Dear subscribers,


This is special intraday update #2004c for Friday early afternoon, May 23, 2014.


I sold all my remaining shares in SCIF between 48.94 and 49.09 per share, which had been by far my largest emerging-market position and my fourth-largest position overall prior to yesterday (after GDXJ, KOL, and XME, with GDX a close fifth). SCIF is a fund of small-cap Indian equities which had become ridiculously undervalued last summer due almost entirely to negative media sentiment, which was why it was my most frequent purchase during August 2013. Not much has changed economically in India since then, while the sentiment has almost completely reversed to euphoria. Last summer, there were numerous gloomy forecasts, several of which I had included in links in my updates, with commentators insisting that India's best decades were behind it. Similar negativity has been periodically common in India one, two, or three (or four or five) thousand years ago, and each time the country recovered, so I figured it wasn't different and it wasn't. In yesterday's second intraday update, a well-known analyst in the link provided (be sure to use the resent copy; I apologize for including the wrong URL in the first transmission) insists that India's current bull market run will last for another ten or twenty years. Of course additional upside is possible and perhaps even likely, but whenever sentiment and chart behavior combine in the way that they have done for SCIF during May 2014, it is usually a good idea to reduce exposure. I sold 40% of my position yesterday and the remainder this morning. Almost all other emerging-market and mining equities are likely to experience greater percentage gains during the next twelve months, if only because they are mostly still highly unpopular and because they would have to increase dramatically to regain their highs from the first quarter of 2012 which I usually use as a benchmark for estimating the total gains between now and the likely 2015 peaks for these assets. I didn't sell SCIF just because it had more than doubled in less than a year, since securities can triple, quadruple, or more, but because of its recent behavior combined with intense overexcitement which was the mirror image of last summer's despondency.


I am continuing to gradually shift assets from non-Roth retirement accounts into Roth retirement accounts, in order to lock in their periodically depressed prices near five-year bottoms for tax purposes and to ensure that all future gains on those holdings will be free of taxes for several more decades of my life and part of the lifetime of my heirs.


Here are my buy ladders of good-until-canceled orders:



SIL, starting at 11.79, separated by 20 cents, each for 0.10% of my net worth.



HDGE, starting at 12.49, separated by 10 cents, each for 0.10% of my net worth. This order missed being filled by 1 cent on May 23, 2014.



COPX, starting at 8.99, separated by 10 cents, each for 0.10% of my net worth.



GDXJ, starting at 33.99, separated by one dollar, each for 0.10% of my net worth.



URA, starting at 13.49, separated by 50 cents, each for 0.10% of my net worth.



I have removed all of my previous orders to purchase emerging-market funds because of their strong rebounds. I would consider making additional purchases if they were to retreat to important higher lows. This is likely because they tend to follow gold and silver mining shares with a delay of two or three months in both directions, so the slump for precious metals and their shares from March 14 through April 21, 2014 could be followed by a similar retracement for emerging-market assets.

--Steve