Dynamic Growth ETF Portfolio
NEW BUYS:
None
NEW SELLS:
None
SWITCHES:
To Top 10:
EWM: MSCI Malaysia (Free) Index- .458
To Honorable Mention:
OIH: Oil Services HOLDRS- .404
Here are our Top 10 ETF's for the week of October 1st:
1) FXI- iShares FTSE/Xinhua China 25- .680
2) PGJ: PS Golden Dragon China Fund- .666
3) ITA- iShares DJ Aerospace & Defense-.615
4) EWS: iShares MSCI Singapore (Free) Index Fund-.558
5) IAH- Internet Architecture HOLDRs Trust-.557
6) PPA- PS Aerospace & Defense- .556
7) IXP: Telecommunications Sector Index Fund- .531
8) DND: Wisdom Tree Pacific Ex-Japan Total Dividend- .493
9) IHI- DJ Medical Devices- .489
10) EWM: MSCI Malaysia (Free) Index- .458
Honorable Mentions:
OIH: Oil Services HOLDRS- .404
Here are our Top 10 Fidelity Sector Funds for October:
1) FSESX- Energy Services
2) FWRLX- Wireless
3) FSDAX: Defense & Aerospace
4) FNARX: Natural Resources
5) FSCHX: Chemicals
6) FDFAX: Consumer Staples
7) FDCPX: Computers
8) FSENX- Energy
9) FSDPX: Materials
10) FSMEX: Medical Equipment
New Buys:
FSMEX: Medical Equipment-#10
FNARX: Natural Resources- #4
New Sells:
FSCSX: Computers & Software-#17
FBSOX: IT Services-#21
FCYIX- Industrials #16
Shifts:
From HM to top 10:
FSENX- Energy #8
From top 10 to Honorable Mention (Holds):
FSTCX: Telecom-#12
FSPTX: Technology-#13
Honorable Mention (Holds):
FSNGX- Natural Gas ##13
FSTCX: Telecom-#12
FSPTX: Technology-#13
Notes:
We continue to believe that energy, materials, commodities, and emerging market plays related to commodities will continue to dominate the markets. Also, countries who are benefiting from the outsourcing of American jobs continue to be strong.
The Week in Review:
The media continues to promote former Fed Chairman Alan Greenspan's book by re-running an interview by CNBC's Maria Bartiromo. I find it very interesting since this is the most I have ever heard Greenspan say.
Yes, over the past 20 years Greenspan has spoke a lot, but he spoke in fed speak, and not english. Now that he is speaking English, what he is saying is pretty revealing.
Here are the questions, and the short answers;
MARIA BARTIROMO:
Hank Paulson said just the other day that this is gonna be a worse slow down than past crises. You agree?
GREENSPAN:
-the actual-- financial-- problems are very similar to those which I've seen-- over the decades.
-they reflect an innate aspect of human nature, which we call "fear." And there's nothing more debilitating to a financial market than people who are frightened.
-unlike a lot countries-- have a-- a very significant wealth effect in our consumer markets.
-85 percent of consumption is financed by income. But the other 15 percent is essentially a reflection of the wealth that gets accumulated, financed, I might say, usually the mortgage market.
-the mortgager market has been financing consumer markets.
SUMMARY: Withdrawals from home equity has fueled the spending boom. Now consumer spending must be financed by income, and not by the extraction of home equity.
Just this week, Lowe’s (LOW) guided 2007 earnings lower and Target Corp. (TGT) cut its Sept. sales forecast.
Isn't this what I have been preaching about for over a year?
This morning both Citigroup (C) and UBS warned that the turmoil in the credit markets will result in losses for Q3 earnings. Citigroup said profits will fall 60 percent in the upcoming quarter.
I find the news on Friday even more intriguing since it didn't get a lot of press. On-line banker, NetBank, was shut down by the FDIC because of a high number of mortgage defaults- Read Article.
I'm sure we will see more defaults in the weeks and months ahead, but the question remaining is whose next?
Was The Bear Stearns/Buffet News a Lie???
Probably. See, Wall Street likes to do things like that. According to Bloomberg, "Bear Stearns is the seventh company named as a potential target for an investment or acquisition by Buffett's Berkshire Hathaway Inc. this year, and Five of the companies -- USG Corp., New York Times Co., Zurich Financial Services AG, Hovnanian Enterprises Inc. and Countrywide Financial Corp., in that order -- trade at lower prices now than they were when the speculation surfaced . . ."
Commodity Prices Continue to Fuel Inflation
As was the case in the 1970's and 1980's, the price of gold, energy and commodities are flying high, while the US Dollar is heading toward wooden nickel status. The Dollar fell to another new all-time low of 77.63 down from 78.48 last week.
1) Gold surged another $10 to close at $742.7/oz. up from $732 last week and $675.80 four weeks ago.
2) NYMEX crude oil closed at at $81.66 up from $81.62 /bbl last week, and $78.09/bbl two weeks ago.
3) Commodities surged again this week as the CRB Index closed at 447.56 up from 442.91 last week and 413.49 four weeks ago.
While the prices for Commodities (food, energy, and materials) race ahead, the inflation data (CPI) continues to distort the real inflation picture. We have a huge inflation problem and the Fed knows it.
The Fed is clearly lowering rates to bailout hedge funds, private equity, and numerous lenders. After the Fed bails out their buddies, interest rates will be raised back to the 5.25% level as a move to rescue the dollar and fight inflation.
Something will be done to fight inflation, and that something is higher interest rates. The U.S. and Canadian dollars are trading at parity for the first time in over 30 years. America’s oil buddy, Saudi Arabia, is considering breaking ranks with the U.S. Dollar.
We may get another .25-.50 basis point cut by the Fed in the months ahead, and that should be enough to shore up the balance sheets of most banks. By the 2nd or 3rd quarter of 2008, I think the fed will begin raising rates again.
Until then, I think traders will have an opportunity to profit in interest rate sensitive securities (I.E.-Banks).
In October, I wouldn't be surprised to see the major market averages give back half of their recent gains. This pullback will set the stage for a more meaningful rally through December.
We raised our allocation to the stock market by another 5% when the Dow dropped below the 13,000- 12,800 mark, and the SPX fell below 1400.
If the Dow drops to the 12,000 level, we will raise our allocation to the stock market by another 5%.
Our asset allocation is as follows;
70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative
