Shesa's DECEMBER 2015 INVESTMENT BLOG

            9 Dec 2015

DECEMBER 2015 Investment Blog

Shesa Nayak  

Hello friends, welcome to my monthly investment blog. This month I am releasing the blog little ahead of time. It will be a brief one, mostly with regard to year-end portfolio adjustment that I have done. It’s very important to do the necessary adjustment and eliminate the laggards to make use of the fund for better Return on Investment. On economy front, last few weeks had many important big news, with the Chinese Yuen inclusion in IMF SDR basket, European Central Bank, the Labor Department, all making headlines.

U.S. Stock Market Commentary

The stock market remains volatile as expected. It would continue to do so before the Fed meets on Dec 15-16 to decide whether to increase interest rate or not! There is very high probability that they will raise interest rate. But let’s see if we get Santa Clause rally after Fed decides and before the end of the year. Here are the stock market indexes as of Friday, 12/4/15.

U.S Indexes	2-Jan-15	Friday Close	Year-to-Date Change	YTD % Change
DOW Jones	17823.07	17,847.63	24.56	0.14
S&P 500	2058.9	2,091.69	32.79	1.59
NASDAQ	4736.05	5,142.27	406.22	8.58

Key Economy News

Chinese Yuan included in SDR: As I wrote many times on my blog, CNY was recently included in the IMF's special drawing rights (SDRs) on Monday, along with US dollar, British pound, Japanese yen and euro. The currency will make up a 10.92% weightage. This is big news for the future of Chinese economy and its pride.

ECB Stimulus Program: On 12/3, the ECB told that the asset purchase program of 60 billion euros (USD $66 billion) per month would be extended by six months to March 2017. The market was clearly disappointed on this news, as they expected ECB to further increase the amount of stimulus program.

Fed testimony before Congress: Fed chair Janet Yellen told congress that the economic data since October has improved and there is high probability that Fed could have its first interest rate hike on Dec 16. She also emphasized that Fed funds rates would remain accommodative in future. What I can deduce is that, even if Fed increases the interest rate, they will do once and “done”.

Unemployment Report: On Friday, the labor department said that U.S. employers added 211,000 nonfarm jobs last month, more than the 190,000 expected by the economists. The unemployment rate in U.S remains at 5%.

Thanksgiving Sales disappointed: Consumer spending at retail locations in the U.S. fell 10 percent to $20.4 billion over the four-day Thanksgiving weekend, according to ShopperTrak.

In my January blog, I would like to write about my perspective for 2016. What we can expect in the stock market, sectors, emerging economy, commodity etc. But before that, let me provide some update on equity sold this month in order to restructure the blog portfolio before the end of the year.  If required, I may sell some more before Dec 31^st to remove some laggards and take capital loss.

NUGT: Sold NUGT on 12/4 @30.69. I had been holding NUGT with a lot of patience and waited for a bounce but it looks like it is dead for the moment. In between, when it bounced I had trimmed some positions a few months ago and updated on my blog. I still have a little bit left but I do not want to keep this any more on my blog portfolio. I have to admit that it was a mistake to include NUGT in my blog portfolio, as it’s extremely volatile. It’s difficult for me to keep updating the readers on day-to-day basis. I still think that precious metal would do reasonably well in the coming years. As soon as USD lose its strength and there is inflation these could bounce very fast. But I will focus on GDX rather than NUGT. Going forward, neither NUGT nor any 3X fund will be included in my Blog portfolio! It’s better to take capital loss and better allocate the fund somewhere else.

NLY: I sold Annalay Capital on 12/4 with a small gain of 7%. I have been holding this for almost a year and it has not provided better return. Now that Fed may be raising interest rate the REIT could further deteriorate. So it’s better to look for alternative better opportunity.

IBN: ICICI Bank. I had big hope on this Indian Bank but the performance has been very disappointing. The Bank’s bad loan has been increasing and that the profit has been dropping. Coincidently, HDFC bank (HDB) has been performing much better on the same space. There is no point in holding this in portfolio and keep losing more money. Of course, one can hold for long term but at this point I have decided not to hold. I can revisit in future.

FHKCX: This is the mutual fund for Fidelity China Region. I like China market for a foreseeable future. This is a good fund but I find a better alternative fund, which has been performing much better than this one. Hence, I will be adding that fund in my Blog Portfolio this month. We will take a look to that fund momentarily.

Now let’s a take look at the positions closed during 2015 as of 12/9/15.

Equity	Sales Price	Date Sold	Gain / Loss (%age)
DUST	17.35	1/9/15	13%
OBCHX	13.64	Feb-15	-4%
CIM	14.07	8/14/15	-8%
KO	38.48	9/10/15	8%
AGNC	17.88	10/30/15	8%
NLY	9.54	12/4/15	7%
IBN	7.95	12/4/15	-24%
NUGT	30.69	12/4/15	-89%
FHKCX	29.53	12/3/15	-3%

Matthews China Dividend Investor (MCDFX)

As said above, I sold FHKCX and included MCDFX as a replacement. The change is with respect to performance of the fund. MCDFX has provided a better return on investment over the long haul. Thus, it’s better to make use of the money for the fund that has been performing better. I still feel that China market will do better in the long run, particularly after the inclusion of Yuan in SDR. This will enhance the attractiveness of Chinese government bonds as a reserve asset and China’s currency should continue to become more market friendly globally. In addition, Chinese GDP is anticipated to grow around 6.5% against 2.5-3% of U.S economy.

Why do I like this fund?

China market has lot of growth potential and a great emerging economy. That’s the reason I am emphasizing on this market. This fund has 5 star rating from Fidelity and has a strong buy Rating from Zacks investment research. Also, the fund is currently trading around at $14.11, 22% low from its 52 week high. The minimum investment for this fund is $2500 and subsequent investment is $250. I have already invested in the fund and keep accumulating down the road. Some of the major holdings of this fund are: China Merchant Banking, China Mobile, China power, China construction Bank, New Oriental Education etc. Moreover, we should invest in equity where there is scope of getting better return on investment. Hence, I think MCDFX is a better alternative to FHKCX. As a strategy, it’s better to invest the minimum amount in the beginning and then keep accumulating over a period of time.

Now let’s look at the fund’s performance as of 11/30/2015:

	Year-to-date	1 Year	3 Year	5 Year	Life of Fund
MCDFX	7.46%	6.47%	8.89%	6.73%	9.0%

NAV: $14.11.     NTF: No Transaction Fee in Fidelity.

Fund Inception:  10|31|2005   

Morningstar Rating:  ***** (5 Star)

Minimum Investment: $2500

Load: No Load and No Transaction Fee.

Expense Ratio: 1.19% (LOW)

Beta: 0.73 è Risk: This is less volatile with the market move

Fund Managers: Yu Zhang since 4/27/2012 and Sherwood Zhang since 4/30/201.

Risks: MCDFX is primarily a Mutual Fund that invests in China. China is an emerging economy and hence there could be higher volatility. There are risks associated to currency-exchange-rate, economic, and political risks. So we must keep the risks in mind.

Blog Portfolio as of Friday, 12/4/15:

Equity	Suggested Price (USD)	Current Price (USD)	Suggested Date	% Changes	My Opinion (see disclaimer)
STOCK
AAPL	56.12	119.03	1/25/13	112%	BUY
BIDU	86.43	208.3	4/18/13	141%	HOLD
GOGO	14	19.21	9/1/13	37%	HOLD
SLW	22	13.98	10/1/13	-36%	HOLD
FB	47	106.18	11/13/13	126%	HOLD
TSLA	135	230.38	11/13/13	71%	HOLD
MA	78.7	98.7	12/12/13	25%	HOLD
NLY	8.92	9.54	2/2/14	7%	SOLD on 12/4 @9.54 <+7%>
AMZN	311.73	672.64	4/12/14	116%	HOLD
BAC	14.64	17.8	5/11/14	22%	BUY
BX	33.33	30.65	8/24/14	-8%	HOLD
VIPS	22.68	15.62	11/23/14	-31%	BUY below $15.5
GILD	102.21	104.07	1/11/15	2%	BUY
ALNY	89.1	108.96	2/6/15	22%	BUY below $100
IBN	10.5	7.98	4/12/15	-24%	SOLD on 12/4 @7.98 <-24%>
SFUN	9.95	6.8	6/14/15	-32%	HOLD
EGO	3.4	3.26	7/17/15	-4%	HOLD
AXP	80.91	71.1	8/16/15	-12%	HOLD
MO	52.59	58.51	9/13/15	11%	BUY
ETF
GDX	27	14.83	4/1/13	-45%	BUY below $14
NUGT	270	30.69	9/21/14	-89%	SOLD on 12/4 @32.69 <-89%>
INDA	31.94	27.05	3/15/15	-15%	HOLD
ASHR	36.66	36.82	3/15/15	0%	BUY (Added more)
USO	16.8	12.46	3/15/15	-26%	HOLD
INCO	34.46	31.48	5/15/15	-9%	BUY (Added more)
IHF	139.39	124.19	8/16/15	-11%	HOLD (Reduced position)
XLY	78.36	81.22	8/16/15	4%	HOLD
PJP	69.71	73.5	10/18/15	5%	BUY
EEM	33	33.88	11/15/15	3%	BUY
MUTUAL FUND
FBIOX	117.73	233.13	3/1/13	98%	Accumulate
PRHSX	55.17	75.77	2/2/14	37%	HOLD (Reduced position)
FSCHX	137.34	140.12	4/12/14	2%	HOLD (Reduced position)
FSCRX	27.3	27.74	10/25/14	2%	HOLD
GASFX	28.51	25.25	12/20/14	-11%	HOLD (Reduced position)
PRMTX	63.52	74.29	12/20/14	17%	Accumulate
FHKCX	30.52	29.53	2/8/15	-3%	SOLD on 12/3 @29.53 <-3%>
MINDX	26.94	26.51	6/14/15	-2%	BUY
MCDFX	14.11	14.11	12/9/15	0%	BUY

Major Economic Report next week (week 12/7/15)

Monday: Consumer Credit

Wednesday:  Wholesale inventories

Thursday: Weekly jobless claims

Friday: Retail sales, Producer Price Index, Business inventories, Consumer sentiment

Wednesday (12/16): Fed decision on Interest Rate

Also you can go to the following URL for more updates:

http://www.marketwatch.com/Economy-Politics/Calendars/Economic

Source: Marketwatch.com

That’s all for today. Wish you good investing! Stay tuned for my new year JAN 2016 blog. As I said earlier, I will be writing my perspective about stock market in 2016. Thanks for your time. If you want to get alert on my action then please subscribe to shesagroup_invest@googlegroups.com. Also, feel free to send me your comments and suggestions or alert request to shesa.nayak@gmail.com

Disclaimer: This blog is meant to provide my personal opinion rather than professional recommendation to buy/sell any stock, ETF, mutual fund or any other security(s). As an investor, it’s your hard earned money and you decide what is best for you. The above are merely my own opinions. Please contact a professional money manager to buy/sell any security. I do not earn any commission by writing the blog. I have position(s) on whatever security I write on my blog and avoid recommending any security that I do not own or follow.

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