Your Global Stock Investor portfolio had another solid week, as risk aversion in global markets continues to decline. ArcelorMittal (MT) and iShares MSCI Brazil Index ETF (EWZ) both soared to record highs. Each hit $100 for the first time. Transocean (RIG) also hit a record, as oil breached the $130 dollar mark. Barrick Gold (ABX) nudged into positive territory as the price of gold recovered above $900 an ounce.
Coca-Cola Hellenic Bottling (CCH) continues to be relatively weak, which makes it a good time to add to your positions. I am moving the PowerShares DB Agriculture ETF (DBA) to a “SELL.” It has reached a size where it is no longer able to track its index, and its unexpected status as a partnership is causing too many headaches for those of you holding it in taxable accounts. Otherwise, all of your other positions except for Barrick Gold (ABX) remain buys.
Overall, nine out of 10 positions in your Global Stock Investor portfolio are showing gains, and four out of your 10 positions are up at least 40%, including Potash (POT), which is up a whopping 85.92%, as of yesterday’s close. But as markets are heading into a traditionally quiet part of the year, it’s unclear whether we’ll have a “summer rally” or whether it’ll be “sell in May and go away.”
PORTFOLIO UPDATE
Barrick Gold (ABX) got a boost from a Goldman Sachs research note to investors. According to Goldman Sachs, "policy-driven investment constraints and geopolitical concerns impeding the free flow of capital across the commodity complex together with strong demand from (Brazil, Russia, India and China), despite a Western World economic slowdown, will support higher commodity prices." Goldman added: "Barrick (Gold Corp.) offers the best risk/reward in our gold coverage with the strongest project pipeline in that space." Although the stock moved back into positive territory, I am keeping the stock at a HOLD.
Coca-Cola Hellenic Bottling (CCH) has stayed remarkably weak in the recent upturn in global markets. Look for this to explode upward as risk appetite returns to markets. The current oversold position in the stock is a terrific opportunity to BUY.
PowerShares DB Agriculture ETF (DBA) recently has begun to exceed regulatory limits capping its exposure to certain agricultural commodities. Consequently, it has been forced to substitute certain futures contracts for those stipulated by its benchmark index. This could cause the fund’s returns to deviate from the index’s returns. In addition, its status as an investment partnership makes holding this fund a bigger tax headache than anticipated. I am moving DBA to a SELL.
iShares MSCI Brazil Index ETF (EWZ) broke $100 for the first time this week, and solidified its position as the #1 performing global market of the year. EWZ is a strong BUY.
CurrencyShares Japanese Yen Trust (FXY) showed some signs of strength this week. This hedge against market downturns remains a defensive BUY.
Millicom International (MICC) was back in the limelight as Jim Cramer called it “one of my absolute favorite cell companies.” The $2.40 per share ex-dividend date (June 2) is only two weeks away. Rumors of possible buyout talks with China Mobile will continue to support this stock. Use any pullback as an opportunity to BUY.
ArcelorMittal (MT) has taken a 14.9% stake in Australia’s Macarthur Coal Ltd. and investors speculated that it might be exploring a takeover bid for the miner. Coking-coal prices have tripled in the past five months. The world’s largest steel maker remains a BUY.
Potash (POT) traded mixed this week even as Banc of America Securities anticipated another year of above-average demand for seeds and crop-protection chemicals. With fertilizer prices going way, way up and phosphates in very limited supply, Potash remains a top BUY.
Transocean (RIG) rose this week after a Lehman Brothers analyst raised his price target to $192 from $180 and maintained his "Overweight" rating on Transocean. Lehman predicted substantial growth in overseas operations for oil service and drilling companies during the next several years. No kidding. Transocean bought back $10.3 billion of its own stock in 2007. You should BUY, too.
Elements Rogers International Commodity ETN (RJI) hit yet another record high this morning. This diversified commodity play is a safe and steady BUY.
