Mark Skousen

“If we are in a transition period, the person in the most danger is the one who has recently done well, because he’s done well on things that are about to change.”

-- Dean LeBaron (Batterymarch Financial Management)

Last Friday, the Wall Street Journal had a cover story, “Big Investors Lose Even as Market Rises,” about hedge fund managers like Paul Tudor Jones whose investments are down for the year even as the stock market is ahead by 5%. Tudor and other big hedge fund managers have taken losses on buying Nikkei Japanese stocks and shorting Treasuries.

These big financial operators were betting that last year’s winners would continue to outperform.

But last year’s winners may be this year’s losers, and vice versa. Treasuries have rallied this year, surprising most investors. Japan imposed a massive increase in its national sales tax in its misguided attempt to reduce its high debt level, rather than growing its way out of debt. The Nikkei index, which was up sharply last year, has suffered this year.

Meanwhile, ourForecasts & Strategiesportfolio of high dividend-paying stocks and funds have outperformed the stock market this year, with 15 out of 18 recommendations profitable. We’ve made several changes in our portfolio in 2014, shifting into energy stocks and India, whose stock market is booming now that it has voted in a pro-business prime minister.

I asked Donald Smith, my favorite hedge fund manager in New York, about the Wall Street Journal story, and he was happy to report that his portfolio is ahead 19.6% so far this year before fees. He’s been bullish on airline stocks, which have skyrocketed. Don has managed money for more than 30 years with incredible success -- he’s outperformed Warren Buffett. He will be doing a breakout session at FreedomFest on his “deep value” investing strategy. I hope you can join us -- his session alone will be worth the price of the ticket. To see what all of the excitement is about, see below.

Yours for good investing, AEIOU,

Mark Skousen

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Mark Skousen

Mark Skousen, Ph. D., is the editor of the monthly investment newsletter, Forecasts & Strategies, as well as three weekly trading services, Skousen High-Income Alert, Hedge Fund Trader and Fast Money Alert.

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