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 “Where have all the bears gone?”, and was written on July 22nd, 2023.
Weekly summary in a paragraph
The US stock market indices were mixed this week, with all the major indices advancing except the Nasdaq which finished lower. The European stock market was also weaker and move was further affected by the Euro depreciating relative to the US Dollar. The 2-10y spread continues to widen for the second week in a row and is still inverted at -98 basis points. Economic data this week included the aforementioned CPI report on Wednesday as well as the PPI report on Thursday which decelerated to +2.4% year on year. In corporate news, sixty S&P500 companies reported Q2 earnings season with notable misses from TSMC and Netflix. Thus far the earnings have been mixed but it is too early to draw any conclusions. Next week 166 S&P500 companies report Q2 earnings, including Meta, Google, Visa and Hilton to name a few.
Asset classes weekly performance
This week the Dow finished +2.1% higher (+6.3% year to date) while the S&P500 gained +0.7% (+18.2% year to date), the Nasdaq lost -0.6% (+34.1% year to date) and the Russell 2000 was +1.5% stronger (+11.3% year to date). Gold finished -0.9% lower (+3.7% year to date) while Silver slid -1.9% (-0.1% year to date). Crude Oil appreciated +1.6% (+0.8% year to date). The 10-y US treasury yield gained +1.3% (+1.2% year to date). The European stock market gave up -0.6% (+20.8% year to date). The Euro lost +0.9% against the US Dollar (+3.9% year to date).
Weekly pitch
The stock market has had a great run over the past 6+ months. Valuation are very stretched and most indices are overbought. After the Nasdaq100 and the S&P500, the Dow Jones has finally broken out. The situation really does beg the question: where have last years’ bears gone? AI frenzy, near-peak interest rate policy and other factors have sustained the market thus far. Q2 earnings and 2024 earnings expectations will be key to determine the market’s direction from here. Until then, 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 have initiated a short position on Thor Industries and Rivian. Stop losses were triggered on our XPO Logistics and JNJ short positions. Cash, US treasury bills, precious metals and hedges amount to 44.5% in our portfolio (unchanged compared to last week).
Top 5 Weekly Portfolio Performers
Bank of America +9.9% (Banking)
Yelp +8.0% (Tech)
Centene +7.6% (Healthcare)
Range Resources +5.6% (Oil)
Bristol Myers Squibb +4.4% (Pharma)
Portfolio Asset Allocation
US stocks long positions 47% (unchanged)
EU stocks long positions 8.5% (unchanged)
US stocks short position 3.5% (increased)
Hedges 8.0% (unchanged)
Silver & Gold 2% (unchanged)
US Treasury bills 2% (unchanged)
Cash 29% (decreased)
1-year Portfolio Performance
Our portfolio performance over the last 12 months is +12.8% (excl. dividends) vs the S&P500 gain of 13.4%.
Invest responsibly!!!
Responsible Investor 