Can’t Get Out of Our Own Way – While the S&P 500 managed to eke out a gain of 0.3% during the past six weeks despite just suffering its worst weekly loss since November, our portfolio in the same period slipped 1.2%. An 11% loss in SPDR Gold Trust (GLD), combined with 8% losses in GE (GE) and Facebook (FB), could not be overcome by 8% gains in Boeing (BA) and Wisdom Tree Japan Hedged Equity (DXJ). Since its January 10 inception our portfolio has gained 0.2% while the S&P 500 has gained 6.1%.
Gold’s collapse has driven our SPDR Gold Trust shares down 17.6% so far, making it our second worst performing position. I feel that Gold is still a valid part of any portfolio as a hedge against currency swings and world turmoil, but its price can take nasty turns when traders with large margin positions are forced to liquidate, as must have happened when the price of gold continued its plunge on April 14 despite the bombings in Boston. Facebook’s share price simply refuses to stabilize. For most of the past six weeks the shares had benefited from favorable reviews of the new Facebook home page for Android devices. But the shares plunged during the selling of the week of April 14. To stabilize the share price, Facebook will likely need to deliver an impressive earnings report showing mobile revenue success.
GE lost 8.5% as its first quarter earnings and revenues beat estimates but did not impress analysts. With the outlook for European profits and revenues looking murky for manufacturers, the improved performance of GE Capital was not enough to give traders confidence that GE will continue to outperform. SPDR S&P China (GXC) lost 6.7% as first quarter Chinese GDP growth slowed to 7.7% from the 7.9% growth reported in the previous quarter.
Japan Hedged Equity gained 8.7% on continued monetary easing by the Bank of Japan. This is our best performing position so far this year with a gain of 22%. Boeing gained 8.3% as the company’s solution to the battery problems of the Dreamliner received FAA approval. News Corp. (NWSA) gained 2% as the spin-off of its publishing units draws nearer. News Corp. is our best performing stock position with a gain of 14.7%.
It seems that every success in our portfolio is trumped by a new blow up, with Gold Trust and Facebook calling the shots. These shares will have to bottom out for our portfolio to start making progress.
2013 MODEL PORTFOLIO
(As of April 19)
Stock Amount Change Index Amount Change
F $ 646.50 (7.8%) FB $ 823.36 (18.3%)
BRK-B $ 736.96 10.4% BGS $ 691.61 (4.3%)
BA $ 791.64 12.9% NWSA $ 811.46 14.7%
AIG $ 738.72 7.5% GLD $ 541.88 (17.6%)
GE $ 717.75 1.5% GXC $ 615.33 (11.9%)
AGNC $ 699.60 1.8% DXJ $ 845.10 22.2%
WFM $ 688.56 (3.9%)
STOCK TOTAL – $ 6,646.56; REIT/ETF TOTAL – $ 2,701.91; CASH TOTAL – $ 667.23
GRAND TOTAL $ 10,015.70 GAIN/LOSS since 1/10/13 0.16%
S&P 500 Index GAIN/LOSS since 1/10/13 6.05%