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AlphaProfit Newsletter: November Indicator Update
November 1, 2006
Dear Valued Subscriber,
The AlphaProfit™ model portfolio returns as of October 31, 2006 are as follows:
| Oct. 2006 | 2H 2006 | 1 Year | 3 Year | Sep. 2003 Inception | |
| AlphaProfit Focus™ Model Portfolio | 4.7% | 0.2% | 13.5% | 80.2% | 98.8% |
| AlphaProfit Core™ Model Portfolio | 3.1% | 5.9% | 18.3% | 54.0% | 65.9% |
| DJ Wilshire 5000® Total Market Index | 3.7% | 8.2% | 16.6% | 42.0% | 50.8% |
In October the broad market, as measured by the Dow Jones Wilshire 5000 Index, made it three-in-a-row by adding to
its gains in August and September. The rally was generally broad-based from a capitalization perspective with
small-cap stocks marginally faring better than large-caps.
The October rally was supported by strong third quarter earnings reports amidst a continuing decline in the price of oil.
With recession appearing less likely, investors returned to industrial and consumer discretionary sectors making
them better performers. Meanwhile, technology-related shares succumbed to earnings shortfalls. Disappointing news
on some experimental drugs and uncertainty over the outcome of upcoming U. S. House and Senate elections
weighed on health care shares.
Fears of Medicare Part D legislation being amended during President Bush’s term are overblown even if Democrats were to take control of the House. Negative sentiment surrounding health care shares should likely become less
of a factor after the November 7 elections.
Maintaining Fidelity Select Materials at Favored Buy.
In October, ‘Favored
Buy’-rated Fidelity Select Materials (FSDPX) with a 5.8% return was the best performer in
the model portfolios. Materials and railroad companies posted healthy year-over-year earnings comparisons.
Consolidation activity continued in the materials space with India's Tata Steel agreeing to buy
Anglo-Dutch Corus Group. This triggered speculation of U. S. Steel becoming a takeover target. With outlook
for global growth remaining positive and valuation in the materials group remaining attractive, we continue to
rate Fidelity Select Materials ‘Favored Buy’.
Rating Fidelity Select Gold Favored Buy.
Fidelity Select Gold (FSAGX) gained 3.7% in October as the yellow metal weathered unfavorable winds from the oil market while the U. S. dollar held its own. There are a few factors that can cause gold to continue
its rally. A softening U. S. economy along with a burgeoning trade deficit can cause the U. S. dollar to weaken.
Gold has the possibility of receiving support from a rising trend in oil as OPEC reins in production and winter
demand kicks in. Lastly, gold is entering a seasonally favorable period and sentiment appears to be improving as
gold for December delivery has regained the $600 per ounce threshold. We rate Fidelity Select Gold ‘Favored Buy’.
Maintaining AlphaProfit Sector Portfolio Indicator at Buy.
The broad market has rallied impressively during the past three months. This in turn makes the broad market
vulnerable to profit-taking. That said, the backdrop for sectors and industry groups included in both model portfolios is generally favorable.
We leave the composition of the model portfolios unchanged at the present time and continue to rate the
AlphaProfit Sector Portfolio
Indicator ‘Buy’. The model portfolio compositions are available in the Subscriber Login
area of the web site.
We welcome your comments.
Best regards,
Sam Subramanian
AlphaProfit Investments, LLC
Ideas. Insights. Results.
http://www.alphaprofit.com
Notes: The AlphaProfit Sector Investors’ Newsletter™ is for information purposes only. AlphaProfit Investments, LLC is not soliciting any subscriber to buy or sell any security. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. Before buying any mutual fund, read its prospectus carefully. AlphaProfit Investments, LLC cannot and does not give any assurance that the present or future model portfolio changes will be profitable. Past performance is not a guarantee for future results. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. AlphaProfit Investments, LLC is not responsible for any errors or omissions. AlphaProfit Investments, LLC neither is affiliated with nor receives any compensation from Fidelity Investments. Please review our Terms and Conditions of Use and Subscriber Agreement which is available on our website at www.alphaprofit.com; they govern your relationship with AlphaProfit Investments, LLC, including, but not by way of limitation, use of this newsletter. No part of the AlphaProfit Information may be reproduced or re-transmitted in any manner without written permission of AlphaProfit Investments, LLC.
Copyright © 2006. AlphaProfit Investments, LLC. All rights reserved.