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The Weekend Update - March 31st, 2013Volume VIII, Issue 13 - Final

SUMMARY

A resolution of the banking crisis in Cyprus resulted in uninsured bank depositors taking huge losses, however, its orderly conclusion (so far) sent investors back into risk assets and U.S. equity markets saw further gains, reaching new all-time highs. Economic reports in Europe indicate the region is still in recession while U.S. data was mixed as the trade-weighted dollar continued its recent ascent, rising to a fresh eight month high.

Energy markets rose sharply, but the price of nearly every other major commodity fell as the natural resource sector continues to struggle, particularly the metals. While energy stocks and REITs continue to do well, gold and silver prices reversed their recent rising trend as did mining shares. For the week, the model portfolio fell 0.7 percent and is now down 5.4 percent for the year.

Changes to the Model Portfolio

None

Changes to the Buy Ratings

None

Administrative Note IMPORTANT!

This is a “Tables and Charts Only” version of the Weekend Update as I’ve been otherwise occupied in recent days getting the old Iacono Research website up and running in preparation for switching back to it in the very near future (in just a few days if all goes well). The partnership with Investing Channel that began just over a year ago did not work out as planned and we’ve decided on a friendly parting of the ways.

The old website has received a major makeover and, aside from the expand/collapse feature, it now looks very much like the website I’ve been using for the last year. Though the details have not been finalized, I expect there will be virtually no impact for current subscribers during the switch back, that is, with the exception of monthly subscribers who will be asked to choose a new billing option with the new payment service provider.

There will be more on this via a separate email in a few days, just prior to the switch, assuming all goes well with the transition.

 


CONTENTS

Economy - Commodities - Energy - Precious Metals - Money & Debt - Model Portfolio Update - For Discussion

 


 

ECONOMY

A modest improvement in the very weak fourth quarter economic growth and mixed data on both consumer confidence and the U.S. housing market highlighted the week’s economic reports. Stocks and bonds ended with the S&P500 Index up 0.8 percent to 1,569.19 (for a year-to-date total return of +10.0 percent) and the yield on the 10-year U.S. Treasury note fell 7 basis points to 1.85 percent.

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COMMODITIES

Sources: Bloomberg and Kitco

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ENERGY

The price of WTI crude oil jumped 3.8 percent, from $93.71 a barrel to $97.23, Brent crude rose 2.3 percent, from $107.53 a barrel to $110.02, and retail gasoline prices in the U.S. dropped two cents to $3.68 per gallon, now 6.1 percent lower than a year ago.

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PRECIOUS METALS

The gold price fell 0.7 percent, from $1,609.20 an ounce to $1,597.60, and silver fell 1.6 percent, from $28.76 an ounce to $28.30. Gold is down 4.6 percent this year, 16.9 percent below its high 18 months ago, and silver is 6.8 percent lower in 2013, down 42.8 percent from its early-2011 high.

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MONEY AND DEBT

U.S. Dollar and Foreign Currencies

he U.S. Dollar Index rose from 82.38 to 82.98 as the euro fell from $1.299 to $1.282, the British pound edged lower, from $1.523 to $1.520, and the Japanese currency strengthened modestly, the dollar falling from 94.46 yen to 94.24 yen.

 

Treasuries and Credit Markets

 

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The Federal Reserve and Monetary Policy

 

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MODEL PORTFOLIO UPDATE

While broad equity markets and fixed income markets both advanced, the natural resource sector in general (and metals in particular) saw lower prices and the mining stocks in the model portfolio reverted to their losing ways after three straight weeks of gains earlier in the month. The first quarter ended with precious metals continuing to be out of favor with investors as the price of both gold and silver again moved lower.

For the week, the model portfolio fell 0.7 percent and is now down 5.4 percent for the year, trailing most other investment approaches so far in 2013, as there were only a few bright spots over the last three months, notably, a 6 percent gain for the Vanguard REIT Index (VNQ) and a 7 percent improvement for the recently added ETFS Physical Palladium Shares ETF (PALL).

Notes:

1. For a summary of changes including closed positions, see the Changes to the Model Portfolio section on the Portfolio page.

2. An Excel spreadsheet (.xls) similar to the one that is used to generate the graphic above can be downloaded here for those subscribers who wish to track their investments the same way as they are tracked for the model portfolio.

3. The color-coding in the table is fairly straightforward. All gain/loss columns have one of four background colors – red (loss), yellow (minor loss or gain), or green (gain). The criteria for certain columns being certain colors varies based on the time period involved and in some cases, due to rounding anomalies, the same percent gain/loss in adjacent columns may appear as different colors. This color-coding is used as a quick visual cue for how investments have performed.

4. With only a few exceptions, all prices in this chart reflect the Friday close for the week just concluded based on data from Yahoo! Finance. The exceptions are gold and silver bullion (Au Coin and Ag Bar, respectively) which come from California Numismatic Investments.

5. To simplify the record-keeping, the monthly total will always use the closing price on a Friday, so certain days at the end of one month or at the beginning of the next month may be included in the total for the adjacent month. Whichever month has the Wednesday gets that week’s data. For example, the last week in July 2007, which includes July 30 and 31 along with August 1, 2, and 3 will be included in the August monthly total, since Wednesday, August 1st is in August. The only period that does not follow this rule is the December-January transition in order to enable completely accurate annual performance data.

6. To further simplify the record-keeping, trading costs may not be included in the model portfolio update. To offset these expenses, dividends on individual equities and interest earned on funds held as cash (when cash balances are relatively low) will not be included either. If the average cash balance exceeds $5,000 in any given quarter, trading costs and interest earned will be calculated and included at the end of the quarter. Distributions and dividends from the large mutual funds and ETFs will always be reflected in the totals and in the changes to the model portfolio.

7. A bright yellow background in the “Balance” column indicates that an individual stock has risen to levels that should warrant consideration of a partial sale in order to realize profits.

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