{"id":39737,"date":"2013-07-05T16:37:47","date_gmt":"2013-07-05T20:37:47","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=39737"},"modified":"2013-07-05T16:37:47","modified_gmt":"2013-07-05T20:37:47","slug":"2013-second-quarter-investment-outlook-and-commentary","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/07\/05\/2013-second-quarter-investment-outlook-and-commentary\/","title":{"rendered":"2013 Second Quarter Investment Outlook and Commentary"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

The second quarter gave us quite the thrill.\u00a0 I\u2019m calling it \u201cThe Great Bernanke Scare of 2013.\u201d<\/p>\n

After a monster first-quarter rally in income-paying securities, comments from the Fed Chairman that he might\u2014just might\u2014taper quantitative easing by early next year led to the worst correction in bonds, MLPs, REITs and other \u201cincome focused\u201d investments in nearly two years.<\/p>\n

Interestingly, \u201chigh beta\u201d sectors such as emerging markets and \u201cperiphery\u201d European markets also took a beating.\u00a0 It was something of a barbell correction in which both the most conservative and the most risky sectors got hit the hardest, while what you might think of as \u201cmainstream stocks\u201d held up relatively well.<\/p>\n

Emerging markets were affected by more than just Fed fears, however.\u00a0 Unrest in Turkey caused a collapse in the Turkish stock market\u2014which had previously been one of the best-performing markets in the world and a source of relative return for the Sizemore Capital Tactical ETF Portfolio<\/a><\/strong>.<\/p>\n

Slower growth in China and fears of a Chinese banking crisis also helped to push emerging market stocks sharply lower.<\/p>\n

Where do we go from here?<\/p>\n

\"10<\/a><\/p>\n

I stand by my original view that the bond market overreacted to Bernanke\u2019s comments and did so by a wide margin. I expect the ten-year Treasury yield, which at time of writing had just shot above 2.7% on a positive jobs report release, to settle into a fairly long-term range of 1.9% to 2.3%\u2014a view that bond market legends Bill Gross and Jeffrey Gundlach would seem to share given their recent bullish\u00a0 comments on the sector.<\/p>\n

The income sectors that got hit the hardest\u2014such as REITs and MLPs\u2014are off their recent lows, and I expect investors to return to these sectors in the second half.\u00a0 In the Dividend Growth Portfolio<\/a><\/strong>, Sizemore Capital took advantage of the selloff to add to our long-term positions in National Retail Properties ($<\/span>NNN<\/a>) <\/b>and Realty Income ($<\/span>O<\/a>)<\/b> and to initiate new positions in competing retail retails Cole Properties ($<\/span>COLE<\/a>) <\/b>and American Realty Capital Properties ($<\/span>ACRP<\/a>).<\/b><\/p>\n

Each of these meets my basic criteria as a dividend growth investment.\u00a0 They pay a relatively high current yield, and their property portfolios are structured to make an increasing cash payout very likely over time.\u00a0 They also fall into a \u201csweet spot\u201d in that their portfolios are defensive yet also offer decent protection in the event of higher-than-expected inflation.<\/p>\n

I additionally made multiple changes to the Tactical ETF Portfolio.\u00a0 I initiated a short position in Japanese government debt via the Powershares DB 3x Inver Japanese Gov Bond ETN ($<\/span>JGBD<\/a>).\u00a0<\/b><\/p>\n

I also shifted the equity portion of the portfolio away from the \u201cmega caps\u201d in the WisdomTree Large Cap Dividend ETF ($<\/span>DLN<\/a>)<\/strong> to a more growth-oriented alternative: the Cambria Shareholder Yield ETF ($<\/span>SYLD<\/a>)<\/strong>.\u00a0 And consistent with my view that more cyclical sectors will lead in the second half, I initiated a position in the Technology Select Sector SPDR ($<\/span>XLK<\/a>)<\/strong>.<\/p>\n

In both the Dividend Growth Portfolio and the Sizemore Investment Letter Portfolio<\/a>, I sold the position in Silver Bay Realty Trust ($<\/span>SBY<\/a>),<\/b> which has failed to meet expectations.\u00a0 I remain wildly bullish about the prospects for the rental housing market, but I fear that a flood of new traded Wall Street alternatives has created something of a glut in the supply of the stocks themselves (though not of the underlying houses).<\/p>\n

Where do we go from here?<\/p>\n

After the recent rout in emerging markets, several are beginning to look attractive to me again.\u00a0 European markets\u2014and particularly periphery markets\u2014also look attractive based on price and investor sentiment.\u00a0 I consider these fertile areas for investment in the second half.<\/p>\n

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