You’ll Never Guess the Top-Performing Stock Markets of 2015

Written by Nicholas Vardy, CFA.

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With the S&P 500 trading at just about the same level as it was a year ago, 2015 has turned out to be a very tough year for investors.

After enduring the sharpest correction since 2011, both U.S. and international markets bounced strongly.

Yet, as last week's sharp pullback confirmed, they are still remarkably unsteady.

Of the 47 global stock markets that I follow on a daily basis, only 15 markets out of the 47 are up in 2015, with the U.S. stock market barely eking out a gain. And a mere five global stock markets have posted gains over the past three months.

Still, there are a handful of markets that have eked out double-digit percentage gains as we head into the home stretch and the last six weeks of trading in 2015.

What is perhaps the most surprising is that three of these markets — Denmark, Ireland and Belgium — have been strong performers over the past five years, with all three ranking among the top five performing global markets during the past half-decade.

What are some of the best stocks in these markets?

1. iShares MSCI Denmark (EDEN) — up 16.02%

Francis Fukuyama, the author of the classic "The End of History," once told me that the eternal question among political scientists around the world is: "Why can't we all be more like Denmark?" Democratic presidential candidate Bernie Sanders agreed, invoking Denmark and other Scandinavian countries as examples that the United States should aspire to emulate. That explains the curious ticker symbol — EDEN — for the Danish exchange-traded fund (ETF).

Investors in Denmark may be coming around to Fukuyama's view, given the performance of the iShares MSCI Denmark Capped (EDEN) over the past few years. One reason for EDEN's consistently impressive returns is its 35% exposure to the healthcare sector. The ETF's largest holding, Danish pharmaceuticals giant Novo Nordisk (NVO), accounts for close to 22% of the fund's weight.

The Danish economy is expected to grow by 1.6% this year, by 2.0% next year and by 1.8% in 2017. The European Union (EU) Commission forecasts unemployment in Denmark will also continue to decline from 6.1% this year to 5.8% in 2016 and to 5.5% in 2017. EDEN also benefits from Denmark pegging its krone to the euro, which provides the country's currency with unique stability.


Why You Should Never Let a Hedgehog Manage Your Money

Written by Nicholas Vardy, CFA.

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Predicting the future — whether in the realm of financial markets, world events or even sports — is a tough game.

And that's whether you examine financial statements, interpret stock charts, defer to astrology — or even read animal entrails as the Romans did.

Yet there are some folks who are better forecasters than others.
That is the conclusion of Philip Tetlock's and Dan Gardner's book, "Superforecasting: The Art and Science of Prediction."
Having read his earlier academic work "Expert Political Judgement," I already was familiar with Tetlock's ideas and conclusions.

In fact, I previously wrote about Tetlock's work, in which he compared the forecasting abilities of "hedgehogs" versus "foxes."

It all comes down to thinking styles.

Hedgehogs Versus Foxes

As the Greek poet Archilochus observed: "The fox knows many things, but the hedgehog knows one big thing."

Hedgehogs have one overarching "Big Idea" into which they shoehorn their opinions and worldview. The Big Idea is like a pair of glasses that the hedgehog never takes off. No critical thinking is required. Like a Marxist, a member of ISIS or the head of a cult predicting the end of the world, hedgehogs are ideological. They never change their minds. Even when their predictions are clearly wrong, they tell you, "Just wait."

Foxes are a very different animal. Foxes are the pragmatic experts who draw on a wide range of analytic tools. They gather as much information as possible from as many sources as possible. They shift mental gears. They talk about probabilities and not certainty. They readily admit when they are wrong and are willing to change their minds.

Thankfully, they are the types of folks who run the space program, the military and occupy the bowels of the top university and government research labs.

Still, hedgehogs have a built-in advantage, which irks Foxes (like yours truly) to no end.

Hedgehogs are more media-friendly, because their simplistic thinking can be reduced to a simple but catchy soundbite. I've always envied hedgehogs because they can keep saying the same thing over and over again and still attract the uncritical adulation of their acolytes.

There are two ironies here.

First, Foxes hardly ever make it into the media. They don't make for "good TV." Despite his success, George Soros' laborious speaking style and strong Hungarian accent are a TV producer's nightmare.

Second, as a rule of thumb, the more confident the forecaster, the more likely it is that she is dead wrong.

Nevertheless, the conclusions of Tetlock's lifetime of research is clear: In terms of forecasting, Foxes beat Hedgehogs.

And it ain't even close.



Written by Nicholas Vardy, CFA.

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October 2015

The "Ivy Plus" Investment Program gained 4.33% for the month.
The "Global Gains" Investment Program rose 5.49% for the month.
The "Double Your Dividends" Investment Program added 3.35% for the month.
The "American Alpha" Investment Program climbed 6.54% for the month.
The “Masters of the Universe” Investment Program jumped 7.93% for the month.
(* The performance figures listed are after management fees.)


The "Ivy Plus" Investment Program added 4.33% for the month. The program is down 3.54% year-to-date, through October 31. Ten out of 26 positions have posted gains for the year.

All but two of the positions in the Ivy Plus Investment Program gained for the month that saw a sharp recovery after the sharp sell-off of the previous two months. Timber turned out to be the biggest gainer, soaring 9.57%, followed by corporate spin-offs, which recovered 8.10%. Otherwise, it was U.S> large cap stocks and S&P 500 Dividend Payers that bounced the most strongly in U.S. markets, with gains of 7.91% and 7.33%, respectively.

The hedge fund long short strategy was hit  the hardest dropping 5.76% after being whipsawed by the markets sharp recovery and a sell-off in one of its largest biotechnology holdings.

The “Ivy Plus” investment program positions performed as follows:


Monthly Gain %

YTD Gain %







US Large Cap



US Mid Cap



US Small Cap



Developed Large Cap



Developed Small Cap



Emerging Markets



Emerging Markets Small Cap



Emerging Markets – Low Volatility



Private Equity



Business Development Companies (BDCs)



S&P 500 Equal Weight



S&P 500 Dividend Payers



Initial Public Offerings (IPOs)



Corporate Spin-offs






Fixed Income






US Treasuries



Foreign Bonds



Inflation Protected



High Yield Bonds






Real Assets






US Real Estate



International Real Estate












Hedge Funds






Global Macro



Hedge Fund Long/Short



Managed Futures



Hedge Fund Managers




The "Global Gains" Investment Program added 5.49% for the month. The program is down 1.84% year-to-date, through October 31. Four out of 10 positions have posted gains for the year.

Global stock markets recovered in October , and as with the U.S., it was large cap stocks that lead the way with a gain of 7.30%. It is notable that 8 out of 10 positions generated gains of at least 5% or more.

 Global emerging markets and frontier markets continue to lag the most over the course of the year, while ex-U.S. small caps and high quality global stocks lead on the upside, with gains of 8.54 and 7.15%, respectively.

 The “Global Gains” investment program positions performed as follows:


Why I Think Commodities May Have Bottomed

Written by Nicholas Vardy, CFA.

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Back in March 2012, I wrote a then-controversial article — an obituary, really — on the "commodities supercycle."

My call that commodity prices had peaked, marking an end to the commodities boom, was greeted by widespread skepticism.

As it turned out, my timing was pretty much spot on.

A glance at the chart of the Jim Rogers-inspired ELEMENTS Rogers Intl Commodity Agriculture TR ETN (RJA) below confirms this.

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Of course, no investor is more identified with the "commodities supercycle" theory than Jim Rogers.

Unhappy with the make-up of the commodities indices of Dow Jones, Reuters and Goldman Sachs, Rogers set up his own index to match in 1998 — the Rogers International Commodities Index (ROCI). Rogers' index consists of a diversified portfolio of 36 commodities, including soft commodities such as wheat and corn, hard metals like nickel and copper, animals like live cattle and lean hogs and a dash of canola and azuki beans. It's the broadest measure of commodities out there.

The Birth of the Current Commodities Supercycle

According to Rogers, the 20th century saw three secular bull markets in commodities (1906-1923, 1933-1955, 1968-1982), each lasting a little over 17 years. Rogers believes that the latest secular bull market in commodities launched in 1998 after years of low prices had depleted commodities' inventories across the board.

That's when demand for commodities world-wide began to explode. Americans needed oil to feed gas-guzzling SUVs. New McMansions gobbled up huge supplies of lumber, steel, aluminum, platinum, palladium and lead. Europeans began to mimic American lifestyles. In Asia, both Japan and Korea became one of the world's leading importers of commodities. And, within a few years, China would become the #1 consumer of copper, steel and iron ore in the world — consuming more of both than the United States and Japan combined.

The supply side began to pressure commodities' prices, as well. No major oil field had been discovered in the world for the last 35 years. Virtually no new mine shafts had been opened in the prior 20 years. And new sugar plantations were as rare as black swans.

The Collapse of Commodities: A Reprise

This round of global commodity demand peaked in 2012. And it has been downhill ever since.

This was due to a single factor: collapsing demand from China.

Fueled by a combination of an unprecedented investment boom in both housing and infrastructure, China's demand for commodities surged over the first decade of the 20th century.

The explosion for demand was staggering. Between 2000 to 2010, the dollar value of China's imports surged by 42.5 times for iron ore, 248 times for thermal coal and 16.2 times for copper. During the same period, China's production (in quantity terms) jumped by 441.8% for aluminum, 219.5% for cement and 396.0% for steel.

By building dozens of empty cities, scores of underutilized airports and thousands of bridges to nowhere, China's level of domestic investment as a percentage of gross domestic product (GDP) hit close to 50% of its GDP — unprecedented in economic history.

Yet, those levels were no more sustainable than the same strategy was for the Soviet Union in the 1930s. In the vocabulary of developmental economists, this kind of "extensive" growth simply could not go on forever.


O Canada! Your Liberal Winds of Change

Written by Nicholas Vardy, CFA.

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This week's Global Guru guest column is by my friend and fellow Eagle Daily Investor contributor Jim Woods. In today's article, Jim weighs in on the political winds of change blowing in Canada and what it means for investors.

Canadian voters just hung a decidedly left turn.

Last week, Canada's Liberal Party won a landslide election victory while also capturing an outright majority in parliament. In the process, the Liberals drove the rival Conservative Party from power, a move that culminated in Prime Minister Stephen Harper resigning as his party's leader.

The country's new Prime Minister, Justin Trudeau, is actually a very familiar name in Canadian politics. The 43-year-old Trudeau is the son of the late Prime Minister Pierre Trudeau, who held the same office from 1968 to 1979 and again from 1980 to 1984.

While the Liberal Party was expected to win a fair number of seats in parliament, the scope of the victory shocked most Canadian political watchers. When the final votes were tabulated, the Liberal Party had won 184 seats, while Conservatives won just 99 seats. The marked turn left was punctuated with the extreme left-leaning New Democratic Party, which took 44 seats.

Now, if you're a free-market advocate like me, the Canadian left turn is a philosophical disappointment. It also doesn't bode well for our neighbors to the north or liberty in general.

The reason why is because Trudeau's idea to get the ailing Canadian economy going again is to implement large-scale government spending programs, paid for courtesy of deficit spending.

A Big-Government Agenda

The prime-minister-elect campaigned on the idea that the Conservative Party had failed the public when it came to economic growth.

To be certain, Canada's economy has suffered over the past year. Unfortunately for the incumbent party, the precipitous decline in global commodity prices — especially for oil — during the past year really cut into Canada's economic performance.

In fact, moreso than anything else, the slippery price of oil, which is Canada's largest export, was the Conservative Party's biggest opponent. Adding fuel to an already volatile situation was Prime Minister Harper's solution to the sagging economy: fiscal austerity.

Austerity is something that's almost never popular among an electorate, and it's even less popular in a country where there's a history of European-style socialism. Not too many voters wanted to swallow the bitter medicine of austerity in an attempt to get healthy again, hence the ill-fated election outcome.

In direct contrast to the Conservative Party's austerity came Trudeau and the Liberals, who say they plan to jump-start the Canadian economy via the age-old left-wing solution of greater deficit spending and military cuts.

This time around, the Liberal message was the winning formula.

The Investment Equation

For those of us who like to look to the north for investment ideas, I think the Trudeau victory is likely to be a net negative over the long term. Short term, however, it might actually be a positive. One big reason why is that the injection of new political blood into a country often can be a catalyst for a short-term bullish track in said country's equity markets.