Tag Archives: japan

Fidelity’s Low-Priced Stock Fund Manager Delivers Market-Beating Returns

John Tillinghast, manager of the Fidelity Low-Priced Stock Fund, (MUTF: FLPSX ) ” owns one of today’s best investment records ,” according to a profile proceeding a recent interview published in Barron’s. In the 26 years he has managed the fund, it returned an average of 13.7% annually (more than 4% higher than the S&P 500). Tillinghast is restricted by the fund’s charter to buying stocks priced at under $35 per share. He explains: “the original idea was that low-priced stocks weren’t well-followed by Wall Street” and “$35 is just above the average price of stocks listed on the New York Stock Exchange.” Tillinghast “look[s] for a highly visible discount to fair value… and management that is fair and honest” and holds “large stock ownership” in the company. He observed that the fund holds about 9% cash at present, down from 11% last year, because “in the past year or two, I have gone from being a little standoffish about small stocks to thinking that there are a decent number of opportunities, but they are still not abundant.” Speaking about political developments that may affect the foreign stocks making up about 35% of the fund, such as Japan’s recession, Tillinghast commented: “My approach to cycles is to pay less attention to the statistics, but to have a general notion of where we are in the cycle, and what that means for valuations,” noting that “In Japan, there are still a lot of cheap companies with great balance sheets.” Regarding energy stocks, Tillinghast has “an index-like weighting” because of uncertainty in the sector, which he describes as “brutally tough for a value investor.” Comparing conditions that favor value versus growth approaches, he said: for a sustained outperformance of value, you need more dispersion in valuations,” but “when everything is priced the same, it’s lousy for value investors and for active management in general.”

Top And Flop Country ETFs Of Q1

The international stock markets had a rough run in the first quarter of 2016, with the Vanguard FTSE All-World ex-US ETF (NYSEARCA: VEU ) losing 0.6%, thanks to deflationary worries in the developed market, oil price issues, the Chinese market upheaval and its ripple effects on the other markets (see all World ETFs here ). While these issues made the country ETF losers’ list long, the space was not bereft of winners either. Several countries’ stock markets performed impressively in this time frame on country-specific factors. Plus, a soggy greenback boosted the demand for emerging market investing, increasing foreign capital inflows into those countries. In fact, the lure of international investing may be seen in the second quarter too, as the Fed is likely to opt for a slower-than-expected interest rate rise. Overall, Latin America won the top three winners’ medals, while the losers were scattered across the world. Investors may wish to know the best- and worst-performing country ETFs of the first quarter. Below, we highlight the top- and worst-performing country ETFs for the January to March period. Leaders iShares MSCI All Peru Capped (NYSEARCA: EPU ) – Up 30.8% The Peruvian market was on a tear in the first quarter, courtesy of the sudden spurt in commodity prices. After a rough patch, metals like gold and silver finally got back their sheen this year on a lower greenback. Even copper returned positively, as evident from the 2.6% return by the iPath DJ-UBS Copper Total Return Sub-Index ETN (NYSEARCA: JJC ). Being a large producer of precious metals, Peru greatly benefited from this trend, offering the pure play EPU a solid 30.8% return. iShares MSCI Brazil Capped ETF (NYSEARCA: EWZ ) – Up 27.2% While the economic growth prospects of Brazil are weakening, heightened political chaos is pushing up its market. Brazilian stocks have generally reacted positively to any political drama related to president Dilma Rousseff. Speculation that Rousseff is incapable of dissuading the impeachment proceedings that have been called against her, and the prospect of a change in governance set the Brazil ETFs on fire. Global X MSCI Colombia ETF (NYSEARCA: GXG ) – Up 22% The Colombian economy is a major exporter of commodities, from the energy sector (oil, coal, natural gas) to the agricultural sector (coffee). It has also a strong exposure to the industrial metal production market. Thus, a rebound in the commodities market led to the surge in this ETF. Though from a year-to-date look oil prices are down, commodities bounced in the middle of the quarter. This might have given a boost to the Colombia ETF. Losers WisdomTree Japan Hedged Financials ETF (NYSEARCA: DXJF ) – Down 24.1% At its January-end meeting, the BoJ set its key interest rate at negative 0.1% to boost inflation and economic growth. The BoJ then hinted at further cuts in interest rates if the economy fails to improve desirably. However, the introduction of negative interest rates weighed on the financial sector, as these stocks perform favorably in a rising rate environment. Also, the currency-hedging technique failed in the quarter due to a falling U.S. dollar. This was truer for the Japan equities, as the yen added more strength by virtue of its safe-haven nature. The twin attacks dulled the demand for the hedged Japan financials ETF, which lost 24.1% in the quarter. Deutsche X-trackers MSCI Spain Hedged Equity ETF (NYSEARCA: DBSP ) – Down 21.6% The Spanish economy is bearing the brunt of deflationary threats despite the ECB’s massive policy easing. Consumer prices in Spain are likely to decline 0.8% year over year in March 2016, the same as in February, as per Trading Economics . This led the Spain ETF to lose 21.6% in the first quarter. SPDR MSCI China A Shares IMI ETF (NYSEARCA: XINA ) – Down 19.21% Since the first quarter was mainly about the nagging economic slowdown in China, most of the China ETFs had a tough time. Within the bloc, XINA lost the most in the quarter, shedding over 19%. Original Post

Ride The Wave

So much has happened and so much to talk about. We could talk about the seemingly globally coordinated easing from central banks around the globe. Central banks easing policy in the last two weeks have included Norway, Sweden, the Bank Of Japan (BOJ), the European Central Bank (ECB), the Chinese central bank and of course our own recent dovish statement from the US Federal Reserve,. We could talk about how that has led to a weaker US Dollar which in turn has helped oil, precious metal and emerging markets stage a turnaround in fortunes. Or perhaps we should discuss how Central bank maneuvers have helped US markets regain all of the ground they had lost so far in 2016. We could talk about all this but here is what we think would be most useful right now. The key to making money in these markets lies in Investor Psychology. How we understand it and our own emotions when it comes to investing our money is the key to success. Here are two charts that can help you be more successful in understanding how emotions play a role in your investing process. Courtesy of CNBC, the first chart shows two 12% rallies in the last 7 months. The second is a chart of investor psychology. After our second 12% rally in 7 months you should ask yourself, where are you on this chart? Are you relieved? Optimistic? Thrilled? Sell risk when prices are rising and buy risk when prices are falling. Understanding and keeping your emotions in check is the key to making money in markets like these. Ride the wave. Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett If the Dow Jones holds its gains for the next two weeks we will have seen the biggest quarterly comeback in stock markets since 1933. We don’t have to remind you that the 1933 rally took place smack in the middle of the Great Depression. Risks are rising after our second 12% rally in months. It is going to be hard to move higher from here but don’t bet against continued central bank largess. The stock market is up 12% in 26 trading days. Not bad. But it does remind us of a blog post from back in October of 2015. October 2015 will go down as the best performing month for the S&P 500 in four years. I think that we all enjoyed the ride back up in October. The S&P 500 rallied 8.3% and followed through with more gains today to get the S&P 500 into the plus column for 2015. Those gains would be nice gains for an entire year – never mind a month! Whenever we get to thinking how much we have gained we cannot help but to contemplate the downside. We must always be on guard to temper our greed/ego just as much as we would concentrate on opportunity when fear strikes. As a reminder the S&P 500 closed October of 2015 at 2080. It would be 10% lower by January of 2016. Central bank policy in Europe and the US is having the same effect. Earnings estimates are heading lower while stocks ride higher. Not a great recipe for success. Risk is rising. We cannot predict with 100% accuracy every move in the market but what we can do is try and profit by tactically allocating and hedging our portfolio in times of market stress to take advantage of market volatility. Investing is not a game of perfection but of managing the risk inside one’s portfolio. We do not jump in and jump out of the market wholesale. By divesting ourselves of overpriced assets and availing ourselves of opportunities when prices are low allows us to take advantage of the long term benefits that the math of compounding brings.