Biderman’s Market Picks 11/19/2012

Nov
19
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Biderman’s Market Picks model portfolio rose a tad last week, again doing better than the S&P 500 which dropped 1.4%. So far this November, the model portfolio has outperformed the overall market by a healthy 5%. To wit, the model portfolio is up 0.4% while the S&P 500 is down 4.6%. And yes, Biderman’s Market Picks is still down since I started it at the end of May, but it is down less than 0.2% while the overall market is still up by 4.7%. But I fully expect the S&P 500 to close the year down from the end of May and our model portfolio to generate a decent return.

 

Remember, Biderman’s Market Picks is not for those seeking hot action. My goal is for the model to make money while preserving capital. That is why, while the portfolio is now 47% short, the short positions are not highly leveraged. Those of you who are more aggressive and short term oriented could buy the double or triple leveraged shorts for Europe, the emerging markets and the big banks and shrink long positions even more than I have. If you are uncertain as to how to find the names and tickers of those leveraged shorts, please send me a comment and I will respond quickly.

 

My view between now and year end has not changed since I first said several weeks ago that Obama’s victory virtually guaranteed higher tax rates, particularly capital gains. Any sane market participant in the face of higher taxes on long term gains next year would be expected to be a seller this year and is what is happening.

 

Indeed at last week’s press conference, my impression was that Mr. Obama was much more concerned about raising tax collections than cutting any spending. Mr. Obama owes those government workers and special interest groups big time for the billions they donated to his campaign. I believe that Mr. Obama has promised them not to cut their gravy train at all and that he will raise taxes on the rich.

 

In other words, take from those capable of generating wealth and give to those who will spend it without doing much for it. Europe has been following that model for many years now and it sure looks like the US will be following Euro land right into the toilet. As I said in a recent video, Mr. Obama will go down in history as the worst fiscal president ever.

 

All that does not mean we won’t have a few days of rallies here and there as those caught fully long hope and pray to avert a job losing bear market. Good luck to them.

 

The reason our model portfolio has barely outperformed is due to the losses of the 20% of the model that is long. And yes, the sell off in gold, 18.5% of the portfolio did not help. Gold dropped 1.2% last week and could go a bit lower between now and year end as some investors are forced to sell their most liquid holdings. That is also why our longs could also retreat a bit.

 

However, if we do get a decent rally early this week, I will be tempted to sell some of our Vanguard Inflation Protected Bond fund to add to our shorts.

 

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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2 Responses to Biderman’s Market Picks 11/19/2012

  1. ron wilson on November 19, 2012 at 11:53 pm

    charles, please send me the the ticker symbols of the shorts in europe, the big banks and emerging markets. thanks ron

    • cbiderman on November 20, 2012 at 5:35 am

      DPK -Europe
      EDZ – Emerging
      FAZ – big banks

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