Last Updated: March 29th, 2013

The $100,000 Model Portfolio - 2013

The $100,000 Model Portfolio was started on 12/30/2005 using a weighting of roughly 20 percent for each of the five investment categories shown below. Archived model portfolios are also available for 2006, 2007, 2008, 2009, 2010, 2011, and 2012.


Current Value: $154,403 - Funds Held as Cash: $6,688

Performance: -0.7% Week, +1.5% Month, -5.4% Year, +88% Since Jan 1st, 2005


For performance details and notes regarding pricing, see the Portfolio Update section of the current Weekend Update. Changes to the portfolio are communicated to subscribers via the Weekend Update before their execution, and when complete, transactions and closed positions are summarized at the bottom of this page under Changes to the Model Portfolio. Funds held as cash are those funds designated for investment in the model portfolio that are currently "on the sideline", either waiting for a buying opportunity or held as cash due to extreme risk perceived in the market.


Curr Price
Curr Amt
_Shares of Commodity Companies
Curr Price
Curr Amt
_Gold and Silver Bullion
Curr Price
Curr Amt
SPDR Gold Shares (used for covered calls)
_Shares of Mining Companies
Curr Price
Curr Amt
Curr Price
Curr Amt

General Notes:

1. This table is normally updated either once or twice a week. The update occurring on either Friday or Saturday will reflect the new prices, percent gain, and current amount for each position as well as for the portfolio as a whole. The Sunday update will include any changes to the buy ratings for the current week.

2. The symbols in the Buy column should be interpreted as follows and a more detailed description is provided in the About the Buy Ratings section below.

- OK to buy - just upgraded or added
- OK to buy
- Proceed with caution - just upgraded
- Proceed with caution
- Proceed with caution - just downgraded
- Not recommended for purchase
- Not recommended for purchase - just downgraded

3. All prices are quoted in U.S. dollars. Some stocks may be available on other exchanges such as the Toronto Stock Exchange (TSX), however, only prices for U.S. brokerages are listed here. In the case where a stock has no listing on a U.S. exchange, the quote will be based on OTC (over the counter) transactions. In most cases, you will find that on foreign exchanges these stocks trade in much higher volume than as OTC stocks in the U.S., and are thus easier to buy and sell there.




Since gold and silver bullion are in a separate model portfolio category further below, exposure to energy products, base metals, and agricultural goods is sought within the Commodities category here, where all positions are mutual funds, ETFs, or ETNs that hold futures contracts or other derivative products.

Note that throughout this website, the phrase "Commodities category" is used to refer to what would more properly be defined as "commodities excluding precious metals" or "commodities with a small precious metals content". This is done as a convenience so that the qualifier need not be repeated constantly.

During most of the long history of this investment website, the Commodities category accounted for about 20 percent of the model portfolio's overall value, however, as part of the major model portfolio changes that were made during the summer of 2009, all positions in this group were sold and it remained empty for nearly a year-and-a-half.

In late-2010, as the prospects for the Federal Reserve's re-inflation efforts brightened and as Congress renewed their commitment to deficit spending, a small position in the Pimco Commodity Real Return Fund was repurchased (see Volume V, Issue 51). The size and timing of future purchases is uncertain and whether this was the beginning of fully re-populating this category is unclear.


_Pimco Commodity Real Return
Last Updated: 7/14/12
52 Week Range: $5.97-$9.16
Net Assets: $22B**
Morningstar Rating:
Expense Ratio: 1.19%

This fund from Pimco tracks the performance of the Dow Jones-UBS Commodity Index (DJ-UBS) that contains 20 commodities as shown below, the current sector weighting being 36 percent agriculture & livestock, 33 percent energy, 19 percent industrial metals, and 13 percent precious metals.

It was launched in late-2002 and was one of the very first widely available commodity funds. It invests in commodity-linked derivatives instruments backed by inflation indexed securities, meaning that, since they buy derivative products for commodities (which are similar to commodity futures and much less costly than the face value of the commodity itself), the excess funds are invested in inflation indexed bonds that earn interest.

For some time this was the only fund of its kind available to retail investors but it has had its share of tax issues over the years making it somewhat difficult to work with when held in taxable accounts.

Large year-end distributions were paid in 2003, 2005, and 2008, meaning that taxes were due just a few months later if not held in a tax-deferred account. For this reason, holding this fund in some sort of a tax-advantaged account (e.g., 401k or IRA) is highly recommended.

Be careful to note the price adjustment and quarterly dividends paid since the price itself on many web-based charting tools does not give a correct indication of the fund's performance. Always check the "annual performance", "year-to-date performance", or "adjusted gains" historical data for the most accurate information.

The fund is available in a handful of different share classes. The "D" shares seem to be the most popular as they have no front-end or back-end loads. The selection of the share class is a matter of personal preference - pick the one that is best suited to your time horizon.

* Adjusted for dividends
** Total net assets includes all classes of shares


_ETFS Physical Platinum Shares
Last Updated: 2/11/13
52 Week Range: $135.80-$171.46
Net Assets: $770M
Expense Ratio: 0.60%

The ETFS Physical Platinum Shares ETF from ETF Securities is a simple, cost-efficient, and secure way for investors to gain exposure to the precious metal platinum. This ETF holds physical platinum stored in secure vaults located in London, U.K. and Zurich, Switzerland. The fund issues shares corresponding to 1/10th of an ounce of the metal and, over time, the value of the ETF will reflect a return equivalent to the movement in the platinum spot price less fees.

PPLT is, by far, the world's most popular platinum ETF, dwarfing other fund offerings according to data compiled at ETF Database, due in large part to being one of the first platinum funds to be offered, beginning in January of 2010.



_ETFS Physical Palladium Shares
Last Updated: 2/11/13
52 Week Range: $54.74-$71.89
Net Assets: $498M
Expense Ratio: 0.60%

The ETFS Physical Palladium Shares ETF from ETF Securities is a simple, cost-efficient, and secure way for investors to gain exposure to the precious metal palladium. This ETF holds physical palladium stored in secure vaults located in London, U.K. and Zurich, Switzerland. The fund issues shares corresponding to 1/10th of an ounce of the metal and, over time, the value of the ETF will reflect a return equivalent to the movement in the palladium spot price less fees.

While there are a few palladium exchange traded notes, PALL is the only palladium ETF available to U.S. investors according to data compiled at ETF Database, launching back in January of 2010.

Back to Top



Shares of Commodity Companies

The Shares of Commodity Companies category includes shares in companies whose primary business is related to commodities or "commodity-like" products such as water and uranium, but excluding precious metals stocks that are part of the Shares of Mining Companies category below.

As was the case for the Commodities category above, all positions in this group were sold during the summer of 2009 and, a year-and-a-half later, the first steps in re-establishing some of these positions were taken with the purchase of two Market Vector ETFs in agriculture and nuclear energy (see Volume V, Issue 51). Since that time, both of those positions were sold, however, in early-2013 positions, were again added to this group.


_SPDR Energy Select Sector ETF
Last Updated: 2/4/13
52 Week Range: $61.11-$78.59
Net Assets: $7.6B
Expense Ratio: 0.18%

The SPDR Energy Select Sector ETF from State Street Global Advisors is the world's most popular energy stock ETF that holds shares of some of the biggest energy companies in the world.

As shown in the table to the right, there is nothing fancy about this ETF - it simply tracks the well known S&P Energy Select Sector Index (^IXE), a market-cap weighted index of energy stocks.

There are other funds available that focus on specific segments of the energy industry, for example, exploration companies, oil services companies, and natural gas companies, but XLE is, by far, the simplest way to gain exposure to this sector.

In the past, the model portfolio has held a few Fidelity energy stock funds but, after a review of the closest match - the Fidelity Select Energy Fund (FSENX) - it was decided to just go with XLE since, like many other managed stock funds these days, FSENX trails a simple index-based fund.

With energy prices rising in late-2012/early-2013 and investors flocking to equity markets, there should be renewed interest in this sector and this ETF should follow broad equity markets higher.


Back to Top



Gold and Silver Bullion

Gold and silver bullion (along with platinum and palladium if you so choose) are essential parts of an investment portfolio based on natural resources. In recent years, a number of new products have been introduced - mostly ETFs (exchange traded funds) that either hold physical bullion or purchase futures contracts along with some ETNs (exchange traded notes), some of which offer leverage, making the task of owning these metals much simpler than it has been in years past.

Storing physical gold and silver can be problematic, but in small quantities this can be handled without much of a problem and subscribers are encouraged to hold physical bullion if it is practical for them to do so. For a complete discussion on the subject of buying both gold and silver bullion, please see the article Buying Bullion (see Volume V, Issue 26).


_American Eagle 1 oz. Gold Coin
Added 12/30/05 at $528
Last Updated: 7/14/2012
52 Week Range: $1,537-$1,945

These are one ounce American Eagle gold coins purchased from California Numismatic Investments in Southern California (Torrance). I've found this company to be friendly and easy to work with, and I have visited their store on several occasions. There are many fine coin dealers out there and if there is one nearby that has good prices or one that can be easily dealt with via the internet, you should do just fine. If you can find one that has been recommended by a friend or acquaintance, even better.

Responding to TV spots or magazine ads is not recommended, as the prices offered by these companies will likely be much higher than you can get elsewhere due to higher marketing costs and other overhead. There are an increasing number of ads that are clearly designed to take advantage of individuals who don't know the first thing about owning gold bullion - they simply want to buy gold because the price is going up. Look for more of this in the years ahead.

I think everyone should own at least a couple of one ounce gold coins - Eagles, Krugerrands, or Maple Leafs - just to be able to feel the density of the metal when held in your hand. Gold is one of the densest of all metals, contrary to popular belief it is denser than lead. is a service that I have used before with no problems and I would recommend them. While I've heard good things about, never having used their service I can't really recommend them, but many others do.

Note that the price you see for this position in the model portfolio is the "Our Buy Price" for one-ounce American Gold Eagles from the California Numismatic Investment website. This is generally $15 to $25 over the spot price, however, this premium can go up or down based on conditions in the local coin market in which dealers operate.


_SPDR Gold Shares
Last Updated: 7/14/12
52 Week Range: $148-$186
Net Assets: $63.6B
Expense Ratio: 0.40%

The SPDR Gold Shares ETF was launched in December of 2004 as the very first U.S.-based gold ETF and, since that time, it has gone on to become the most popular and successful commodity fund on the market. Now with assets over $63 billion, it trails only the SPDR S&P500 ETF (NYSE:SPY) in size.

SPDR Gold shares offers investors a relatively cost efficient, convenient, and secure way to access the gold market, each share representing a fractional ownership interest in the Trust, the sole assets of which are gold bullion. This fund has as its goal the lowering of a large number of the barriers that have prevented investors from using gold as an asset allocation and trading tool, most importantly, the logistics of buying, storing, and insuring gold.

Average trading volume is roughly 10 million shares per day. For all practical purposes, you can never take delivery of gold from this ETFs, but it is, by far, the most convenient and cost effective way to buy and sell gold. Be aware that share prices of this ETF will decline over time relative to the spot price of gold in order to cover the fund's operating expenses, including storage costs. As is the case for silver, owning physical bullion is recommended over the ETF up until the point that storage of the metal becomes a problem.


_Engelhard 100 oz. Silver Bar
Added 12/30/05 at $871
Last Updated: 7/14/12
52 Week Range: $2,630-$4,340

These are 100 ounce Johnson Matthey/Engelhard Bars (.999 Fine) purchased from California Numismatic Investments. Storing silver is very inconvenient, and I do not recommend purchasing large quantities of physical silver for this reason but, as with gold, physical possession of some silver is recommended. Silver rounds as well as "junk" silver (40 percent pre-1969 or 90 percent pre-1965 coins) are also recommended and are relatively easy to store in small quantities. has a silver product available and, although I've never bought silver from them, I have every reason to believe that this is a fine choice.

Note that the price you see for silver in the model portfolio is the "Our Buy Price" for 100 ounce Johnson Matthey/Engelhard Bar 0.999 Fine silver bars from the California Numismatic Investment website, which will generally be 100 times the silver spot price per ounce less anywhere between 20 cents and 70 cents.


_Sprott Physical Silver Trust
Last Updated: 8/30/12
52 Week Range: $10.87-$20.30
Net Assets: $1.2B
Expense Ratio: N/A

The Sprott Physical Silver Trust from Sprott Asset Management provides a secure and convenient way to own silver bullion in the form of an exchange-traded fund, avoiding the inconvenience and costs associated with storage and/or insurance of the physical metal.

As opposed to other exchanged traded silver products where the Trust's custodian is a "bullion bank" such as JP Morgan or HSBC in London or New York, investors in PSLV can enjoy the security of knowing that the fund's silver bullion is fully allocated and segregated in a secure LBMA-approved storage location in Canada.

This fund also offers potential tax advantages for U.S. non-corporate investors who hold shares for more than one year and provides the ability to redeem shares for physical bullion on a monthly basis.

Note that, since this is a closed-end fund (i.e., only the fund's managers can buy and sell silver for the trust), a premium or discount to the price of spot silver may develop over time due to demand for this form of silver bullion relative to the supply of shares available for sale. This is in contrast to most other precious metal ETFs that allow "authorized participants" to buy and sell metal for the trusts, quickly arbitraging away any price differences that develop between the spot price of the metal and the price of the shares.

Since this fund was launched in late-2010, the average premium has been about 15 percent, climbing to over 30 percent several times. This fund was purchased for the model portfolio in August 2012 (see Volume VII, Issue 33) in exchange for shares of the iShares Silver Trust (SLV) when the PSLV premium was only about 3 percent in an effort to realize premium gains in addition to capital gains after silver completes its 2011-2012 correction and moves higher.

Back to Top



Shares of Mining Companies

The Shares of Mining Company category includes shares in companies whose primary business is exploration and mining of precious metals, mostly gold and silver. From large producers such as Newmont and Barrick (held in mutual funds and ETFs) to individual shares of small producers and exploration companies, this category seeks gains from capital appreciation as a result of company activities related to the increasing demand for precious metals.

During a period of rising gold and silver prices, the larger companies should offer consistent gains, whereas, the smaller companies provide a greater potential for explosive growth as a result of discoveries that are either brought into production or become the subject of acquisitions by larger mining companies.

During much of the last 30 years, when gold prices were in the $300-$400 range, there has been little incentive to explore for new resources. However, in recent years, with the surging demand for precious metals and soaring metal prices, there has been an increased emphasis on exploration and acquisitions as large producers seek to secure future mining production by buying junior mining companies that have already made discoveries.

The junior mining sector is very high risk/high reward. These stocks can quickly double, triple, quintuple, or more, however, they can also lose 80 percent of their value as was seen in 2008. Up until late-2009, the investment approach here had been to own a large position or two in funds that include the major gold producers and to then take many smaller positions in junior mining companies since there were no comparable fund offerings for small-cap mining stocks. However, since the introduction of the Market Vectors Junior Gold Miners ETF in late-2009 and its growing popularity, this has been the primary investment vehicle used to gain exposure to this sector.


_Fidelity Select Gold
Last Updated: 7/22/12
52 Week Range: $32.24-$55.36
Net Assets: $3.0B
Morningstar Rating:
Expense Ratio: 0.89%

This fund from Fidelity holds shares of companies that are engaged in the exploration, mining, processing, or dealing in gold, or, to a lesser degree, silver, platinum, diamonds, or other precious metals and minerals. The fund normally invests at least 80 percent of its assets in securities of companies principally engaged in gold-related activities and in gold bullion or coins.

As of June 2012, the top five holdings were GoldCorp (GG), Barrick Gold (ABX), Newmont Mining (NEM), Newcrest Mining (NCMGF), and AngloGold Ashanti (AU). The rest of the top ten holdings and the geographical diversification of the companies held in the fund are as shown below.

For alternatives to this Fidelity fund, consult the Yahoo! Finance Mutual Fund Center, specifically, the Specialty- Precious Metals category. Funds that I have owned in the past or which can be recommended based on familiarity with them are listed below:

  • Vanguard Precious Metals and Mining (VGPMX)
  • U.S. Global Investors World Precious Minerals (UNWPX)
  • U.S. Global Investors Gold Shares (USERX)
  • Tocqueville Gold (TGLDX)
  • USAA Precious Metals and Minerals (USAGX)
  • Market Vector Gold Miners ETF (GDX - see below)

Precious metals mutual funds are best held within tax advantaged retirement accounts such as IRAs, and in particular Roth IRAs. Since gains are expected to be substantial in the years ahead, deferring tax payment on these gains or paying no taxes at all will boost long term returns.

* Adjusted for re-invested distributions


_Market Vectors Gold Miners ETF
Last Updated: 7/22/12
52 Week Range: $39.08-66.98
Net Assets: $7.5B
Expense Ratio: 0.52%

There are dozens of gold stock mutual funds available to investors today and many of them have been around for decades, but the Market Vectors Gold Miners ETF is the first exchange traded fund to provide access to an index-based basket of gold and silver mining stocks and it has become quite popular in recent years.

This ETF, part of the Market Vectors family of funds from Van Eck Global, seeks to replicate, before fees and expenses, the price and yield performance of the NYSE Arca Gold Miners Index.

The index provides exposure to publicly traded companies worldwide involved primarily in the business of mining for gold and silver, representing a blend of small-, mid- and large-capitalization stocks, a modified market capitalization-weighted collection of publicly traded companies with market caps exceeding $100 million and daily average trading volume of at least 50,000 shares.

The top 10 holdings are reproduced in the table to the right and this group of stocks constitutes roughly two-thirds of the overall index.

Launched in May of 2006, the Gold Miners ETF has grown rapidly to about $8 billion in assets, more than any gold stock mutual fund, and has an average daily trading volume of nearly 10 million shares making this the most popular way to buy and sell gold stocks, save for direct ownership of shares of the top five major gold companies in the world.



_MV Junior Gold Miners ETF
Last Updated: 07/22/12
52 Week Range: $17.37-$39.50
Net Assets: $2.1B
Expense Ratio: 0.52%

Following in the footsteps of the wildly popular Market Vectors Gold Miners ETF (GDX), in late-2009, Van Eck Global launched a similar product for mid- to small-cap gold/silver mining stocks dubbed the Market Vectors Junior Gold Miners ETF.

Like its big brother, this is a first-of-its-kind exchange traded fund that, in this case, offers exposure to smaller mining companies, seeking to replicate, before fees and expenses, the performance of the Market Vectors Junior Gold Miners Index that, per company's website, is "a rules-based, modified market capitalization-weighted, float-adjusted index" that includes companies that "generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company's revenue from gold or silver mining when developed, or primarily invest in gold or silver."

The minimum market capitalization for being included in the index is $150 million, however, the average weighted market cap is much higher, so, the "typical" company included in the index is much larger than what some might think of as a junior mining company.

The top 10 holdings are reproduced in the table to the right and, as compared to the more top-weighted Gold Miners ETF, the top 10 holdings of the Junior Gold Miners ETF comprise only 27 percent of the fund's assets.

This ETF was launched at an auspicious time, in late-2009, as the gold price had just broken through and held the $1,000 an ounce level for the first time ever. In its first month of trading the fund's assets grew sharply to several hundred million dollars and, after more than two years of trading, is near the $2 billion mark with daily trading volume of over 1 million shares.


_Northern Tiger Resources
Last Updated: 2/4/12
52 Week Range: $0.11-$0.68
Market Capitalization: $22M
Shares Outstanding: 99M

Canadian-based Northern Tiger Resources Inc. is a resource exploration company focused on gold and copper exploration in the Yukon Territory. The company's main project is the promising 3Ace Property in Southeast Yukon that was acquired from Yukon Prospector in early-2010.

A surface exploration program in the summer of 2010 revealed excellent mineralization at 3Ace in grab samples and soil samples over four zones, leading to a small scale drill program in the fall that produced a significant new high grade gold discovery.

The 3Ace Property is in an excellent location, adjacent to an all-weather road approximately 24 miles from the Cantung Tungsten Mine and was recently expanded to over 200 square kilometers.

Northern Tiger is also conducting exploration in Central Yukon at a copper-gold-molybdenum system known as Sonora Gulch and has a strategic alliance with Capstone Mining having acquired 5 properties from them in 2010 where sampling and surveying led to a small drill program to test one target.

In 2011, a $7.2 million exploration program followed up on previous discoveries at both 3Ace and Sonora Gulch and, while their effort did not produce anything similar to the 2010 discovery holes, they did confirm consistent mineralization at both projects while reporting a number of impressive intercepts and identifying new exploration targets for a 2012 drill program.

* an additional purchase in early-2012 (see Volume VI, Issue 53) reduced the cost basis from the early-2011 price.


_Kaminak Gold Corporation
Last Updated: 2/4/12
52 Week Range: $1.75-$4.71
Market Capitalization: $191M
Shares Outstanding: 74M

Based in Vancouver and operating in the Yukon, Kaminak Gold Corporation is a quickly growing, well financed exploration company with an extensive portfolio of discovery-stage projects that offer world-class potential and present exposure to strategic commodities, most importantly gold.

The company's focus is currently on its 150,000 acre Coffee Project where, after a limited drill program in 2010 highlighted by eight separate and closely-spaced gold discoveries within a 10 kilometer strike length, it was the subject of a much more extensive $15 million drill program in 2011 that produced many superb intercepts and confirmed widespread mineralization while expanding the major exploration zones.

In the process, they raised their stature to be one of the highest-quality junior miners in the world today. The company built on their 2011 exploration success to quickly secure funding late in the year for their 2012 drill program at a time when the market, in general, was reluctant to invest more money in this sector. The results of the 2012 program are expected to lead to the company's first official NI 43-101 compliant resource estimate for the Coffee property.

* an additional purchase in early-2012 (see Volume VI, Issue 53) reduced the cost basis from the early-2011 price.


_ATAC Resources
Last Updated: 2/4/12
52 Week Range: $2.22-$10.34
Market Capitalization: $336M
Shares Outstanding: 97M

Canadian-based ATAC Resources is a rapidly growing mining exploration company focused on developing Canada's only Carlin-type gold discovery at its 100 percent owned, 1,600 square kilometer Rackla Gold Project in the Yukon Territory.

Exploration to date has focused on the Rau Trend where the company drilled 25,900 metres in 132 diamond drill holes in 2010. This was followed by the discovery of the Carlin-style deposits nearby that set the stage for a much more ambitious and equally successful 2011 drill program focused on the Nadaleen Trend.

Carlin-style deposits, previously found mostly in the Nevada area, are unique in that they have produced some of the largest gold finds in mining history due to their large-scale ancient structure. The gold mineralization is usually sub-micron, however, it is spread throughout large swaths of the earth's crust and this adds to the recent conjecture that the Yukon could be another larger-scale mining region or "area play".

What is particularly exciting about ATAC is that they have such a large piece of property, of which, only about 10 percent has already been explored and, as more and more attention is focused on the Yukon area, they are increasingly seen as one of the most important mining companies in the region.

* an additional purchase in early-2012 (see Volume VI, Issue 53) reduced the cost basis from the early-2011 price.

Back to Top




Up until 2008, the "Other" category was previously known as the Foreign Currencies category and had included positions in freely traded, non-U.S. global currencies that were expected to rise in value as the U.S. Dollar declined, as was the case during the early and middle part of the 2000s decade when the dollar experienced a major decline over a period of years.

After this revaluation and with the likelihood that there are far smaller gains to be made in this area going forward, foreign currency exposure was completely eliminated in mid-2008 and this category was renamed "Other" in order to open it up to other possible investments such as foreign stocks, real estate investment trusts, or other investment products.


_Vanguard REIT Index ETF
Last Updated: 9/24/12
52 Week Range: $47.10-$69.20
Net Assets: $27.9B
Expense Ratio: 0.1%

The Vanguard REIT Index ETF is a large, diversified exchange traded fund that invests in stocks of publicly traded equity real estate investment trusts (REITs), companies that purchase office buildings, hotels, and other real property. Its objective is to track the overall returns of the MSCI U.S. REIT Index, a well known gauge of real estate stocks.

The ETF is popular for many reasons, two of which being that it is an extremely low cost way to access the REIT market (an expense ration of just 0.1 percent) and it offers great potential for investment income and growth.

It helps to diversify an investment portfolio, however, as was the case in the 2008 financial crisis, it is not immune to market downturns and followed equity markets sharply lower during that time.

The top ten holdings are shown to the right and they include shares of huge companies such as the Simon Property Group (SPG) with a market cap of $48 billion, Public Storage (PS) at $25 billion, and $15 billion Equity Residential (EQR).



_iShares FTSE/Xinhua China 25 Index ETF
Last Updated: 2/25/13
52 Week Range: $31.62 - $41.97
Net Assets: $9.2B
Expense Ratio: 0.7%

The FTSE/Xinhua China 25 Index ETF from iShares is better known simply as "the China ETF" since it is, by far, the most popular China-only exchange traded fund.

With net assets of over $9 billion, it trails the broader international stock ETFs from iShares - the $42 billion MSCI EAFE Index (EFA) and the even bigger $52 billion MSCI Emerging Markets Index (EEM) - however, I'm more interested in China-specific stocks rather than the entire world of emerging market stocks.

The fund seeks the investment results that correspond generally to the price and yield performance, before fees and expenses, of the FSTE/Xinhua China 25 Index which consists of 25 of the largest and most liquid Chinese companies. The index is market capitalization weighted and all securities trade on the Hong Kong Stock Exchange.

This ETF holds big positions in some of the best known Chinese companies as shown to the right - China Mobile, China Construction Bank, Industrial and Commercial Bank of China, CNOOC, and Bank of China. The fund was launched in October of 2004 and quickly become the investment vehicle of choice for those seeking exposure to the Chinese stock market.

Back to Top



About the Buy Ratings

The buy ratings in the model portfolio are provided to give subscribers an idea about what I think about current price levels for each position. Keep in mind that there may be a large difference in price between the time that the buy ratings are assigned over the weekend, until later in the week - for each position, the current buy rating should always be assessed relative to the current price quoted in the model portfolio.

Also keep in mind that I have no special predictive powers and, like everybody else, I make mistakes and I make decisions that are based on incomplete information - any recommendation that is provided here is based on a number of factors having to do with where we are in the long-term commodity bull market and how that position is viewed at the moment relative to others on a risk/reward basis.

Most importantly, all recommendations are based on holding that position for a very long time.

There is no way of knowing what will happen next week or next month, but the fundamental approach to investing practiced here is to buy commodities, currencies, and shares of good companies on weakness and then hold most of them through the commodities bull market. Occasional sales will be made to realize profits or to exit poorly performing stocks or funds, but few positions are expected to be completely exited until the expected mania is near its peak, an event that is likely still years away.

So, given these caveats, what do the different colors really mean?

The color and the corresponding brief description in the notes at the top of this page are a very coarse rating for each position, which may or may not be applicable to investors of different backgrounds or with different levels of exposure to commodities. Generally speaking, I will try to determine these ratings based on a hypothetical situation where I was halfway through assembling a portfolio of commodity investments.

Of course, for both my personal portfolio and the model portfolio, this is not the case at all - for both of these portfolios, it is now just a matter of minor adjustments - adding positions on weakness and selling into strength, but I will do my best to assign the Buy Ratings as though I were half way through building a portfolio, hopefully covering that middle segment of subscribers and qualifying the rationale for those at the other two extremes.

In all cases, naturally, subscribers should do their own due diligence for each investment decision that they make.

Green Lights

The most important point about the green light is what it does not mean. Very simply, the green light does not mean to buy all you were planning to buy of that position and that now you are done. The light changing from yellow to green is not intended to be the "all clear" signal that you can buy all that is needed to complete whatever allocation that you have decided upon and everything will work out swimmingly. You will increase your trading costs slightly, but I think it's almost always a good idea to enter positions in two or more increments, averaging in over time. That is explicitly not done with the model portfolio because of the extra bookkeeping that it would necessitate, but in almost all cases, averaging in is recommended.

What the green light does mean is that the position is recommended for an incremental purchase based on the current price level, given the caveat that the investment will be held for a very long period of time.

Yellow Lights

The yellow light basically means that there are no strong feelings either way for that position - a hold rating, if you will. There will likely be many good buying opportunities for positions that are have a yellow light - that's just the way things work.

It is unreasonable to expect the Buy Ratings to be updated every week in a manner that will yield consistent gains even if I was able to achieve consistent gains by doing so. If subscribers are able to do their own research that compels them to purchase positions with the yellow buy rating, there is certainly nothing wrong with that.

Red Lights

The red light is pretty simple - it is not recommended for purchase. This could be because it is about to be exited (or serious consideration is being given to doing so) or there is something coming along to replace it and it will no longer be covered as part of this service.

Back to Top



Changes to the Model Portfolio

All transactions and closed positions for the year 2013 are shown below.


Details of positions that have been exited in 2013 are archived here.


Back to Top




Charts and Data Sources