STOCKS barely changed last week, with our portfolios edging up 0.4 per cent on average. The median gain was 0.2 per cent.

 

The lowest forward PE portfolio is the biggest gainer, advancing by 1.7 per cent. Two stocks contributed the bulk of the gain: China Fishery and Hong Leong Asia. The former popped 19.2 per cent while, the latter added 12.2 per cent.

 

Hong Leong Asia also helped lift the value of the highest dividend yield portfolio. The portfolio increased by 1.3 per cent.

 

There may be some jitters in the market this week as Wall Street posted its worst day of the new year on Friday. All the three major indexes were down about one per cent, with the Dow Jones industrial average falling nearly 101 points.

 

The New York Times reported that traders saw promise and peril in JPMorgan Chase's financial report. The bank said that it earned US$11.7 billion last year and that its profit quadrupled in the fourth quarter, beating expectations. But the firm's chief executive noted that losses on consumer loans remained high and would remain an issue in 2010.

 

'It does continue to bring up old fears,' an investment strategist, was quoted as saying.

 

Two weeks into the new year, Wall Street finds itself searching for direction, market watchers noted.

Over the next few weeks, companies will continue to announce fourth-quarter earnings, and the results are expected to be mostly positive.

 

Expectations this quarter, however, have shifted, and investors are looking for indications that businesses have moved beyond cost-cutting and have started to bring in revenue.

 

After the market closed on Thursday, Intel reported a 28 per cent increase in revenue and the largest gross profit margin in its history. Overnight, its shares climbed, but they closed down 3.17 per cent on Friday.

 

'It is an interesting juxtaposition,' Hank B Smith, chief investment officer for Haverford Investments, was quoted as saying. 'These all beat expectations, but by the time all the news is disseminated, there's concern this may be the peak for profit margins for these companies.'

 

Mr Smith said that he did not believe the worries were valid. But he said that Wall Street's negative reaction to the cheery reports could indicate that investors were using the earnings season as a selling opportunity.

 

'It would be healthy for the market to consolidate and pull back,' Mr Smith said. 'It's very normal to have a correction - defined as 10 per cent or more - in a bull market.'

 

As for our portfolios, the purpose is to provide real-time tracking of the various trading strategies - namely, buying the stocks which are the most recommended by analysts, those which have seen the highest upgrades by analysts, the one-year top losers, the highest dividend yielding stocks, stocks with the lowest forward price-earnings ratio and those with the lowest price-to-book ratio.

 

The process is mechanical and no qualitative judgement is exercised. So stocks that appear in the portfolios are not necessarily good buys. But as the status of the portfolios shows, buying the most down-trodden stocks does pay off over time.