The housing numbers like a good majority of economic data gets revised each month so you really have to look below the headline numbers into the actual data to see what trends are developing. From what I see looking at both charts is that lower rates are not creating a significant increase in either existing or new home sales. As we have pointed out in many previous discussions the lending standards have become so much more tighter that it is harder for people to take advantage of the lower rates to purchase a new house or even refinance an exiting mortgage.
Our DWCM fund performed remarkably well this week given the rough waters the other indices had faced. We were up 0.7% for the week and are now up over 22% for the year besting all of the 4 major indices. We exited out of Green Mountain Coffee Roasters $GMCR and SodaStream $SODA booking a loss of 7.1% on GMCR and a gain of 15.1% on SODA. Both these momentum names were becoming too hot for me to handle. Neither of these stocks were ever really trading that well on their own fundamentals and from a technical standpoint I didn't see the direction that either stocks were going in and the risk was just too much for me. Net/Net it is a gain for the fund and we move on but I will continue to monitor these names going forward.
I was also looking this week to take some profits in some of our option positions such as Disney $DIS, Apple $AAPL, and Chipotle Mexican Grill $CMG which have all gone parabolic. There is a saying that "pigs make money while hogs get slaughter." Translation, it is one thing to make a profit but don't get to greedy or you risk loosing everything. Think of the run up in the NASDAQ during 1999/2000 and the previous period of 2007/2008 before the financial crash. None of the names hit my target or limit price so we will continue to monitor and look to take profits this upcoming week.
The Week Ahead
This coming week is loaded with new economic data all trying to to give us clues and insight as to how strong this recovery is or if it is running out of steam already. Last week in Barron's Mike Santoli addressed the issue of waiting for the perceived pullback that everyone is waiting for that might now happen. Even though we had the slightest of pullbacks this week in the major indices the run up in the markets since the October bottom has been nothing but spectacular. It really makes me personally focus harder on preserving capital and looking at names that fit our long-term thesis that can be bought at a discounted price. Strong names that have solid fundamentals but also good technical attributes as well.
- Mon - Pending Home Sales Index, Dallas Fed Mfg Survey
- Tue - S&P Case-Shiller HPI, Consumer Confidence, Richmond Fed Manufacturing
- Wed - Durable Goods Orders
- Thu - GDP,
- Fri - Personal Income and Outlays, Chicago PMI, Consumer Sentiment
This week we were featured in our first national news publication The Mutual Fund Wire.Com. DWCM released it's first major press release which was picked up by several publications including The MFWire.Com. Armie Lee from The MFWire.Com conducted the interview with myself which focused on the launch of our firm and the goal of launching our own Mutual Fund or ETF within the next 1 to 2 years. My hope that as we grow at DWCM and continue to gain clients and readers trust, that people will feel confident in our performance and investing process to invest in our fund. For any of you interesting in looking to invest in a fund such as ours you can reach out to me via email at pfenner@dwcmllc.com
Have a great week!
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