Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Why is Dr. Copper important for a healthy portfolio?”, and was written on May 13th, 2023.
Weekly summary in a paragraph
The US stock market indices finished mostly lower this week, with the exception of the Nasdaq, just like the previous week. The European stock market also finished lower but is still leading year to date, globally. The Bank of England raised interest rates again and stated that a recession is not expected in the UK. The 2-10y spread continues to be range-bound has an inverted value of -52 basis points. In terms of economic data, the CPI and the PPI indices published mid-week came in as expected, supporting the disinflation narrative. In corporate news, Disney disappointed while Li Auto beat expectations with a 66% year-on-year increase in car deliveries . While 92% of the S&P500 companies have now reported earnings, there are still a few to watch next week including Target, Walmart and Applied Materials.
Asset classes weekly performance
This week the Dow finished -1.1% lower (+0.5% year to date) while the S&P500 gave up -0.3% (+7.4% year to date), the Nasdaq advanced +0.4% (+17.4% year to date) and the Russell 2000 lost -1.1% (-1.2% year to date). Gold finished -1.34% lower (+7.34% year to date, we are long) while Silver tanked -6.8% (-1.9% year to date). Oil lost -4.9% (-9.3% year to date). The 10-y US treasury yield gave up -1.65% (-8.7% year to date). The European stock market finished -1.9% lower (+17.6% year to date). The Euro lost -1.5% against the US Dollar (+1.3% year to date).
Copper is such a critical metal for global economic growth, that over the years it has earned the title of “Doctor Copper”. Copper futures have been anticipating both bull and bear markets in the past, and many investors look at its price fluctuations with interest. After Covid hit, copper made higher lows and higher highs; this trend was broken in summer 2022 when, after peaking in March, its price made a lower low. The sharp decline this week could signal further pessimism in the global economy. Responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges as well as a diversified portfolio with some exposure to the European stock market. This week we have beaten the market, taken full profits on some long positions and initiated new long and short positions.
Weekly Portfolio Update
Here are this week’s movements: we took profits on our Silver ETF (+14.1%), Palantir Technologies (+9.9%), and AMD (+6.2%) long positions as well as on our Affirm (+7.6%) and Adobe (7.5%) short positions; partial sell stops were triggered on our Nasdaq ETF short position. We initiated a long positions on Tellurian and a short position on Affirm. Cash, precious metals and hedges amount to 41.5% in our portfolio (increased compared to last week).
Top 5 Weekly Portfolio Performers
Palantir Technologies +28.2% (Tech)
Google +11.0% (Tech)
AMD +6.0% (Semiconductors)
Fortinet +4.9% (Electronic Tech)
Orsted +4.1% (Renewable Energy)
Portfolio Asset Allocation
US Long stock positions 49% (reduced)
EU Long stock positions 9.5% (unchanged)
US Short stock position 4.5% (unchanged)
Hedges 7.5% (reduced)
Silver & Gold 3% (reduced)
Cash 26.5% (increased)
1-year Portfolio Performance
Our portfolio performance over the last 12 months is +6.1% (excl. dividends) vs the S&P500 gain of +4.9%, which corresponds to a +1.2% market beat.