Month: August 2014

BRK.A, Berkshire Hathaway

Hamilton

brk.a aug 2014brk.a aug 15 2014

Don’t look at previous blogs on this company, let’s just say that they did not work out exactly as anticipated. The stock hit a new all time high of about 203 thousand dollars, nearly triple the value at the lows of the “great recession”, during which, by the way, this stock like most others also lost more than half its value. We do not wish to diminish the investing talents of Mr. Buffett and Co. but do wonder if the tripling of the stock was entirely his doing or if Yellen and predecessors had a small finger in this pie. Whatever the case, if you still own a few thousand of these shares we would recommend lightening up. Given the almost cult-like status of Berkshire in the investment community, we are aware that a call to sell would be received with complete contempt and derision which is why we would just sell 100 or so shares every now and then. Dollar-cost-averaging in reverse so to speak.

Above I have used a Yahoo chart. It has the advantage that the highs and lows are sanded down so the overlap (a contentious issue in any event)  that would have occurred between 2 and 4 does not show. Furthermore the triangle suggested as a 4th wave is far from perfect. Another question that might apply is whether or not Berkshire should be viewed as a stock or more as a mutual fund. None of this detracts from the notion that this might just be close to a top.

NUS, Nuskin update

Hamilton

NUS aug 12 2014

Back in January we opined that this stock should drop to $30 as a minimum, based on the level of the 4th wave of previous degree. So far so good. The RSI is very overbought so a bit of a bounce right here should not come as a surprise but this one has further to go. $30, as a minimum , still makes sense. (See also previous blog).

DAX and EWG (repeat)

Hamilton

DAX aug 12 2014ewg aug 12 2014

Here we have the DAX, Germany’s main stock index and the Morgan Stanley IShares EWG. G, of course, stands for Germany. Why both? Well, I have noticed that often comparisons are made between the DAX and other indices , for instance the DOW, without regard to the type of index. The DAX is not some sort of über index that outperforms most of it’s peers, instead it is simple a total return index as a result of which it will normally show a higher value at most points in time. It has a base in 1987 at 1000 and for each year that passes it adds the dividend to the capital gain/loss to come up with a value. As with the DOW, there are 30 stocks in this index most of which are also represented in the EWG.

Presently the yield is roughly, very roughly, 4%. Since the highs of 2007, seven years have passed so, applying the above, very roughly again, the DAX should be higher by about 28% than the EWG is, not including compounding. In fact it is!

Having established that, what does it matter? A lot. Using the DAX Canadians are misguided into believing that their economy is inferior to that of Germany and that the proverbial  “Wirtschaftswunder” has passed it by entirely while we were building F150s instead of Benzes. Not so as you can see at a glance on the chart of the TSX;

TSX aug 12 2014

When the TSX is compared to the EWG, and not the DAX, the TSX actually outperforms relative to the 2007 (or 8) peak. You will notice that the two charts (you can move them around) are, again roughly, identical and both are clear B-waves that are signalling that a wave C is just around the corner. However, this time, it does look as if Germany is in the lead.