New Low Risk Investments with High Returns
AlphaProfit Provides New Fidelity Mutual Fund and ETF Recommendations
The AlphaProfit Focus and Core model portfolios will be reconstituted on September 28 using new low risk investments with high returns. The new investment recommendations will include Fidelity funds and ETFs.
Despite the twists and turns in the first half, year 2012 appears to be shaping up favorably for stocks as the third quarter ends.
Double-digit gains are galore around the world.
The Fidelity Spartan 500 Index Fund (FUSEX) that tracks the S&P 500 index ($SPX) is up 17% for the year.
Overseas markets have also seen sizeable gains. iShares MSCI ACWI Index ETF (ACWI) that tracks the MSCI All Country World Index is up a healthy 14%.
Among the 10 major sectors, economically sensitive ones like consumer discretionary, financial, and technology investments have fared notably well.
Consumer Discretionary Select Sector SPDR ETF (XLY), Financial Select Sector SPDR ETF (XLF) and Vanguard Information Technology ETF (VGT) are all up over 20%.
Likewise, Fidelity Select Consumer Discretionary (FSCPX), Fidelity Select Financial Services (FIDSX), and Fidelity Select Technology (FSPTX) have each gained over 20%.
Discussing the recent performance of the U. S. stock market, Dr. Sam Subramanian, Editor of AlphaProfit's Premium Service Investment Newsletter said, 'Macroeconomic negatives like the European debt crisis, anemic job creation in the U. S., and slowing growth in China have not prevented stocks from rising in 2012. For the most part, investor optimism on government actions has lifted stock prices.'
AlphaProfit's strategy of seeking low risk investments with high returns has powered the performance of the sector-based Core and Focus model portfolios.
Negotiating the topsy-turvy market, the Fidelity and ETF Core model portfolios are up 19.1% and 22.2%, respectively while the Fidelity and ETF Focus model portfolios are up 20.8% and 22.4%, respectively.
The model portfolios have particularly benefited from timely selections of high return investments like biotechnology & housing and low risk investments like consumer staples & pharmaceuticals.
Fidelity Select Biotechnology (FBIOX) and SPDR S&P Biotech ETF (XBI) are both up over 39% since the start of 2012. SPDR S&P Homebuilders ETF (XHB) and Fidelity Select Construction & Housing (FSHOX) are up 53% and 31%, respectively.
Selections like Fidelity Select Consumer Staples (FDFAX) & Consumer Staples Select Sector SPDR ETF (XLP) as well as Fidelity Select Pharmaceuticals (FPHAX) & PowerShares Dynamic Pharmaceuticals (PJP) have helped to reduce portfolio volatility.
Imperative for Low Risk Investments with High Returns
Fourth quarters in Presidential election years have historically been quite favorable for the stock market.
The S&P 500 has advanced in 81% of the Presidential election year fourth quarters with gains on average amounting to 2%.
Even though history favors gains in the upcoming quarter for this Presidential election year, Dr. Subramanian is cautious in his outlook.
Dr. Subramanian cites persistent problems in Europe and uncertainties from the fiscal cliff in the U. S. as main factors that can pressure stock prices going forward.
Elaborating his concerns Dr. Subramanian says, 'There is no easy solution to the European crisis. While political leaders are putting on a show of unity, differences are bound to arise when leaders work to iron out specifics. The disagreement between France and Germany on setting up a timetable for jointly overseeing Europe's banking sector is an example.'
Likewise, it remains to be seen if Congress can avoid a fiscal cliff from expiration of Bush-era tax cuts and trigger of automatic spending cuts on Jan. 1. If not, higher taxes coupled with $100 billion in spending cuts agreed as part of the debt ceiling compromise will be a significant impediment to economic growth.
Since mid-September, stocks are selectively working off overbought excesses in certain groups.
Dr. Subramanian expects this consolidation trend to continue in the near-term. He says, 'Correction in major stock market indices like the S&P 500 should likely be limited to 3% to 5% prior to the election. Fiscal cliff concerns can however trigger a larger decline after the elections.'
As such, prudent investors need to focus on managing risk going forward.
Low Risk Investments with High Returns
Valuation, momentum, and news quality are the three elements of AlphaProfit's process for selecting low risk investments with high returns. AlphaProfit uses this process to consistently pick winners among Fidelity Select funds and sector ETFs over both the long-term and short-term.
Compounding at an annual rate of 20.6%, a dollar invested in this selection process in 1994 is now worth $33.17 while a comparable investment in the S&P 500 is worth just $4.50. This market-leading performance has enabled AlphaProfit Premium Service investment newsletter to bag Hulbert Financial Digest's #1 rank 12 times.
The AlphaProfit Core and Focus model portfolios will be reconstituted on Friday, September 28 with new low risk, high return investments. The new recommendations will include Fidelity funds and ETFs. Learn more about AlphaProfit's Fidelity fund recommendations and ETF model portfolios.
Looking ahead to the new low risk, high return mutual fund and ETF recommendations Dr. Subramanian said, 'Given high levels of uncertainty, our top priority in the near-term is to help subscribers preserve capital. We will look to AlphaProfit's investment process to select new low risk investments with high returns.'
'I am confident, we can help subscribers add to their recent gains by blending low risk investments with high return ones and by matching the recommendations with appropriate market timing advice', concluded Dr. Subramanian.
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By Hulbert #1 rank winner Dr. Sam Subramanian
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AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector
Investor's Newsletter, edited by Dr. Sam Subramanian. Leveraging sector funds, the Newsletter provides high-performance model portfolios
with Fidelity funds and exchange-traded funds.
It also includes actionable stock recommendations. This newsletter features among MarketWatch's top 10 investment newsletters and has won
the coveted #1 rank from Hulbert Financial
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