Covestor model manager Robert Gay of Global Equity Analytics and Research Services LLC (GEARS) focuses his Speedboat model on the purchase of companies that are unusually depressed. He uses a proprietary program to interpret documents and identify companies that fit in his portfolio. This week Gay bought NVIDIA Corp (NASDAQ:NVDA), a technology company that creates graphic chips and other materials for video game systems, computers and mobile devices. The company is currently trading at the low prices it hasn’t seen since May of 2009. With the rise in popularity of mobile applications and video games, it seems odd that the company is not performing well. The company’s stockholder equity increased in 2009, but their earnings per share are low.
Another Covestor model manager, Leonard Fox, uses a proprietary list of five signals to help him determine market exposure. His Scarecrow Trading model trades high beta ETFs. This week he bought ProShares Ultra QQQ ETF (QLD) which is an ETF meant to have twice the performance of the Nasdaq 100, which represents the largest non-financial companies on the Nasdaq. While QLD has recovered from its all-time low in March 2009, it has yet to reach the highs experienced in 2007. Although the Nasdaq 100 is diversified amongst many non-financial sectors, the ETF is not diversified any further than the index itself so investors can expect its performance to stay on target with the Nasdaq 100. Any additional assets are left in money markets, so there isn’t a hedge to protect against the downside of the Nasdaq 100.