Author: Karen Burns and CJ Brott, Capital Ideas Inc
Covestor Models: Macro Plus Income, ETF Only
Disclosure: Long MDY, XES, MOO, EFA, USL
Capital Ideas’ macro models invest in large, forward looking market themes. Currently we continue to believe the most important investment themes are solutions to the problem of world hunger, continuation of world economic growth, and relative market valuations of the US vs. overseas markets. Reviewing both of our models, we continue to hold various securities which should benefit from these trends.
Market Vectors Agribusiness ETF (NYSE: MOO) holds many of the companies involved in supplying the world with food. The SPDR Oil & Gas Service Companies (NYSE: XES) holds many of the companies that help supply the world’s energy. The United States 12 Month Oil fund (NYSE: USL) is a direct bet on WTI crude, a great substitute for direct ownership of petroleum commodity contracts.
We believe as the world grows and the US Dollar depreciates, oil becomes an even more valuable, currency-like asset. Although we continue to own iShares MSCI EAFE ETF (NYSE: EFA) for international exposure, that exposure has been greatly reduced. We have increased our exposure to the US markets by ramping up our holdings in the SPDR S&P 400 Midcap ETF (NYSE: MDY). Although large capitalization US stocks are very popular currently, mid caps still continue to outperform.
These are not all of our positions but they are the most topical at this time. As the markets continue to progress into first quarter earnings, we believe these holdings – as well as the others we own – will benefit from 2011’s growing earnings.
CJ Brott and Karen Burns
