Markets Consolidate Recent Gains

Nicholas Vardy

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

U.S. stock markets paused for breath this past week, even as the major indices hit record highs.

The Dow Jones was down 0.03%, the S&P 500 fell 0.36% and the NASDAQ gained 0.24%. The MCSI Emerging Markets Index also fell 1.16%.

Big gainers in your Alpha Investor Letter portfolio included ICICI Bank Ltd. (IBN), which jumped 6.38%; Markel Corp. (MKL), which gained 2.88%; and Actavis plc (ACT), which rose 2.46%.

Several of your positions also hit new 52-week highs. These include the Vanguard Russell 2000 Index ETF (VTWO), Markel Corp. (MKL), PowerShares DB US Dollar Bullish ETF (UUP), Skyworks Solutions Inc. (SWKS), Actavis plc (ACT) and Market Vectors Biotech ETF (BBH).

India’s ICICI Bank Ltd. (IBN) moved back above its 50-day moving average and moved to a BUY.

Two of your positions — Berkshire Hathaway (BRK-B) and Union Pacific Corporation (UNP) — fell below their 50-day moving averages and moved to a HOLD. Both of these moves highlight the relative weakness of the U.S. large-cap sector so far in 2015.

With Google (GOOGL) moving back above its 200-day moving average, and now in an established long-term uptrend, I am moving this position from your watch list and back to a BUY.

Global stock markets remained persistently bullish — though cracks are appearing when you look at the behavior of options traders who are betting on a further pullback in U.S. markets.

But the action continues to be in your global stock bets.

This morning’s news of a rate cut in India is bullish for your position in ICICI Bank (IBN).

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The continued weakening of the euro against the U.S. dollar is bullish both for your bet on the U.S. Dollar Index through PowerShares DB US Dollar Bullish ETF (UUP) and last month’s hedged bet on Germany through iShares Currency Hedged MSCI Germany (HEWG). It is also bullish for Irish pharmaceutical bet Actavis plc (ACT).

Portfolio Update

Berkshire Hathaway (BRK-B) lost 2.03% over the previous trading week. Warren Buffett’s legendary annual letter to shareholders came out last Saturday. Buffett announced that he and the board of Berkshire Hathaway had already agreed upon his (currently unnamed) replacement — when that time comes. Warren’s comment on this in a recent CNBC interview was, “In certain important respects, this person will do a better job than I am doing.” It is hard not be skeptical of that assessment — unless it’s Buffett’s long-time 91-year-old partner Charlie Munger. BRK-B fell below its 50-day moving average (MA) to become a HOLD.

Vanguard Global ex-US Real Estate ETF (VNQI) closed the week mostly flat, losing just 0.26%. Many formerly skeptical Wall Street gurus are picking up on my argument that Europe and many other global stock markets may outperform the United States in 2015 for the first time in many years. Your bet on global real estate should get a lift from this trend. VNQI is currently a BUY.

Vanguard Russell 2000 Index ETF (VTWO) rose 0.10% last week and hit a new 52-week high. Small-cap stocks struggled a bit at the beginning of 2015, but managed to pick up the pace at the beginning of February. I expect the momentum to continue throughout 2015 as I outlined in last week’s edition of The Global Guru. VTWO is a BUY.

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Markel Corp. (MKL) gained 2.88%. Investors have been buying Markel ever since seeing its recent quarterly earnings report a few weeks ago. MKL did take a breather the week before, trading sideways a bit to consolidate recent gains, but jumped to a new 52-week high in yesterday’s trading session. MKL is a BUY.

PowerShares DB US Dollar Bullish ETF (UUP) added another 1.04% last week and hit a new 52-week high. The U.S. dollar hit an 11.5-year high, as the euro crashed through support levels that had held for a month as the European Central Bank begins its bond buying program. The outlook for the U.S. dollar continues to be bullish. UUP is a BUY.

Actavis plc (ACT) rose 2.46% and hit a new 52-week high. Deutsche Bank raised its price target on ACT this morning to $336.00 — which represents a 13.42% jump above yesterday’s closing stock price. The firm kept its “Buy” rating intact. ACT is also a BUY in your portfolio.

ICICI Bank Ltd. (IBN) jumped 6.38%. The Reserve Bank of India announced a 0.25% rate cut this morning — its second rate cut for 2015. Rates dipped to 7.5%. The last rate cut happened just in January — also paring 0.25%. IBN closed directly on its 50-day MA yesterday and moved to a BUY.

Newly Updated Special Report

As a courtesy, I invite you to view the newly updated version of The Top 12 Stocks for 2015, which features three of my top investment recommendations from the recent Orlando MoneyShow, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. This report and others are available FREE on my website to you.

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Nicholas Vardy

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It was exactly a year ago today that I bet investment manager David Rolfe that U.S. small caps would beat Berkshire Hathaway stock over the next 10 years.

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