI Bank Ltd. (IBN).

The 32 markets ahead of the United States in 2014 are split evenly between the emerging markets and developed foreign markets.

Over the past month, both India and Russia have rallied extremely strongly, with India up almost 20% and Russia up 12.22%, before pulling back yesterday. The rise in peripheral European markets like Greece, Ireland and Italy has slowed down. Japan has been stuck in a trading range, despite the sharp rally in the past few days.

Looking ahead, I am betting that a shotgun approach to specific countries and strong-performing U.S. sectors will be the best way forward for the second half of 2014. Some of the markets I am looking at are Russia, Indonesia, Turkey, the Philippines and Brazil. Many of these either are oversold or offer big upside following elections that may herald positive economic reforms and kick off strong stock market performance.

Portfolio Update

Berkshire Hathaway (BRK-B) added 1.16% over the holiday-shortened week. Long-time Warren Buffett friend Bill Gates currently holds 77,039,804 shares of Berkshire, representing 3.3% of the outstanding shares. Berkshire Hathaway currently has a market cap just north of $298 billion. With Berkshire’s ever-expanding operating margin, and annual average earnings growth of 9.10% over the past ten years, it is no wonder Mr. Gates puts so many of his eggs in Mr. Buffett’s basket. BRK-B is a BUY.

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iShares MSCI Ireland Capped Investable Market Index (EIRL) gained 3.32%. The prior week’s touch down to the 200-day moving average (MA) turned into last week’s convincing bounce from the 200-day MA, setting a good bullish tone for the foreseeable future. EIRL remains a HOLD.

WisdomTree Japan Hedged Equity (DXJ) jumped 4.35% over the four-day trading week and pushed swiftly up through the 50-day MA. Recent strength in the U.S. markets, coupled with the dollar’s eight-week peak, is serving as a good catalyst for this Japanese bet. DXJ is now a BUY.

Google Inc. (GOOGL) jumped 6.38%. In lockstep with the broader markets, and following a pattern experienced in the majority of your other Alpha Investor Letter portfolio positions, Google made a resounding comeback and moved higher last week. GOOGL also punched up through the 50-day MA to become a BUY.

WisdomTree Japan SmallCap Dividend (DFJ) gained 3.47% over the past four trading days, following your other Japanese bet in WisdomTree Japan Hedged Equity (DXJ). DFJ popped above the 50-day MA and changed to a BUY.

Market Vectors Biotech ETF (BBH) recovered 4.35%. After patiently watching BBH trade sideways along its 200-day MA for eight weeks, you finally saw BBH move above both the 200-day and 50-day moving averages last week. From a technical standpoint, this type of chart pattern is usually a long-term bullish signal. BBH is now a BUY.

The Blackstone Group L.P. (BX) gained 3.13%. BX is expanding its holdings in the apartment real estate sector as it continues to bet on the real estate bull market. Blackstone is already the largest holder of single-family homes in the United States. BX is just pennies below its 50-day MA and is a HOLD for the moment.

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Market Vectors Gulf States Index ETF (MES) powered 7.59% higher last week. Last week’s quick dip below the 50-day MA proved an ideal buying opportunity as MES regained its lost ground quickly over the shortened week. In fact, MES is nearly back to its previous 52-week high. MES moves back to a BUY.

Nicholas Vardy

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