Dynamic Growth ETF Portfolio
NEW BUYS:
ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .542
NEW SELLS:
None
SWITCHES:
To Honorable Mention:
IHI- DJ Medical Devices- .373
Here are our Top 10 ETF's for the week of November 4th:
1) PGJ: PS Golden Dragon China Fund- .803
2) FXI- iShares FTSE/Xinhua China 25- .764
3) EEB: Claymore ETF BNY BRIC- .641
4) ITA- iShares DJ Aerospace & Defense-.618
5) IAH- Internet Architecture HOLDRs Trust-.579
6) PPA- PS Aerospace & Defense- .576
7) IXP: Telecommunications Sector Index Fund- .567
8) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .542
9) EWM: MSCI Malaysia (Free) Index- .492
10) EWS: iShares MSCI Singapore (Free) Index Fund-.460
Honorable Mentions:
OIH: Oil Services HOLDRS- .385
IHI- DJ Medical Devices- .373
Here are our Top 10 Fidelity Sector Funds for November:
1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FWRLX- Wireless
4) FWRLX: Natural Gas
5) FSENX- Energy
6) FSPTX: Technology
7) FDCPX: Computers
8) FSDAX: Defense & Aerospace
9) FSDPX: Materials
10) FSCHX: Chemicals
New Buys:
None
New Sells:
FSMEX: Medical Equipment
FSTCX: Telecom
Shifts:
From HM to top 10:
FSNGX- Natural Gas
FSPTX: Technology
From Top 10 to Honorable Mention (Holds):
FDFAX: Consumer Staples
Honorable Mention (Holds):
FDFAX: Consumer Staples
Top 5 Stocks in our Top 10 Fidelity Sector Funds
FSESX- Energy Services:
SCHLUMBERGER LTD
NATIONAL-OILWELL VARCO INC
HALLIBURTON CO
GLOBALSANTAFE CORP
TRANSOCEAN INC
FNARX: Natural Resources:
EXXON MOBIL CORP
SCHLUMBERGER LTD
NATIONAL-OILWELL VARCO INC
CONOCOPHILLIPS
VALERO ENERGY CORP
FWRLX- Wireless:
RESEARCH IN MOTION LTD
VODAFONE GROUP PLC SPON ADR
NOKIA CORP SPON ADR
QUALCOMM INC
MOTOROLA INC
FWRLX: Natural Gas:
QUICKSILVER RES INC
RANGE RESOURCES CORP
VALERO ENERGY CORP
ULTRA PETROLEUM CORP
PLAINS EXPLORATION & PRODTN CO
FSENX- Energy:
EXXON MOBIL CORP
SCHLUMBERGER LTD
VALERO ENERGY CORP
NATIONAL-OILWELL VARCO INC
CONOCOPHILLIPS
FSPTX: Technology:
CISCO SYSTEMS INC
GOOGLE INC A
APPLE INC
RESEARCH IN MOTION LTD
MARVELL TECHNOLOGY GROUP LTD
FDCPX: Computers:
APPLE INC
DELL INC
HEWLETT-PACKARD CO
EMC CORP
INTL BUS MACH CORP
FSDAX: Defense & Aerospace:
LOCKHEED MARTIN CORP
GENERAL DYNAMICS CORPORATION
RAYTHEON CO
BOEING CO
PRECISION CASTPARTS CORP
FSDPX: Materials:
MONSANTO CO NEW
DUPONT (EI) DE NEMOURS & CO
FREEPORT MCMORAN COPPER & GOLD
DOW CHEMICAL CO
ALCOA INC
FSCHX: Chemicals:
MONSANTO CO NEW
DUPONT (EI) DE NEMOURS & CO
DOW CHEMICAL CO
AIR PRODUCTS & CHEMICALS INC
CELANESE CORP SER A
Notes:
As you can see from the Top 5 stocks in each fund, the markets performance has become increasingly narrow, and the best performing funds hold many of the best performing stocks.
The NASDAQ 100 is up over 400 points since the beginning of the year, and 230 points of those points can be attributed to three stocks listed above; Google (GOOG), Apple (AAPL), and Research In Motion (RIMM).
The Energy sector continues to be strong as does Defense & Aerospace, Chemicals, and Wireless telecommunications.
The Week in Review:
The stock market continues to be extremely volatile as financial shares continue to come under pressure from worries over of further asset write-downs related to sub-prime mortgages.
Merrill Lynch had its biggest one-day decline in six years, falling 4.91 to 57.28. And Citigroup Chief Executive Charles Prince is expected to resign at any time. On Friday, shares of C closed down 78 cents at 37.73 following rumors that an emergency board meeting will force Price out this weekend.
Last week, Merrill Lynch CEO Stanley O'Neal got the boot after the company took an $8.4 billion write-down from losses incurred in collateralized debt obligations (CDOs).
The big news right now is the 5 percent decline in the S&P 500 earnings for the third quarter. Without the write downs from the financial sector, and losses in the housing sector, the rest S&P 500 have reporting earnings of around 13%.
The big problem going forward is energy prices. Over the past two weeks, gasoline prices rose an average of 16 cents a gallon. The average price of regular gasoline on Friday was $2.96 a gallon. If gasoline continues to rise, $3.00/ gallon could hurt sales during the all important Christmas selling season.
Where are the Bargains?
I continue to believe some of the best buys on the exchange continue to be in the banking sector. As investors continue to flee any stock related to finance, many high quality U.S. banks look like incredible bargains.
Spotting a market bottom or top is not always easy. The reason is because investors get caught up in the euphoria or hype of the moment, or get depressed during periods of hysteria.
John Templeton (Templeton Funds) use to say, the best time to buy is in the teeth of maximum pessimism. I am not exactly sure when maximum pessimism will peak, but the psychology of the current market surrounding the financials looks extreme.
Many high quality banks now sport dividend yields approaching 6%. If you are a value investor, I would begin dollar cost averaging into bank stocks that have a track record of increasing their dividends, and have had insider buying during this decline.
At this time, I don't give individual stock recommendations in the Dynamic Growth Newsletter. I will tell you however that I am buying several bank stocks for my own account. In my opinion, the banks are very close to being totally washed out.
Economic News
On Friday, the employment report showed a big jump in jobs. The Labor Department reported a 166,000 boost in Non-farm payrolls which was twice the expectation for October.
The GDP report showed the U.S. economy grew 3.9 percent in the third quarter due to increased consumer spending. Average hourly earnings rose less than expected, so I have come to the conclusion that consumers are adding more debt to their credit cards.
Last week, MasterCard (MA) stock soared 32.76 points to $189.91 after profits increased on a boost in cardholder spending.
On Wednesday, The Fed cut the Fed Funds Rate 25 basis points, to 4.50%. After the cut, major financial institutions cut their prime lending rates to 7.50%.
My best guess from here is the market will attempt another run back to the all-time highs. If the Christmas selling seasons turns out to be a bust, it will be bombs away for the stock market.
Our best approach going forward is to take profits into the upcoming rally.
In the mean time,
Our current 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
At Dow 14,500, S&P 1575, we will reduce our allocation models by 5% to;
65% Equities: (Normally 95%) Aggressive
55% Equities: (Normally 80%) Moderately Aggressive
45% Equities: (Normally 60%) Moderate
25% Equities: (Normally 40%) Moderately Conservative
10% Equities: (Normally 20%) Conservative
