Follow on Google News News By Tag Industry News News By Location Country(s) Industry News
Follow on Google News | Don Dion and Warren Buffett Bet On Inflation, as Dion makes a portfolio moveDon Dion, publisher of Sector Momentum Tracker, swaps Construction and Housing (FSHOX) for Communications Equipment (FSDCX), as he and Warren Buffet count on continuing inflation.
http://store.fidelityindependentadviser.com/ “Today, we exit our position in Construction and Housing (FSHOX) after five weeks with a net unrealized loss of 10.05 percent,” Dion announced in his weekly commentary, Don’s Outlook. Dion purchased FSHOX in mid-May, due to strong economic data in the industry. “When our quantitative model detected ongoing momentum in this fund, it was because of better-than- http://store.fidelityindependentadviser.com/ “That surge, however,” said Dion, “was short lived, and we had to begin looking for more consistent opportunities, especially in this volatile market.” As of April, there was an 11-month supply of new and pre-owned houses on the market, and Dion believes that “inventory is likely to grow before the housing market hits bottom.” By one estimate, there are currently around 10 million homes in the U.S. that have negative equity, i.e., houses with mortgages that exceed their market value. “If they can remain steady in their objectives and fundamentals,” Another technology fund, Networking and Infrastructure (FNINX), was the biggest momentum gainer in Sector Momentum Tracker last week. Cisco Systems is also the top holding in this fund. Although Cisco’s stock nudged into positive territory on June 5 for the first time in 2008, it has since given back some of that gain and remains about 9 percent below where it started the year. Dion sees the long-term prospects for the company, however—and FNINX more broadly—as promising. Cisco recently released the results of a study showing that internet traffic will grow from the current monthly level of 7 exabytes (about 2 billion DVDs’ worth of data) to 44 exabytes within the next 4 years. The reason? The surging popularity of online video. “Consumer Staples (FDFAX) slipped 4 spots in the momentum ranking last week, Dion said, “that was the worst performance of any fund in our universe.” Dion mentioned that “between filling their gas tanks, and paying off bills, people will be willing to switch to ‘private label’ goods—the house brands that tend to be less expensive than their name brand counterparts.” Stocks retreated on Friday, and the major market indexes finished near their lows for the year as oil prices surged and investor anxiety over the state of the financial sector resurfaced. Credit ratings agency Moody’s Investors Service downgraded bond insurers MBIA and Ambac Financial on Friday, stripping them of their triple-A ratings. This caused dramatic sell-offs in certain municipal bond issues, such as pension funds and other publicly-chartered investment trusts that are required by law to carry a triple-A rating. Most Fed watchers agree that the central bank is not yet prepared to resume raising interest rates but will attempt instead to “talk up” the dollar in advance of Wednesday’s meeting and in its policy statement. Dion adds “as the old saying goes, ‘talk is cheap,’ without a concrete interest rate hike from the Federal Reserve, the dollar will remain weak against other foreign currencies.” With inflation looming at home and plaguing markets abroad, fluctuations in the gold market have not caused Dion to surrender his position in FSAGX. “I believe that inflationary pressures will continue for some time, and gold should begin to recover some of its lost ground.” Although Gold (FSAGX) has slipped to 20 on his momentum ranking table, Dion says that he will continue to hold the fund in this Portfolio. http://store.fidelityindependentadviser.com/ Warren Buffet, who spoke with Don recently, agrees. During a CNBC interview, Buffet asserted that "exploding inflation (is) the biggest risk to the economy.” Buffet went on to note that inflation is “huge right now, whether it's steel or oil…we see it everywhere." If Dion and Buffet are right about the state of inflation, FSAGX may experience an upswing after yesterday’s Fed. Meeting. About Don Dion, Publisher of Sector Momentum Tracker: Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors Don’s commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the United States and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers. http://www.fidelityadviser.com/ Mr. Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Massachusetts, Dion Money Management manages more than $750 million in assets for clients in 49 states and 11 countries. A licensed attorney in Massachusetts and Maine, Mr. Dion has more than 25 years’ experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management. http://www.dionmm.com/ # # # Fidelity Independent Adviser's newsletters offer a broad range of investors Don’s commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds End
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
