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 “What is ‘window dressing’ and why does it matter?”, and was written on July 1st, 2023.
Weekly summary in a paragraph
The US stock market indices finished higher this week, with all the major indices recovering after last week’s decline. The Nasdaq has had the best first half of the year ever. The European stock market outperformed the US stock market as the Eurozone flash PMI came in lower than expected, and is ahead of the S&P500 for the third quarter in a row. The 2-10y spread continues to widen and has now an inverted value of -106 basis points. Economic data published this week was mostly positive. In speaking at an event in Europe, Powell stated that future hikes are still a possibility. In corporate news, Carnival beat expectations while Nike and Micron missed. No major earnings reports next week. The Q2 earnings seasons kicks off week after next with some of the largest US banks reporting on Friday the 14th of July.
Asset classes weekly performance
This week the Dow finished +2.02% higher (+3.8% year to date) while the S&P500 gained +2.35% (+15.9% year to date), the Nasdaq soared +2.19% (+31.7% year to date) and the Russell 2000 jumped +3.68% (+7.2% year to date). Gold finished +0.2% higher (+1.8% year to date) while Silver gave up -0.7% (-7.4% year to date). Oil gained +4.1% (-8.1% year to date). The 10-y US treasury yield was +1.35% higher (+0.69% year to date). The European stock market gained+3.6% (+18.8% year to date). The Euro lost -0.1% against the US Dollar (+1.8% year to date).
Weekly pitch
There wasn’t enough in the economic data reports to sustain the rally that all major indices experienced this week. The end of Q2, however, meant that fund managers were busy with the so-called ‘window dressing‘, an investment practice whereby money managers sell laggards in their portfolio and buy stocks which have had a good run. That way, their portfolios appear to be full of winners. Fund managers move a lot of money in the markets and window dressing may have masked what would have otherwise been a quiet week. Until the current Q2 earnings expectations are confirmed, 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.
Weekly Portfolio Update
Here are this week’s movements: we took partial profits on our Campari long position (+22%), as well as full profits on our ASX long position (+6.5%) and our UPS short position (+4.4%); a stop loss was triggered on our Thor short position. Cash, precious metals and hedges amount to 42% in our portfolio (increased compared to last week).
Top 5 Weekly Portfolio Performers
Callon Petroleum +9.6% (Oil)
Dish Network +9.5% (Cable/Satellite TV)
BorgWarner +8.1% (Trucks)
Marriott +7.1% (Hotels)
ACI Worldwide +7.0% (Tech)
Portfolio Asset Allocation
US stocks long positions 49.5% (unchanged)
EU stocks long positions 8.5% (reduced)
US stocks short position 2% (unchanged)
Hedges 8.0% (unchanged)
Silver & Gold 2% (unchanged)
Cash 30% (increased)
1-year Portfolio Performance
Our portfolio performance over the last 12 months is +14.0% (excl. dividends) vs the S&P500 gain of +16.5%.
Invest responsibly!!!
Responsible Investor 