PRISM expands equity exposure in volatile market

BRIAN LOPES
STAFF WRITER

The S&P 500 has retreated 33.56 points, or 1.78 percent since April 1. There has been a sharp sell-off from last Friday’s high of 1,896 points to Tuesday’s close of 1851.96. This indicates the market is bearish going into quarterly earnings. The markets have been seeing this sell-off before earnings trend throughout the fall and winter 2013, and it looks to be continuing into the Spring of 2014.

Alcoa (NYSE:AA) kicked off this earning season after reporting earnings Tuesday after the market closed. Alcoa beat estimated earnings per share by $0.04 and reported Q1 revenue of $5.5 billion. This looks like a strong sign for the market to come, and hopefully the market fund some buyers in trading Wednesday.

The University’s Portfolio of Responsible Investments under Student Management (PRISM) club has also been hurt by the recent economic slowdown. The club’s market value went from $321,000 to $317,500 a total loss of 1.09 percent since Friday. PRISM executive Jake Kanavy commented on the club’s portfolio.

“We’ve recently encountered quite a number of people exiting long potations on the growth stocks that catalyzed the unprecedented market appreciation in 2013. Market participants are flocking to safer plays such as utilities and healthcare due to the uncertainty of the macroeconomic atmosphere and nearing corporate earnings announcements. I believe that’s why we saw some bids from Friday to Tuesday,” Kanavy said. “I am optimistic the portfolio will appreciate heading into the second quarter of this year and beyond as we implement new strategies and increase our global exposure based on student analyst expectations.”

PRISM’s portfolio return is currently yielding an impressive 9.63 percent YTD. This seems impressive, as the S&P 500 has seen an YTD return of 11.46 percent. With recently acquired positions in Comcast (NASDAQ:CMCSA) and Volkswagen AG (OTCMKTS:VLKAY), PRISM has seen some positive gains. Something the club was unaware of was the sharp decline in Visa Inc. (NYSE:V). Visa was PRISM’s top gainer for the year with a gain north of 20 percent, but since sanctions in Russia, a lawsuit by Walmart, and other negative news on the company shares have fallen. The club is still positive on their position in Visa. Visa has yielded 8.68 percent for the club.

The market as a whole looks to be quite unstable in the short term. Investors are advised to remain vigilant in the coming months in domestic markets, but remain bullish on foreign markets. They should consider buying markets such as Europe, Japan and Mexico, and risk tolerant investors to park some capital in some Russian markets for the exposure. It is the belief around Wall Street that the violence in the Ukraine will not go on forever, which is why many firms are acquiring Russian companies at a discount right now.

Contact the writer:
brian.lopes@scranton.edu

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