Biderman’s Market Picks 10/29/2012

Oct
29
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Biderman’s Market Picks model portfolio rose modest 0.2% last week, but handsomely outperformed the overall market, as the S&P500 dropped 1.5%. Last week’s decision to increasing the shorts by 10% and reducing the longs including gold obviously helped results.
 
This week and next there are a two events that could have a big impact stock prices. First up, this Friday, the Bureau of Labor Statistics will announce its guess as to October job gains. Remember last month’s report was too bizarre to comment on – other than we all know that there is an election happening a week from Tuesday. Therefore we would not be shocked to see another off the wall report.
 
While wage and salary growth has been slowing recently, we are still estimating that about 140,000 jobs were created in October, down from about 210,000 in September. We would not be shocked in job growth continues to slow through year end. Our estimates are based upon withheld income and employment taxes collected and reported daily by the US Treasury. Then we adjust for changes in the tax rate, wage and salary gains and bracket creep. While we have no idea what the BLS will report this Friday, whatever they do report is likely to move the stock market one way or the other.
 
Next week’s election also could move stock prices. I think an Obama victory would guarantee a hike in dividend and capital gains tax rates. That certainly will negatively impact dividend stocks and would also speed up selling of those stocks with big gains this year as investors sell now rather than pay higher taxes next year. In other words if Obama wins, I probably will sell the model portfolios tech holdings now and buy them back at lower prices closer to year end.
 
On the other hand a Romney victory might not generate that big a rally, particularly in the Congress remains divided, but the market would be unlikely to sell off. I find it hard to believe that even a Romney administration will be able to avoid the massive year end tax hikes in dividends, capital gains and the overall payroll tax rates.
 
My bottom line is that for the long term it is unlikely to matter who wins the election. The problems that our government, and the governments of Europe and Japan have created are not solvable by those governments.
 
The major changes in our model portfolio prices last week was a big dump in OXY Pete, down 4.6%, Whole Foods lost 2.5% and Salesforce.com 1.6%. The gainers included the Short Financials ETF, SEF, which rose 1.8%, the leveraged Euro short, EUO up 1.3% and the Short Europe EFZ, up 1%.
 
Biderman’s Market Picks model portfolio is positioned to not only to make money but also to preserve capital whatever happens in this volatile global financial world. And, sometimes stock prices will not go our way over the short term.
 

Charles Biderman
President & CEO, TrimTabs Investment Research
Portfolio Manager, TrimTabs Float Shrink ETF (TTFS)

Disclosure of Potential Conflicts of Interest & Trading Rules.
Biderman’s Market Picks (“BMP”) is a newsletter offered by TrimTabs Investment Research (“TTIR”). TTIR is not an investment adviser. Charles Biderman is the CEO of TTIR and the sole source of trading ideas and portfolio holdings of BMP. He offers his general market opinions as well as some of his own investment ideas and information on his actual personal investments. Mr. Biderman does not intend to, and has no obligation, to disclose his entire portfolio in BMP, or the performance of his portfolio.This arrangement may result in several potential conflicts of interest.TTIR also provides investment research to institutional investors on supply and demand for shares of stock, and data on money flows as well as economic trends. Some of the information in BMP will be available to other TTIR customers before BMP is published each week.

Mr. Biderman is also the CEO and portfolio manager of TrimTabs Asset Management (“TTAM”), a registered investment adviser and the sub-adviser to the TrimTabs Float Shrink ETF (“TTFS”). TTIR and TTAM are therefore under common control, and they share certain employees, but TTAM does not use TTIR data and research.

As the portfolio manager of TTFS Mr. Biderman personally makes portfolio decisions for the 100 portfolio holdings of TTFS, based upon a customized TTAM formula of float reduction, free cash flow generation, and leverage reduction, rather than fundamental analysis of a company’s shares. To mitigate any conflicts of interests, BMP will not include any stocks included in the TTFS portfolio. However, this means that users of BMP will not have the benefit of Mr. Biderman’s views on companies that are included in the TTFS portfolio.

While BMP may include suggestions for investment in specific securities, including TTFS, Mr. Charles Biderman may trade in any position held by the model portfolio in his personal and family accounts at any time. He may make recommendations for the model portfolio after or before purchasing or and selling the same positions from his personal and family accounts. Charles Biderman’s personal accounts differ in size and composition from the model portfolio.

The model portfolio will consist of ETFs, both leveraged and unleveraged, and liquid stocks.

The model portfolio assumes a starting date of May 29, 2012, of $100,000 in cash invested in securities at that day’s closing price. All future transactions are assumed to occur at the closing price. The model does not include deductions for advisory, brokerage, custody or other fees and expenses which typically apply to an actual portfolio. Such fees and expenses will reduce returns, and they will have a compounded negative effect on a portfolio’s performance over time. The performance of the model will be affected by market and economic events in addition to the investment and trading decisions of Charles Biderman. The model’s performance is not indicative of future results.

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