Today, I want to talk about a couple of our stocks and fill you in on our 2010 Survey…
But first, a word about what’s going on with the market right now:
This week gave investors a return to heightened volatility as the VIX volatility index broke out to new highs for the month of September. But while the media focused on economic data as the driving force in the increased sway for stocks, the truth was much easier to understand…
On Monday, the S&P 500, a good proxy for the broad market as a whole, broke through a significant technical resistance level at 1130, taking stocks well above last Friday’s levels. Not surprisingly, Tuesday and Wednesday saw stocks lower as the market tested newfound support at the 1130 level.
While the Fed’s rate meeting was blamed for the tumble in equities, the market was really drooping because of technical phenomena.
Remember, the financial media likes explanations. It’s tough to say “the market’s up today, and we don’t know why…” so instead, CNN and CNBC attribute moves to whatever news story is in the headlines – even if it doesn’t really make sense. The fact is that on a day-to-day basis (barring a real piece of market-moving news) we really have little understanding over why the market moves the way it does. Despite that fact, technical analysis at least gives us a method of predicting how stocks will move in the short-term. Over the longer-term, nitty gritty fundamental analysis rules the roost.
So, what’s going on in the short-term?
Right now, it looks like more bullish days could be ahead… Following the market’s pullback earlier this week, we’re getting a bounce higher off of support today. Now that support has been set at 1130, we’ve got pretty unobstructed upside to the 1175 level.
Now onto our open positions…
Our Berkshire Play Powers On
Berkshire Hathaway (NYSE:BRK.B) is having a powerful run-up today thanks to strength in the insurance industry as a whole. As I write this, the stock is up around 3.5% intraday – making our overall gain on the stock more than 27% since we bought it in January.
That stellar performance is even more impressive compared to the rest of the market: the S&P 500 is down 0.2% over that same period. I’ll have some more interesting performance notes in next week’s quarterly letter to subscribers…
Selling Beer In China
Our long-term investment in beer is also paying off right now. Earlier this week, Molson Coors Brewing Company (NYSE:TAP) announced a deal to acquire a 51% stake in a joint venture with a Chinese beer company. The deal will help Molson Coors introduce popular American brands (like Coors Light) to Chinese consumers. With excellent beverage prospects in the People’s Republic right now, this move could provide Molson Coors with some top-line growth potential – especially now that China has vowed to let their currency appreciate for the rest of 2010.
Our 2010 Survey…
As I mentioned in last week’s market recap, I’m sending out our first quarterly letter to subscribers at the end of September (i.e. next week). In it, I’ll touch on strategies going forward, our performance, and changes coming to the Rhino Stock Report.
But I need your help too. Please fill out our Rhino Stock Report 2010 Survey. It’ll help me align this publication with your interests – and it’ll give you the chance to make suggestions and ask me questions.
I’ll answer your questions in next week’s letter. Click here to fill out the survey now – it’ll only take 5 minutes of your time.
Editor, The Rhino Stock Report