3 Funds to Exit Now

02/03/2012 10:15 am EST

Focus: FUNDS

Ron Rowland

Editor, All Star Fund Trader

Sometimes events of the ultra-rich and powerful can put our everyday lives into ironic perspective, notes Ron Rowland of All Star Fund Trader.

Irony abounded last week. In snowy Davos, Switzerland, the planet’s wealthiest 0.0001% gathered in warm lodges over sumptuous meals to discuss "improving the state of the world." News reports portrayed the assemblage as capitalist leaders.

Never mind that in true capitalism they would all be broke, since their banks and bonds would all have collapsed in 2008 but for the a rescue by the other 99.9999%.

Meanwhile in Washington, hundreds of lesser millionaires packed the House chamber to hear President Obama’s State of the Union message. As such speeches usually are, it was filled with soaring rhetoric and a laundry list of proposals.

The president’s re-election strategy seems to involve painting himself as defender of the common man against evil banksters. This, of course, is the same administration that has seized every opportunity to coddle those same banks and studiously ignored (until now) the need to investigate actual crimes committed on Wall Street.

US economic growth data came out showing a 2.8% gain in the fourth quarter’s first estimate. This was below expectations but up from the prior quarter’s 1.8% rate. Consumer spending, employment, and housing prices remain problematic, but folks in DC and Davos were nonetheless pleased.

Markets so far in 2012 have been noted by short-term spurts across many different segments. Biotechnology, semiconductors, and homebuilders all had a day or two in the sun this month.

Last Wednesday, the Materials sector took its turn with great one-day performance after the Federal Reserve’s potentially inflationary decision to extend its low-rate pledge out to 2014. The commodities bounce boosted gains in resource-rich Australia, which in turn lifted the Pacific ex-Japan category to the top of our one-week performance chart.

The year has also seen some one-day plunges, such as last Thursday, when our new banking positions fell on more worries in Europe. And the weakest sector of 2012 did not find any support: Telecommunications also dropped as sector giant AT&T (T) reported a 24% earnings plunge, even worse than expected.

With the Consumer Staples sector losing relative strength, the time has come to shed some of those positions from our strategies. Sell First Trust Consumer Staples AlphaDEX (FXG), Fidelity Select Consumer Staples (FDFAX), and Rydex Consumer Products (RYCIX).

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