Caffeinated returns


An Asian buffet, the Internet, and coffee: Three of my favorite things.  They’re also our favorite sectors, too, at the moment.

For a vast number of people in the world, every day starts out with a cup of coffee and checking Facebook (FB), and maybe even a post on Facebook about their coffee.

Between a Starbucks (SBUX) on every corner of the globe and the convenience of the k-cup maker Keurig Green Mountain (GMCR), Americans are drinking more coffee than ever.

 

coffee-starbucks

 

Record Year

It’s a fact that global demand for coffee is headed toward record levels this year, and supply is having a hard time keeping up.   

Other commentators have recently noted that “stockpiles at warehouses monitored by ICE have dropped for 11 straight quarters” and that weather conditions have hurt Brazil’s coffee crop this year.  

This sets the stage for a classic supply-and-demand increase in prices.  

 

Cup of Jo

So one of our top picks this month is the iPath Bloomberg Coffee ETN (JO).

Another sector to love is the First Trust Dow Jones Internet ETF (FDN), in our opinion. 

This fund’s largest holding is Facebook (FB) with a weight of over 10% as of September 7.  

Just a few years ago, the consensus was that Google (GOOG) would continue to be the leader in online display revenue.

More recent studies show that Facebook has surpassed Google and continues to take market share each year as Facebook Ads have become a central part of many business’ marketing strategies.

As we head into the fall and winter, it’s our opinion that businesses will begin to ramp up these ad campaigns and Facebook will see a wave of ad spending inflows.  

And, as investors begin to anticipate this, we think it creates a positive outlook for this fund.

 

Asia Buffet

And lastly, we like the Asian buffet.  

By this we mean that we like a whole smorgasbord of Asia-based ETFs including the iShares MSCI South Korea (EWY), the iShares MSCI Hong Kong (EWH), the India Fund Inc (IFN), and the VanEck Vectors Russia ETF (RSX).  

And what’s not to like? If interest rates are raised, that will likely strengthen the dollar, which will likely, in turn, boost the exports and economies of many of these Asian countries.

And what could be more unnerving than fretting about the uncertainty of US presidential elections?

This month we’ll just take a vacation from the US and not worry about it, and maybe go find a real Asian buffet instead. Let’s eat!

Photo Credit: Marco Pakoeningrat via Flickr Creative Commons

Author profile

Auxan Capital Advisors LLC
Auxan Capital Advisors LLC
Auxan Capital Advisors, LLC is a growing RIA based in Springfield, MO. They work with individuals and institutions to actively manage their portfolios, give investment advice, and provide consulting services. Chief Investment Strategist, Derek Schmidly, has 12 years of experience managing portfolios actively and developing quantitative systems for trading. He has an MBA from the University of Missouri and is an Adjunct Professor of Finance at Evangel University. President, Paul Ebisch, is also an experienced asset manager. Under his management, client portfolios performed exceptionally well through the last two major recessions. He has also managed large bond portfolios for banking institutions. Paul and Derek have been managing portfolios together since 2004.