Week 13 2012 Performance......Record Setting First Quarter

We saw quite a bit of volatility in the DWCM fund this week as all of the major stock indices we follow finished with green arrows up including our own portfolio.  We squeaked out a week over week gain of 0.3% but at one point in the week we were up 2.5%.  Looking at week over week activity just proves to me time and time again that it is just about impossible to time any market.


I know that I had been clamouring for the past weeks about taking profits and we finally did so this week.  We took a third off of our Disney $DIS and Chipotle $CMG options positions and once again I missed selling Apple $AAPL.  I still have the limit order on to reduce our APPL position by a third.  I would expect to see this filled on Monday as the first trading day of a new month is often higher as new money flows into the markets.


As mention in an earlier post this week [Mosaic Miss Earnings], we doubled down on two of our agriculture names Mosaic $MOS and Potash $POT based on the weak earnings report from MOS.  We had smaller positions in both these names but I see us building upon them in support of our long-term ag thesis.


So far 2012 has been outstanding when it comes to equity returns and especially our own DWCM performance.  The fund finished the first quarter up 22.7% vs. DJIA 8.8%, NASDAQ 18.7%, Russell 2000 12.4%, and the S&P 500 12.6%.  The obvious two leaders both in the DWCM fund and broader markets were Apple and Chipotle up 48.0% and 23.8% respectively.  Other leaders in the fund included Disney, Buffalo Wild Wings, BMW, and Lowe's  Laggards included our ultrashort S&P 500 position and Gold.

Looking back on the quarter we did a lot of things right and had a few misses as well but all in all we achieved our objective which is an absolute return and to beat the major market indices.  The key to the upcoming quarters and the rest of 2012 are to continue to find undervalued names that fit into some of our long-term strategies while being a bit defensive.  I cannot expect Apple and Chipotle to continue to carry the portfolio.  While I believe in both companies and the power of their expected growth, they will eventually need to pull back and consolidate before being able to move higher.


The Week Ahead
The first Friday of each month brings us the latest jobs and unemployment data.  There is no doubt that this week the markets will be greatly anticipating the release of those numbers.  Although jobs is a lagging economic indicator I think that it does more for confidence or reinforces the perception of where the economy stands either good or bad.  


A good way to review jobs data is to take a look at the initial jobless claims trend such as the chart below.  This data is released every Thursday and can at times be a headline grabbing event.  Whatever way you slice it, the trend is obviously down which is good.  What gets tricky concerning the jobs data on Friday is the participation rate and what impact those that do or do not get counted as unemployed have on the actual unemployment rate.  To further add variability you have those that are considered under-employed which can add greater depth to the real jobs picture.  

• Mon -  ISM Mfg Index,  Construction Spending
• Tue -  Factory Orders,  FOMC Minutes
• Wed  -  Challenger Job-Cut Report,  ADP Employment Report,  ISM Non-Mfg Index,  EIA Petroleum Status Report
• Thu - Fed Balance Sheet
• Fri -  Employment Situation,  Consumer Credit

DreamWorks Capital Management Updates

For the past few days Mega Millions mania has been sweeping the country, I even purchased a few tickets myself (not a winner but even so I would still be doing what I am doing).  But for those of you fortunate to land any windfalls please consider DWCM for all of your investment and wealth management needs.  (Cheesy plug I know)

I hope that many of you regular viewers have noticed the increased amount of posts this month.  From the time that I decided to start writing about all of the financial and non-financial topics that we cover here at DWCM, I tried to set a goal for myself to average 2 posts per day.  I wasn't sure how I was exactly going to do that but I knew that I wanted to give you the viewers and DWCM clients the best when it came to thoughts and perspectives in the world of finance and beyond.  

Obviously the month of March was not only a great performance month for the DWCM fund but I was also able to go beyond my posting goal.  I attribute this to the positive feedback that I have received from you via your comments and emails.  I also need to acknowledge and thank my very supportive wife who helps me create the time to write given our hectic lives trying to raise our triplets.  Please continue to send all of your comments and suggestions as it helps to create for me a more dynamic DWCM.

Thank you and Have a Great Week!