Week 37 of 2012.
It feels like the last 37 weeks have all been about waiting for QE3. With Mario and the ECB doing their part last week, the floor was clear for the FED to do their bit – and boy did they deliver! But as ever, it is uncertain how long the FED will push QE3. Perhaps the biggest effort and indicator missed in all the bazooka talk from Mario Last week was via China. On Sept 7th (after Mario’s speech) the Chinese launched their own in the form of a $150bln stimulus package. When you throw in the Fed reserves potential $40bln per month – you’d be right in guessing that it looks like a 4 month plan if China’s package is anything to go by. There is a trend of ‘all’ involved sharing the burden of flooding the markets with cash. A concerted effort is clearly better than a fragmented one. So China may well have defined the length of the Fed’s program for us.
If the FED do run QE3 for 4 months (to year end), then it should facilitate a major Equities rally which even Santa couldn’t rival.
Historically commodity focussed stocks are the first to benefit from QE and 2009 and 2010 both saw remarkable rises in many commodity sectors whether small cap or main listings.
News from Kurdistan that a payment agreement between Baghdad and the KRG was set for approval on Tuesday is a major step forwards for all foreign companies operating in the region. The O&G law might not be far behind. Investors will know that politics can u-turn in an instance so caution is always required. But for now, the momentum certainly feels positive from both sides. Considering the market/city is using around a 50% to 75% discount to fair value on many Kurdistan focussed stocks due to political uncertainty – it could make for an enjoyable re-rating if/when a resolution is found.
Key Indices summary – The DOW closed week 37 up 287pts at 13593 its highest close since pre Lehmans/2008. The FTSE 100 finished up 111pts at 5916.
A virtual portfolio has been set up using the 2011 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. 2 newspaper top tens for 2012 have been included to help monitor/compare against.
Week 37 stock picks summary:
The mini month league ends up in the blue with a gain of just under 1%. CHAR’s duster clearly denting the overall performance but nonetheless, the summer league did provide good returns on 3 out of the 5 stocks. Good going for what is normally a benign and slow summer period. Xcite Energy was the star performer delivering close to a 50% gain.
Thesharehub mini month league ran for 6 weeks through to St Legers (Sept 12th to 15th) and was simply a measure of 5 stocks during the lazy summer period.
The results chart can be seen below…
A very good week for equities as the markets clearly got stuck in fast after the FED Reserve announced QE3 plans. It’s certainly going to be an interesting last 15 weeks and if 2009 and 2010 are anything to go by, then commodity heavy stock picks like the Hotlist should do very well indeed. The independent might be looking over its shoulder in the not too distant future. Exciting times ahead.
Current standings / Week 37 Results
1. The Independent 2012 +47.23% (weekly gain of 3.46%)
2. The ‘B’ List 2012 +12.02% (weekly gain of 2.44%)
3. Tempus Times 2012 +11.96% (weekly gain of 4.48%)
4. The 2012 Hotlist +5.56% (weekly gain of 1.69%)
Click on Portfolio image to enlarge
