It was a horrible week for the stock markets, the worst since March actually, with most indices suffering from more than 5% losses. The main concern continues to be the second wave of the pandemic which is inducing several governments to impose new lockdowns, however ‘soft’. The upcoming US presidential election is another cause of uncertainty as demonstrated by increased volatility levels: even though this coming Tuesday is election day, considering that many votes have been cast by mail, it is likely that the winner won’t be known until week after next or even beyond that. There is an unmissable Netflix special on US voting rights which is free to watch on Youtube.
Going back to last week, out of the markets we watch more closely, only Denmark had a more muted response and was only down 3.1% while the Stoxx was 5.4% lower and the Italian FTSEMIB suffered a 6.6% loss. In the US the Nasdaq was down 5.4%, the S&P500 5.6% and the Dow 6.4%. Here is an interesting video with a summary of the technical analysis for the US stock market: while valuation is the main ingredient in investing, momentum should not be ignored. Our Responsible Investor portfolio was down 3.9% which means that we have beat the market by 2%. Yesterday was the last trading day of October, which finished lower for most indices.
It was a big week for Q3 earnings with tech giants like $AMZN, $FB, $AAPL and $GOOG reporting on Thursday. Amazon had by far the most impressive top and bottom line numbers, while Apple somewhat disappointed. $TWTR dropped 21% the day after their earnings report came out: looks like an overreaction to me but I would not touch it until one of the two US president candidates concedes.
$NEM beat earnings doubling their profit yoy for what was their best quarter ever: the stock has had a good week compared to the various indices as investors turned to gold and I still consider it grossly undervalued based on the earnings growth projections.
$GRUB smashed their earnings on Wednesday. Their sales were up 54% yoy but the stock was down last week and followed the mainstream trend. The stock is poised for more growth based on estimates but it will be important to see whether momentum will be on its side too otherwise we will lock in our profits, pull the plug and put our money to work elsewhere.
$PCG missed on the bottom line while they matched revenue expectations: I will review our position and send an alert if I feel we need to act on our position. Finally $DSV.CO reported an earnings beat and finished the week with a 0.3% gain; they have also guided higher in terms of EBIT margin. Next week $DANSKE.CO and $BRK will report earnings.
We have made two buys on Thursday: $UMC, our first semiconductor play and $JD, a Chinese consumer mega-cap stock. I think they have a long way to go given their current a projected valuations but only time will tell!
The table below summarises the portfolio performance since inception.
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