U.S. Global Investors, Inc. Reports Results for Fiscal Year 2014
August 29, 2014
Anticipate Before You Participate: Patterns in Trading
By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors
The primary unit of time measurement for high-frequency traders might be the microsecond, but for normal retail traders, it’s vital to know the best months, days and even half-hours of the day to make market transactions.
Consider Black Friday, the most active shopping day of the year. Let’s say a 60” 1080p plasma HDTV normally goes for around $900 but, on Black Friday, is discounted to $500. That’s a 44 percent savings. If you had a desire to own this TV and were somehow guaranteed a way to bypass the rabid mobs, you’d be careless to spend $900 on it the day before.
Likewise, you’d be at a disadvantage to buy or sell a security without first conducting some level of research to determine the optimal time, statistically speaking, to make a transaction. At the very least, you should know when not to make a transaction.
Fortunately, much of this research has already been conducted. My friend Jeffrey Hirsch, following in the footsteps of his late father Yale Hirsch, has for years edited the invaluable Stock Trader’s Almanac, which is updated annually. The book is notable for finding reliable patterns in market trends and behavior, on both the macro and micro scale. It also gave birth to such well-known investing adages as “Sell in May and Go Away” and the “January Barometer.”
Thirty-five years ago when I was just getting started in the investment business, I asked Yale how he managed to arrive at his findings. He told me that his background in music composition enabled him to “hear” melodies, if you will, in four-year presidential cycles, seasonal cycles, weekly cycles and more. This interdisciplinary approach of combining music and finance should inspire all investors to leverage their own unique skills, talents and backgrounds to seek patterns in the market that others might overlook.
If you don’t already own a copy of the Stock Trader’s Almanac, I urge you to make a special trip to the bookstore. You can also visit the book’s website and sign up for a free seven-day trial. The site provides a wealth of helpful and fascinating information for investors to peruse.
The Best Times to Trade
Previously I discussed market patterns in four-year presidential cycles and seasonal cycles. But now let’s look at months and work our way down to half-hours of the trading day.
“Sell in May and Go Away” is more than a clever expression. The Stock Trader’s Almanac has over six decades’ worth of data to support the reliability of this strategy. Based on the S&P 500 Index’s monthly closing prices, November, December and January are the best months for trading volume. Conversely, the worst-performing months of the year fall between May and October. Even though the Dow Jones Industrial Average has been up four of the past five Septembers, the ninth month has still been the worst-performing since 1950 for all of the major indexes and exchanges, including the Dow, S&P 500, NASDAQ and Russell 1000 Index.
What this shows is that, in August, September and October, it’s time to “nibble” on stocks, as prices are dropping. In March, April and May, it’s time to “trim.”
As I said, the Dow has been improving slightly in September over the last few years. Its 20-year return has risen to -0.51 percent from its 50-year return of -0.77 percent return.
Theoretically, investing from November 1 through April 30 and then switching to fixed-income products for the rest of the year seems to be a safe and effective strategy. If you back-test this to 1950 with an initial $10,000 investment, you would have gained an estimated 6,740 percent. Investing the same $10,000 from May through October would have cost you $1,024. What a difference six months makes.
I must stress, however, that this chart, and those that follow, shows only probability. Like a basketball bouncing down a rocky mountainside, nothing is certain, and actual behavior varies. Macro events such as presidential elections, midterm elections and changes in fiscal and monetary policy have a dramatic effect on the outcome of the market.
For further data, check out the Almanac’s best and worst S&P 500 entry and exit dates, separated into the five best months (November through April, excluding February) and seven worst months (May through October, including February).
Below you can see the best and worst weeks of the Dow, ranging from 2008 to 2012.
|Best 20 Weeks||Worst 20 Weeks|
|Week Ending||% Change||Week Ending||% Change|
|Source: Stock Traders Almanac 2014, U.S. Global Investors|
What’s interesting here is that, even though September is historically the worst month in which to trade, it had three of the best weeks and only one of the worst weeks. Conversely, December, one of the best months in which to trade, had only two of the best weeks. No week in December fell in the “worst” category, however.
Which day is the best to buy? Which day is the best to sell? That depends on whether we’re talking about days of the week, days of the month, days preceding or following holidays—there are innumerable contexts and implications to consider, all of which have already been carefully studied and scrutinized by Yale and Jeffrey Hirsch.
According to Hirsch, the best day to trade was once the last trading day of the month, followed by the first four trading days of the next month. Front-runners who noticed and took advantage of this trend, however, changed that, and a shift occurred in 1982. Since then, the strongest days tend to fall on the ninth, tenth and eleventh trading days of the month.
To the right, you can see what Hirsch’s research says are the days of the week when the greatest likelihood that performance will rise in the Dow will occur. Between 2008 and 2014, Mondays have been the weakest, rising less than 50 percent of the time—the only trading day to fall more than it rises, in fact.
As a special case study, let’s focus just on the three days before and after a holiday, specifically Labor Day, which arrives this Monday. Historically, how does the market react to this particular day?
The following chart tracks the historical 33-year performance of four major indexes three trading days before and after Labor Day. As you can see, investors tend to be bullish on the Friday preceding the weekend (-1) and bearish starting Tuesday, the first trading day of the week (+1). The NASDAQ does slightly better than the other three both before and after the holiday, leading into the rest of September.
There’s plenty more research on the best days on which to trade—and which to avoid—in The Stock Trader’s Almanac.
Hours and Half-Hours
Canada is the largest natural resource market in the world. The TSX Venture Exchange, with a market capitalization of over $37 billion, represents approximately 2,250 small-cap companies, many of them in the mining and metals space.
What you see above is the intraday market performance of the TSX Venture. I chose to use it as an illustration here because mining, metals and gas are some of our specialties here at U.S. Global Investors. Therefore, it’s imperative that our portfolio management team is cognizant of these exchange-specific intraday trends to buy and sell stock at the best possible price and execution.
With the TSX Venture, it’s generally smarter to sell rather than buy in the morning. Over the last two and a half years, this is when prices tend to be high. There’s heavy volatility as the market is reacting to what might have happened since the previous trading day’s closing bell. Unless you really know what you’re doing in this particular market, if you buy in the morning, you can often expect to see your shares sink as the day unfolds.
The “safest” time to buy would be in the late afternoon. The market has cooled somewhat and traders are gauging where things might be headed. The challenge during this time, however, is that volume has dipped and, as a result, spreads have widened.
A similar pattern emerges, a little like the shape of a waterslide, if you chart the intraday performance of the Market Vector Junior Gold Miners ETF, which gives investors exposure to small and intermediate gold and silver companies. Prices are highest in the morning, decrease throughout the afternoon and then get a final boost starting around 3:00. Making a trade at 9:30, then, will have a vastly different outcome than making one at 1:30.
Again, these charts are imperfect and show only probability. Trading activity can fluctuate widely, especially prior to and after earnings and economic announcements. And there will always be the unforeseen event—a workers’ strike, a CEO’s termination or resignation, civil unrest—that shakes up the market.
Now compare the TSX Venture and Market Vectors Junior Gold Miners ETF, both of which have their own DNAs of volatility, to the NASDAQ 100 ETF, which tracks the 100 largest and most active non-financial and international companies listed on the greater NASDAQ—in other words, blue chip stocks.
Intraday Performance of the NASDAQ 100 ETF (QQQ)
Over the same timeframe as the previous indexes, the pattern here has almost reversed. Relative lows in the morning. Modest improvement throughout the trading day. You could, in this market, reasonably buy in the morning and sell in the afternoon.
You don’t have to be as obsessed and intuitive with statistics and patterns as Yale or his son Jeffrey Hirsch, but it pays to participate. If there’s one thing I want to leave you with, it’s that research must be conducted on the market you’re planning to trade in before you enter.
- Major market indices finished higher this week. The Dow Jones Industrial Average rose 0.57 percent. The S&P 500 Stock Index gained 0.75 percent, while the Nasdaq Composite advanced 0.92 percent. The Russell 2000 small capitalization index rose 1.21 percent this week.
- The Hang Seng Composite fell 1.47 percent; Taiwan rose 0.60 percent and the KOSPI advanced 0.58 percent.
- The 10-year Treasury bond yield fell six basis points to 2.34 percent.
Domestic Equity Market
The S&P 500 Index rose to new highs again this week. The market remains in that Goldilocks zone where nothing seems to phase it and negative news is brushed aside and positive news is embraced; this is a classic bull market in that sense. Defensive areas of the market and energy stocks led this week, while traditionally more economically sensitive areas underperformed. This is a shift from recent trends.
- The telecommunications and utilities sectors outperformed this week as long-term bond yields hit the lowest levels in more than a year and bond proxies rallied. Every constituent in both indices were positive for the week.
- The energy sector was also very strong with broad-based participation in the rally. Energy stocks have underperformed over the past month and some of the hardest hit areas in the recent selloff such as exploration & production names were the best performers this week.
- Specialty pharmaceutical maker Mallinckrodt was the best performer in the S&P 500 this week, rising 11.72 percent. The stock has risen six days in a row as the company was added to the S&P 500 on August 18, in addition to closing on the acquisition of Questcor Pharmaceuticals on August 15.
- The industrials sector was the worst performer this week as the airline stocks underperformed along with other defense and aerospace related names.
- In an otherwise strong week, the casino and gaming names were weak as Wynn Resorts fell 3.62 percent. Numerous Chinese gaming stocks were also weak in anticipation of weak August gaming results from Macau, scheduled to be released early next week.
- Garmin was the worst performer in the S&P 500 this week, falling by 5.74 percent. A major brokerage firm issued cautious comments on the stock based on feedback from retailers when conducting their own channel checks.
- Earnings season has pretty much run its course and the market will shift attention to economic data and other macro items which look likely to maintain the status quo and the market’s upward bias.
- The U.S. economy is currently a bright spot in the developed world; this could funnel money back into the U.S. equity market.
- The path of least resistance for the market appears higher as this “classic” bull market phase of grinding higher with low volatility remains intact for now.
- Volatility has been remarkably low and this bull market has been an abnormally smooth ride. This calmness won’t last forever and late summer to early fall has traditionally been more volatile.
- The market could potentially begin to worry about a policy mistake from the Federal Reserve, either raising interest rates too soon or not fast enough. Either scenario would likely negatively impact the market.
- Geopolitical tensions remain high and while the market has been able to shrug off these events so far an escalation could be the catalyst for a long-awaited correction.
Treasury yields fell this week with the long end of the yield curve hitting new cycle lows. The bond market benefitted from weak global economic data, deflation fears in Europe, geopolitical turmoil, U.S. dollar strength and perceived relative value as many European countries trade at yields below comparable treasury yields.
- The Conference Board’s consumer confidence index rose to the highest level since October 2007. Consumer sentiment continues its steady improvement, which bodes well for the economic outlook for the next several months.
- Durable goods orders in July rose a record 22.6 percent driven by orders for Boeing jets.
- Second-quarter GDP was revised higher to 4.2 percent, reinforcing the idea of a robust recovery from a weak and weather-impacted first quarter and sets the stage for a strong start to the third quarter.
- Housing data was generally weak with new home sales in July posting the weakest results since March. In the same report housing prices fell 3.7 during the month and are now up only 1.2 percent for 2014.
- The European Commission’s business and consumer confidence index fell more than expected in August. Recent data points out of Europe paint a weak picture with growth stalling and deflation concerns rising.
- China’s oil demand in July fell 2.1 percent versus a year ago, highlighting concerns that the economy is slowing.
- Geopolitical tensions escalated this week with Russia “invading” Ukraine. If there were any doubts about Russia’s direct support and involvement with the Ukrainian separatists, those have been put to rest.
- European economic and inflation data has been weaker than expected and talk of additional European Central Bank (ECB) action increasing is not only taking European yields lower, but is dragging U.S. yields with them.
- With key global central banks back into easy policy mode and inflation trending lower in many parts of the world, the path of least resistance for bond yields likely remains down.
- The U.S. economy has some positive momentum and appears poised to continue to build on that as we move into the fall. Recent indications from some Fed officials point to the potential for higher interest rates sooner than many were expecting.
- Even with a holiday-shortened week we have significant economic data points such as the ISM Manufacturing Index and unemployment data. Both of these releases have the potential to be market movers and recent trends have been strong. If these trends continue, they may pressure bonds.
- Several Fed speakers have become more vocal in recent weeks indicating a potential shift in Fed thinking toward normalizing interest rates.
For the week, spot gold closed at 1,287.62 up $7.54 per ounce, or 0.59 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 2.40 percent. The U.S. Trade-Weighted Dollar Index rose 0.44 percent for the week.
|Aug 25||US New Home Sales||439K||422K||406K|
|Aug 28||Germany CPI YoY||0.8%||0.8%||0.8%|
|Aug 28||US Initial Jobless Claims||300K||299K||298K|
|Aug 29||Eurozone Core Inflation YoY||0.8%||0.9%||0.8%|
|Aug 31||HSBC China Manufacturing PMI||50.3||-||50.3|
|Sept 02||US ISM Manufacturing||57.0||-||57.1|
|Sept 04||ECB Main Refinancing Rate||0.150%||-||0.150%|
|Sept 05||Change in Nonfarm Payrolls||220K||-||209K|
- After Imperial Metals’ tailings breach, the government of Ontario announced that it has established the Ring of Fire Infrastructure Development Corporation to united First Nations and the public and private sectors. Canadian Natural Resource Minister Greg Rickford emphasized the need to engage with all communities in the region in addition to working effectively with the mining industry. The news is a positive sign for how future disputes will be settled by reason and not carried away with extreme policies.
- Gold traders are the most bullish in seven weeks amid the escalating tensions in Ukraine. The flat out invasion by Russia this week reminded investors of how attractive and useful gold is as a haven in uncertain times. Gold, after being down early in the week, closed up roughly 0.7 percent.
- As part of the continuing deregulation of the gold market in China, Shanghai has allowed 21 banks to become market makers in interbank gold wholesale market as of the first of next month. The announcement was released this week on the Shanghai Gold Exchange website and signals that gold is still very much an important asset in the world’s most populous country.
- Gold imports into Hong Kong fell by 42 percent in July from the prior month. The decline comes on the back of anti-corruption campaigns and price declines that have turned away Chinese consumers. Although the news reveals weakness in the gold market, measuring gold imports into China through Hong Kong is not as reliable as it once was. Routes have been established through both Shanghai and Beijing, with the former revealing a much smaller decline in gold consumption. Unfortunately markets and the media still report only the Hong Kong figures, which will continue to tell less and less of the story as liberalization of the gold market continues in China.
- Platinum prices have failed to break out so far this year despite significant production losses due to strikes. Platinum suffered roughly a 7 percent decline in price since early June as there continue to be no obvious catalyst for the metal at the moment.
- Despite the continued resilience of gold prices, gold backing global exchange-traded products have declined 2 percent so far this year. The contrarian performance of gold funds reveals that the precious metal is still struggling to attract flows.
- As shown in the chart, history reveals that September is gold’s favorite month. The historical outperformance of gold in September relates to India’s festival period, which extends from late August to October. The widespread use of gold in the festivals as gifts, prizes and decorations serves to boost gold demand in the coming month.
- Zinc prices are on an upward trend. Sharp increases in Chinese zinc imports, up 39.3 percent through July, reveal the strong demand support system underlying future zinc prices. Trevali Mining is one the few stocks that investors can play for zinc exposure.
- Recent comments from analysts attending a property tour of Balmoral Resources indicate that the company’s Grasset and La Martiniere exploration projects have substantial potential. The Grasset project drill results reveal high grade Ni-Cugip-PGE values, while drilling at the Bug Lake zone has identified a 1,000 meter long, 10-50 meter wide mineralized structure, which yields gold grades over 1,000 grams per tonne. Furthermore, Balmoral shows no need of external financing as it sits on roughly $9.5 million in working capital.
- This week saw a few jaw-dropping examples of poor leadership in Europe and the United States. In a shocking announcement, German Finance Minister Schaeuble stated that the beneficial effect of monetary policy is exhausted in Europe. The announcement is in response to the increased likelihood that the ECB will need to enact further stimulus to counter the growing deflation threat. If Schaeuble is correct and the ECB truly does not have the tools to fight deflation, gold could suffer. The other examples come from the United States, where two Federal Reserve presidents, William Dudley and Richard Fisher, reported substantial holdings of individual stocks and investment funds. Their extraordinary activity in financial markets is a glaring conflict of interest. Finally, as a response to the growing threat from the Islamic State in Iraq, President Barack Obama revealed he has no strategy, which should cause tremendous global concern.
- The summer rally for gold may have unfortunately already peaked. While historical summer seasonal gains for the gold price and the S&P/TSX Gold Index have appreciated by 15.5 percent and 23.6 percent respectively, this year has seen an appreciation of only 3.0 percent and 17.5 percent. Although this data is cause for concern that the summer gold rally has been minute, it is worth noting that last year’s summer rally end by August 28.
- The United Nations Interregional Crime and Justice Research Institute (UNICRI) is planning to implement a global study examining the relationship between organized crime and gold. While there are worthwhile concerns relating to gold smuggling and organized crime, this signal spotlight overlooks the prevalence of smaller illegal gold operations, shining all of its light on larger producers that operate through established legal practices and trade. This failure to distinguish between different gold producers serves to harm the gold mining industry overall.
- Rising oil prices led major integrated oil stocks to outperform this week. Suncor Energy rose 1.52 percent for the week.
- The S&P Supercomposite Oil & Gas Index outperformed on the back of rising oil prices as well. The index was up 3.4 percent this week after declining the prior four weeks.
- Gold stocks rallied this week, with the NYSE Arca Gold Miners Index rising 2.4 percent. After declining in the early part of the week, gold stocks turned around as global geopolitical tensions caused gold prices to rally.
- Diversified metals and mining stocks suffered this week. Falling 1.20 percent, the S&P/TSX Capped Diversified Metals and Mining Index was brought down by rising geopolitical tensions in Europe, which have created a negative outlook on future demand for base metals.
- Iron ore continued to decline this week, falling to the lowest level since October 2009. Down 8.4 percent for the month, iron ore prices are facing headwinds due to oversupply concerns. The Bloomberg World Iron/Steel Index fell 2.18 percent this week.
- Coal stocks continue to face significant headwinds. The Market Vectors Global Coal Price Index was down 0.16 percent this week.
- YPF SA and Petroliam Nasional have signed a $550 million agreement to develop shale oil in Argentina’s Vaca Muerta formation. The two state-owned enterprises are planning to drill several dozen wells using hydraulic fracturing at first. The project could reach as many as 1,000 wells over the coming decade.
- The escalating tension between Ukraine and Russia this week has led gold traders to maintain their bullish outlook on gold. Gold’s appeal to many as a haven was reinforced after Russian forces and artillery were reported entering eastern Ukraine.
- Palladium continues to rally as concerns mount over prospects for further sanctions on Russia that could limit global supply. Holdings in exchange-traded funds backed by palladium reached new highs this month.
- Mining companies in India suffered this week after the highest court ruled that the allocation of coal mines since 1993 was illegal. The news raises concerns over the current legitimacy of mining operations in India, which could be subject to penalties or seizures.
- Brazil and Argentina may begin exporting oil and gas according to Bloomberg. Both countries have the potential for increased energy production and could cut dependency on imports and focus on exports. The increase in global supply could weigh on energy prices.
- Brazil led emerging markets this week, with the Ibovespa Brasil Sao Paulo Exchange Index up roughly 3.5 percent. Equities rallied on the back of polling data that revealed presidential candidate Marina Silva would defeat incumbent Dilma Rousseff in an election runoff. Silva, who is perceived as more market friendly, has pledged to support inflation control and cut government spending.
- Despite the recent market correction in China, equity fund inflows to the country continued for a twelfth-consecutive week, with a cumulative $9.34 billion sum or around 40 percent of emerging market flows. Global investors continued to increase allocation to China ahead of the mid-October launch of the Hong Kong-Shanghai Stock Connect program which allows mutual market access for investors from both sides.
- The risk-off mentality that persisted in emerging markets caused consumer staples to outperform. Up roughly 1.05 percent on the week, consumer staples was led by JBS SA, a meat processor out of Brazil.
- Materials stumbled this week as rising global geopolitical tensions led investors to shy away from offensive stocks. The MSCI Emerging Markets Materials Index was down roughly 1.2 percent on the week. The decline was led by Jindal Steel & Power, which was down this week after India’s highest court ruled that the allocation of coal mines since 1993 was illegal, spurring concern that mining permits may be canceled.
- Ukraine and Russia continue to bump heads. Emerging markets suffered after NATO reported an increase in Russian military presence in eastern Ukraine. This most recent escalation of the conflict has led global leaders to once again discuss the imposition of tougher sanctions on Russia. Eastern Europe was particularly vulnerable to the news, with all countries suffering substantial declines since Thursday.
- Indonesia was among the worst-performing countries in Asia this week, as investors fretted about the short-term inflationary pressure from a possible fuel subsidy reduction by president-elect Joko Widodo who remains committed to phasing out the fuel subsidy program within several years.
- Upon Alibaba Group’s second-quarter results update, the 49-year old company founder Jack Ma ascended to the richest person in mainland China, according to the Bloomberg Billionaires Index, with a net worth of $21.8 billion ahead of the company’s initial public offering in the U.S. Together with second- and third-richest persons, Tencent Holdings CEO Pony Ma and Baidu CEO Robin Li, respectively, the staggering rise of internet entrepreneurs in China highlight further monetization potential for one of world’s most innovative and dynamic industries.
- European CPI inflation data continues to disappoint. Germany, Spain and Italy continue to see decreases in inflation year-over-year, with both Spain and Italy posting subzero percent change. Given the rising deflation threat and weak growth in Europe, it would appear the ECB must provide additional stimulus soon. If additional stimulus is provided, perhaps in some form of quantitative easing, it could serve to boost emerging markets. A cheaper euro could decrease facilitate investment in Asia and other emerging markets as borrowing costs decline for European investors.
- Economic data out of the United States continues to be strong, with official second-quarter GDP growing 4.2 percent. The continuation of a strong economic recovery in the U.S. should provide tailwinds for emerging market exports moving forward.
- Bloomberg reported that Alexander Kantarovich, head of research at JP Morgan Chase in Moscow, stated that the Russian stock market may face a “Lehman Moment” in the near future. He warns escalations in the Ukraine-Russia conflict create a substantial shock. The Micex Index has already fallen 6.6 percent this year with no positive turnaround in sight.
- Since the Second-Child policy was approved in China earlier this year, eligible couples have been slow to embrace looser restrictions based on provincial statistics. The growth prospect of China’s mass consumer sector such as infant foods and diapers has significantly diminished due to structural migration to e-commerce and rising competition to name brands.
The tables show the weekly, monthly and quarterly performance statistics of major equity and commodity market benchmarks of our family of funds.
|S&P Basic Materials||318.09||+2.22||+0.70%|
|Hang Seng Composite Index||3,374.32||-50.36||-1.47%|
|Korean KOSPI Index||2,068.54||+11.84||+0.58%|
|S&P/TSX Canadian Gold Index||202.18||+3.77||+1.90%|
|Natural Gas Futures||4.08||+0.24||+6.30%|
|10-Yr Treasury Bond||2.34||-0.06||-2.54%|
|S&P Basic Materials||318.09||+4.89||+1.56%|
|Hang Seng Composite Index||3,374.32||-332.01||-14.83%|
|Korean KOSPI Index||2,068.54||-14.07||-0.68%|
|S&P/TSX Canadian Gold Index||202.18||+1.74||+0.87%|
|Natural Gas Futures||4.08||+0.30||+7.82%|
|10-Yr Treasury Bond||2.34||-0.22||-8.44%|
|S&P Basic Materials||318.09||+9.16||+2.97%|
|Hang Seng Composite Index||3,374.32||+218.38||+6.92%|
|Korean KOSPI Index||2,068.54||+73.58||+3.69%|
|S&P/TSX Canadian Gold Index||202.18||+32.21||+18.95%|
|Natural Gas Futures||4.08||-0.46||-10.13%|
|10-Yr Treasury Bond||2.34||-0.14||-5.45%|
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio.
The Emerging Europe Fund invests more than 25 percent of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.
Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.
Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5 percent to 10 percent of your portfolio in these sectors.
Stock markets can be volatile and can fluctuate in response to sector-related or foreign-market developments. For details about these and other risks the Holmes Macro Trends Fund may face, please refer to the fund’s prospectus.
Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. The Near-Term Tax Free Fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. The Near-Term Tax Free Fund may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer..
Investing in real estate securities involves risks including the potential loss of principal resulting from changes in property value, interest rates, taxes and changes in regulatory requirements.
Past performance does not guarantee future results.
Some link(s) above may be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.
These market comments were compiled using Bloomberg and Reuters financial news.
Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings as a percentage of net assets as of 6-30-2014:
NASDAQ 100 ETF: 0.0%
Market Vectors Junior Gold Miners ETF: Gold and Precious Metals Fund, 0.55%; World Precious Minerals Fund, 0.55%
Mallinckrodt plc: 0.0%
Questcor Pharmaceuticals, Inc.: 0.0%
Wynn Resorts Ltd: All American Equity Fund, 1.58%
Garmin Ltd: 0.0%
The Boeing Co.: 0.0%
Imperial Metals Corp.: Gold and Precious Metals Fund, 1.34%; World Precious Minerals Fund, 1.37%
Trevali Mining Corp.: World Precious Minerals Fund, 0.63%
Balmoral Resources Ltd: World Precious Minerals Fund, 1.11%
Suncor Energy, Inc.: Global Resources Fund, 2.01%
YPF SA: 0.0%
JBS SA: 0.0%
Jindal Steel & Power: 0.0%
Alibaba Group: 0.0%
Tencent Holdings Ltd: China Region Fund, 4.55%
Baidu, Inc.: 0.0%
*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.
The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.
The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.
The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.
The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver.
The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.
The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.
The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500.
The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500.
The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period.
The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500.
The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500.
The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500.
The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500.
The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500.
The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500.
The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.
The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.
The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns.
The Consumer Confidence Index (CCI) is an indicator which measures consumer confidence in the Economy.
The ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states.
The S&P 1500 Supercomposite Oil & Gas Exploration & Production Index is a capitalization-weighted index comprised of stocks whose primary function is exploring for natural gas and oil resources on land or at sea.
S&P/TSX Capped Diversified Metals and Mining Index is an index of companies engaged in diversified production or extraction of metals and minerals.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
The MICEX Index is the real-time cap-weighted Russian composite index. It comprises 30 most liquid stocks of Russian largest and most developed companies from 10 main economy sectors. The MICEX Index was launched on September 22, 1997, base value 100. The MICEX Index is calculated and disseminated by the MICEX Stock Exchange, the main Russian stock exchange.
The Russell 1000 Index is a U.S. equity index measuring the performance of the 1,000 largest companies in the Russell 3000 Index.
The Russell 3000 Index consists of the 3,000 largest U.S. companies as determined by total market capitalization.