Apple’s earnings decline again: third time unlucky? | Responsible Investor Weekly Newsletter, August 5th, 2023

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 “Apple’s earnings decline again: third time unlucky?”, and was written on August 5th, 2023.

Weekly summary in a paragraph

The US stock market indices were lower this week, as all the major indices were spooked by Fitch downgrading to AA+ the US national debt and by mixed labour market data. The European stock market was also weaker on negative sentiment caused by poor Q2 earnings and 2024 forecasts. The 2-10y spread shrunk again and significantly this week, but it is still inverted at -73 basis points. The Bank of England raised interest rates to a new 15-year high, warning that its fight against inflation may require tighter borrowing conditions for a longer period. In corporate news, one third of the S&P500 companies reported Q2 earnings with Amazon beating and Apple underwhelming investors. Next week more S&P500 companies will report Q2 earnings, including Disney, UPS and Novo Nordisk to name a few.

Asset classes weekly performance

This week the Dow finished -1.1% lower (+5.8% year to date) while the S&P500 lost -2.3% (+16.6% year to date), the Nasdaq depreciated -2.9% (+32.9% year to date) and the Russell 2000 was -1.2% weaker (+11.1% year to date). Gold finished -1.5% lower (+2.7% year to date) while Silver slid -5.0% (-4.4% year to date). Crude Oil appreciated +1.0% (+8.4% year to date). The 10-y US treasury yield gained +2.6% (+7.0% year to date). The European stock market tanked -3.8% (+16.7% year to date). The Euro lost -0.1% against the US Dollar (+2.8% year to date).

Weekly pitch

We don’t typically feature individual stocks in the weekly pitch: the comments on Apple that follow are meant to illustrate the link between earnings and stock prices. As a general, well-established trend, stock prices follow earnings and earnings expectations. Last Thursday Apple reported the third consecutive quarterly decline in sales in a row. While the Services income reached an all time high, the decline in overall earnings may put pressure on the stock price, at least until the new lineup of models is presented in September. Responsible Investor has owned Apple on and off over the years (mostly on!), though we are not buyers at these levels. Responsible investors should review their positions during the earnings season, 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 taken full profits on our Draftkings (+52.9%), Yelp (+28.4%) and Range Resources (+14.3%) long positions and partial profits on our KWEB (+10.5%) long position. We have accumulated our Zimmer Biomet Holdings long position and initiated long positions on Newmont Mining, Hershey’s and Gilead Sciences as well as a short position on XPO Logistics. Cash, US treasury bills, precious metals and hedges amount to 43.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

iPath Series B S&P500 VIX Short-Term Futures +12.8% (Volatility ETN)

ProShares UltraPro Short QQQ +9.5% (3x inverse Nasdaq ETF)

Duerr AG +4.5% (Industrial Machinery)

ACI Worldwide +4.4% (Packaged Software)

Halliburton +3.6% (Oil Services)

Portfolio Asset Allocation

US stocks long positions 48% (increased)

EU stocks long positions 8.5% (unchanged)

US stocks short position 2.5% (unchanged)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 29% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.3% (excl. dividends) vs the S&P500 gain of +7.9%, which corresponds to a 3.4% market beat.

Invest responsibly!!!

Q2 earnings decline: now what? | Responsible Investor Weekly Newsletter, July 29th, 2023

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 “Q2 earnings decline: now what?”, and was written on July 29th, 2023.

Weekly summary in a paragraph

The US stock market indices were higher this week, with all the major indices advancing on news of generally good earnings and positive economic data. The European stock market was also stronger though this week’s gain was offset by the Euro depreciating relative to the US Dollar. The 2-10y spread shrunk after two weeks of widening and is still inverted at -91 basis points. Economic data this week included the FED’s decision to hike by another 0.25%, as widely expected, and core PCE continuing to decelerate. The Bank of Japan surprised markets by announcing it first shift from a decade-long period of monetary easing. In corporate news, one third of the S&P500 companies reported Q2 earnings season with notable beats from Meta, Google and Intel. On the flipside, Procter & Gamble’s 2024 outlook disappointed and Chipotle’s earnings were mixed. Next week 170 S&P500 companies report Q2 earnings, including Apple, AMD, Amazon and Starbucks to name a few.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+7.0% year to date) while the S&P500 gained +1.0% (+19.3% year to date), the Nasdaq jumped +2.0% (+36.8% year to date) and the Russell 2000 was +1.1% stronger (+12.5% year to date). Gold finished -0.2% lower (+3.7% year to date) while Silver slid -1.4% (-1.4% year to date). Crude Oil appreciated +1.3% (+5.8% year to date). The 10-y US treasury yield gained +1.5% (+4.6% year to date). The European stock market gave up +0.7% (+21.6% year to date). The Euro lost -0.95% against the US Dollar (+2.9% year to date).

Weekly pitch

With 51% of the S&P500 companies having reported Q2 earnings so far, an attempt to draw some preliminary conclusions can be made. Q2 earnings decline is presently -7.3%, lower than expectations of -7.0% at the beginning of the quarter. If this figure is confirmed, it would be the third quarterly earnings decline in a row and the highest since the disastrous Q2 2020 which was due to the pandemic. Even if the forecasted earnings growth in Q3 and Q4 were confirmed, the expected earnings growth for 2023 is a meager +0.4%. Therefore, 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 taken partial profits on our Meta (+129%) and Campari (+19.3%) long positions. We have accumulated our Disney, Raytheon and Zimmer Biomet Holdings long positions and initiated a short position on Molson Coors Brewing. Stop losses were triggered on our XPO Logistics, Rivian and Overstock 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

The Gap +13.4% (Apparel)

KraneShares CSI China Internet +12.7% (Internet services Chinese companies ETF)

Meta +10.6% (Tech)

Google +10.6% (Tech)

Yelp +9.0% (Tech)

Portfolio Asset Allocation

US stocks long positions 47% (unchanged)

EU stocks long positions 8.5% (unchanged)

US stocks short position 2.5% (reduced)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 30% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.9% (excl. dividends) vs the S&P500 gain of 12.5%.

Invest responsibly!!!

Where have all the bears gone? | Responsible Investor Weekly Newsletter, July 22nd, 2023

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!!!

Nasdaq rebalancing: much ado about nothing? | Responsible Investor Weekly Newsletter, July 15th, 2023

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 “Nasdaq rebalancing: much ado about nothing?”, and was written on July 15th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, with all the major indices reversing previous week’s losses. The better than expected CPI report was largely behind the move. The European stock market outperformed the US stock market and this gain was enhanced by the Euro appreciating relative to the US Dollar. The 2-10y spread resumed is widening after last week’s reversal and is still inverted at -91 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, US major banks JP Morgan and Wells Fargo unofficially kicked off the Q2 earnings season and reported a beat on Friday, while Citi disappointed with a weaker-than-expected rebound in investment banking activity. Amazon’s shares leapt 3% after announcing the first 24 hours of its ‘Prime Day’ was their largest sales day ever. Next week 60 S&P500 companies report Q2 earnings, including ASML, Alcoa, Bank of America and Netflix.

Asset classes weekly performance

This week the Dow finished +2.3% lower (+4.1% year to date) while the S&P500 gained +2.4% (+17.3% year to date), the Nasdaq rose +3.3% (+34.9% year to date) and the Russell 2000 was +3.6% stronger (+9.6% year to date). Gold finished +1.2% higher (+3.5% year to date) while Silver jumped +8.1% (+1.4% year to date). Oil appreciated +0.6% (-1.8% year to date). The 10-y US treasury yield slid -4.1% (+0.7% year to date). The European stock market leapt +5.9% (+21.6% year to date). The Euro gained +2.38% against the US Dollar (+4.9% year to date).

Weekly pitch

The Nasdaq100 index has never seen such a high concentration of its top 10 stocks which exceed 60% of its market capitalisation. Earlier this week a ‘special rebalance’ has been announced which will reduce the relative weight of it top 5 stocks: Apple, Nvidia, Amazon, Tesla and Microsoft. Their total weight of 46% will be brought down to 40%. Even considering the 24 ETFs tracking the Nasdaq-100 index who will be forced to sell to match the rebalance, the impact is expected to be quite small based on the on the rebalance alone. The valuations of these tech giants are very high, therefore 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 profits on our Nvidia (+18.1%) and our Restaurants Brands International long position (+5.9%). We closed the position on Thor’s spin-off Phinia which resulted in 2400-bagger! We have also initiated a short position on XPO Logistics. A stop loss was triggered on our Lennar short position. Cash, US treasury bills, precious metals and hedges amount to 44.5% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

DraftKings +14.4% (Entertainment)

Sibanye Stillwater +12.7% (Precious Metals)

Halliburton +6.6% (Oilfield Services)

The Gap +6.6% (Apparel)

Meta +6.5% (Tech)

Portfolio Asset Allocation

US stocks long positions 47% (reduced)

EU stocks long positions 8.5% (unchanged)

US stocks short position 2.5% (reduced)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 30% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +14.4% (excl. dividends) vs the S&P500 gain of 18.9%.

Invest responsibly!!!

Which key word did Fed Chair Powell not utter? | Responsible Investor Weekly Newsletter, May 6th, 2023

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 “Which key word did Fed Chair Powell not utter?”, and was written on May 6th, 2023.

Weekly summary in a paragraph

The US stock market indices finished mostly lower this week, with the exception of the Nasdaq which managed to gain a meager 0.1%. The week was dominated by the FOMC meeting which confirmed the 0.25% increase in interest rate, as expected. There was one key word which the Fed’s chair Powell did not utter, though: “pause”. In other words, the Fed will keep making decisions on the basis of economic data, and is not prepared to commit to this latest increase being the last in the cycle. The European stock market finished higher and is still leading year to date, globally, despite this week’s ECB rate hike. The 2-10y spread reversed its trend and reduced the gap to an inverted value of -48 basis points. In terms of economic data, the ISM index published on Monday was slightly better than consensus, and the jobs report came in stronger than expected on Friday. In corporate news, Apple beat earnings and saved the market from an even deeper weekly loss, though this is the second quarter in a row that Apple revenue has decreased. Next week more S&P500 companies report earnings, including Paypal, Airbnb and Disney.

Asset classes weekly performance

This week the Dow finished -1.24% lower (+1.6% year to date) while the S&P500 gave up -0.8% (+7.7% year to date), the Nasdaq advanced +0.1% (+16.9% year to date) and the Russell 2000 lost -0.5% (-0.1% year to date). Gold finished +0.1% higher (+7.8% year to date, we are long) while Silver gained +1.21% (+5.4% year to date, we are long). Oil lost -0.5% (-7.7% year to date). The 10-y US treasury yield gave up -0.2% (-9.2% year to date). The European stock market gained +0.2% (+19.9% year to date). The Euro appreciated +0.11% against the US Dollar (+2.92% year to date).

Weekly pitch

Strong economic data and the Fed’s refusal to pivot were responsible for a negative week. While the quarter percentage point rate hike was largely expected, the market was looking for the Fed to confirm that no further hikes were planned, and were therefore disappointed by Powell’s words during the press conference. Despite the proximity of the war in Ukraine, the performance of the European stock market and of the Euro keeps being superior relative to the US indices and the US dollar. 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 long positions and initiated new long positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Arconic Corporation (+17%), Electronic Arts (+10.6%) and Sanofi (+9.1%) long positions; sell stops were triggered on our Capri Holdings and on the US Banks ETF long positions. We initiated long positions on Plug, Restaurants Brands International and AMD. Cash, precious metals and hedges amount to 41% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Arconic Corporation +17.4% (Aluminum)

Rational +7.8% (Industrial Machinery)

Sibanye Stillwater +7.4% (Precious Metals)

Davide Campari +4.6% (Alcoholic Beverages)

Marriot International +4.3% (Hotels & Leisure)

Portfolio Asset Allocation

US Long stock positions 49.5% (reduced)

EU Long stock positions 9.5% (reduced)

US Short stock position 4.5% (increased)

Hedges 8% (increased)

Silver & Gold 3.5% (unchanged)

Cash 25% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +5.2% (excl. dividends) vs the S&P500 loss of -0.3%, which corresponds to a +5.5% market beat.

Invest responsibly!!!

Earnings surprise! What to do now | Responsible Investor Weekly Newsletter, April 29th, 2023

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 “Earnings surprise! What to do now”, and was written on April 29th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, though the Russell 2000 didn’t participate. Q1 GDP data published this week reported a 1.1% growth in the US while the Europe area stopped at 0.1%, and avoided a recession by a hair. The European stock market saw an end to multi-week gains but is still leading year to date, globally. The 2-10y spread was flat and is still inverted at -60 basis points. Oil now in negative territory after the first four months of 2023. In terms of economic data, March headline and core PCE inflation came in mostly in line. Personal income and spending for March was reported slightly higher than expected. In corporate news, mega cap companies like Microsoft and Meta smashed Q1 2023 earnings, Alphabet reported a beat while Amazon’s guidance underwhelmed. Many other long positions in our portfolio reported an earnings beat this week, Chipotle and Fielmann above all. Next week 126 S&P500 companies report earnings, including AMD, Apple and Novo Nordisk.

Asset classes weekly performance

This week the Dow finished +0.86% higher (+2.9% year to date) while the S&P500 gained +0.87% (+8.6% year to date), the Nasdaq advanced +1.28% (+16.8% year to date) and the Russell 2000 lost -1.26% (+0.4% year to date). Gold finished flat (+6.5% year to date, we are long) while Silver lost -0.74% (+3.0% year to date, we are long). Oil tanked -2.7% (-0.8% year to date). The 10-y US treasury yield gave up -1.79% (-9.0% year to date). The European stock market lost -0.4% (+19.7% year to date). The Euro gained +0.24% against the US Dollar (+2.9% year to date).

Weekly pitch

The earnings estimate for the S&P500 companies in Q1 2023 was just over 50$, in aggregate, at the beginning of the earnings season. After 222 companies reported so far that number has increased by 2.5%. If this increase is representative of the other half which will report in May, the overall figure may increase to 54-55$, ie one of the largest in recent years. It is important to note, however, that the year to date increase on the index is led by very few companies, therefore now more than ever before it is a stock picker’s market. Until more earnings data is available over the next couple of weeks, responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges. Analysts now believe that another quarter point rate hike will happen at next week’s FOMC meeting, with an 86% probability. This week we have taken full or partial profits on long and short positions and initiated new long positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Eli Lilly (+13.9%) long position, on our Snapchat (+2.6%) and Pinterest (+16%) short positions and partial profits on our Microsoft (+15.3%), Halliburton (+4.5%), Raytheon Technologies (+4.3%), Sibanye Stillwater (+4.2%) and Capri Holdings (+3.6%) long positions. We initiated long positions on three Chinese ETFs. Cash, precious metals and hedges amount to 40% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Fielmann +16.43% (Medical Specialties)

Chipotle Mexican Grill +14.87% (Restaurants)

Meta +12.88% (Technology Services)

Microsoft +7.52% (Technology Services)

Centene +4.46% (Managed Healthcare)

Portfolio Asset Allocation

US Long stock positions 50% (reduced)

EU Long stock positions 10% (unchanged)

US Short stock position 4% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 3.5% (reduced)

Cash 25% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +4.2% (excl. dividends) vs the S&P500 loss of -2.8%, which corresponds to a +7.0% market beat.

Invest responsibly!!!

Please donate for the earthquake in Turkey | Responsible Investor Weekly Newsletter, February 11th, 2023

With such a devastating force of nature and ailing shelters, the havoc wreaked in Turkish left at least 23,000 dead, with the count only poised to grow in the coming days. With news like these nothing financially relevant seems relevant, really. So read what follows lightly and make your hearts heavy with grief for those who fell. Donate if you can.

Weekly summary in a paragraph

US stock markets finished lower on Friday after a 3-week and a 6-week rise for the S&P500 and the Nasdaq, respectively. Value continues to underperform relative to growth. Oil higher mostly due to Russia cutting production by 0.5M barrels. The terminal rate is now expected at 5.15% from 4.9% last Thursday. The 2-10y inversion has reached 80 basis points. Economic data published this week threw a spanner in the works of the disinflationary path: it is very difficult to go from 4 to 2% and the Fed does not seems to backtrack from its 2% target. In corporate news, Disney earnings beat expectations on a cost cutting programme while Google got clobbered by losing an AI competition.

Asset classes weekly performance

This week the Dow finished -0.17% lower (+2.2% year to date) while the S&P500 did worse with a -1.1% decrease (+6.5% year to date, we are 1 time short), the Nasdaq tanked -2.4% (+12.0% year to date, we have a 3 times inverse position) and the Russell 2000 lost as much as -3.4% (+9.0% year to date). Gold finished lower -0.1% (+2.2% year to date, we are long) while Silver was -1.6% weaker (-8.8% year to date, we are long). Oil jumped +8.4% (-0.7% year to date). The 10-y US treasury yield jumped +1.9% this week (-1.3% year to date). The European stock market gave up -1.8% (+11.3% year to date). The Euro finished -1.1% lower against the US Dollar (-0.3% year to date).

Weekly pitch

It was too good to be true, wasn’t it? And often when things are too good to be true they just aren’t. The Nasdaq failed to add a 7th week of consecutive gains and retraced after having delivered what were basically a year’s worth of gains in the first 40 days of 2023.

It is tempting to go all in when markets outperform but it is prudent to either keep profitable positions on a tight leash (do you use automatic sell stops and take profits like we do?) or have cash and hedges in one’s portfolio (see our portfolio asset allocation below). We have beaten the market this week and are protected to the downside should there be more pain coming next week when the January CPI is announced.

Weekly Portfolio Update

Here are this week’s movements: we took profits on Nucor (+9.3%), Qualcomm (+3.2%) and Global Lithium ETF (+7.9%); take profits were triggered on our Pinterest, Peloton, SL Green Realty and Semrush Holdings short positions. Cash, precious metals and hedges amount to 39.5% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +10.8% (3x inverse Russell 2000)

Vix short-term S&P500 future +7.5% (Volatility)

ProShares UltraPro QQQ +6.4% (2x inverse Nasdaq)

Denbury +4.3% (Oil)

Callon Petroleum Company +4.0% (Oil)

Portfolio Asset Allocation

US Long stock positions 44% (reduced)

EU Long stock positions 10% (unchanged)

Short stock position 6.5% (unchanged)

Hedges 7% (unchanged)

Silver & Gold 4% (unchanged)

Cash 28.5% (increased)

Year to date Portfolio Performance

Our year to date portfolio performance is +4.7% (excl. dividends) vs the S&P500 gain of +6.5%.

…in case you missed it…

Check out our first 2023 weekly newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.

Podcasts

You can now listen to this newsletter on Apple Podcasts and Spotify.

Invest responsibly!!!

Apple, Google, Amazon and Microsoft disappoint: who is left to save the earnings season? | February 4th, 2023 Newsletter

Weekly summary in a paragraph

Fifth straight week of upside for the Nasdaq despite most of the Q4 earnings reports from the major tech stocks disappointed, the exception being Meta (which we own). Ford, Qualcomm and Starbucks also missed. The Fed confirmed the expected quarter point rate hike on Wednesday and Powell came across as relatively dovish during the press conference. The most notable data point of the week was the January nonfarm employment which was up 517k vs 190k consensus – a clear underestimation, which would suggest continued strength in the job market and brings the unemployment down to 3.4% (vs 3.6% expected). More than half of the S&P500 companies are yet to report: the next two weeks will be key to assess the extent of the year on year earnings decline for Q4.

Asset classes weekly performance

This week the Dow finished -0.1% lower (+2.4% year to date) while the S&P500 did better with a +1.6% increase (+7.7% year to date, we are 1 time short), the Nasdaq gapped +3.3% higher (+14.7% year to date, we have a 3 times inverse position) and the Russell 2000 gained +3.9% (+12.7% year to date). Gold finished lower -3.2% (+4.0% year to date, we are long) while Silver was -5.1% weaker (-6.7% year to date, we are long). Oil tanked -7.8% (-4.6% year to date). The 10-y US treasury retraced -0.3% this week (-6.9% year to date). The European stock market gained +0.9% (+13.3% year to date). The Euro finished +0.7% higher against the US Dollar (+0.82% year to date).

Weekly pitch

Investors have finally been able to catch a breath after a very positive January. Given the steep climb of these first 5 weeks of 2023, particularly for long-duration tech stocks, one wonders whether the Nasdaq has gone up too quickly. Despite finishing up again this week, the fact that all the four biggest tech companies have disappointed is weakening the bullish sentiment in the Nasdaq, at least in the short term.

It is tempting to go all in when markets outperform but it is prudent to either keep profitable positions on a tight leash (do you use sell stops and take profits like we do?) or have cash and hedges in one’s portfolio (see our portfolio asset allocation below).

Weekly Portfolio Update

Here are this week’s movements: we took profits on Newmont Mining (+13%) and Amazon (+8%); partial sell stops were triggered on our Intel, Mattel, Oak Street Health and Williams-Sonoma short positions. Cash, precious metals and hedges amount to 37% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Meta +24.4% (Social media/Tech)

Gap +12.12% (Retail trade)

Thor +11.04% (Recreational products)

Orsted +8.18% (Utilities, Green Power)

NXPI +8.05% (Semiconductors)

Portfolio Asset Allocation

US Long stock positions 47% (unchanged)

EU Long stock positions 10% (unchanged)

Short stock position 6.5% (increased)

Hedges 7% (reduced)

Silver & Gold 4% (unchanged)

Cash 26% (reduced)

Year to date Portfolio Performance

Our currency-adjusted year to date portfolio performance in Euro is +4.51% (excl. dividends) vs the European market gain of +12.51% and +5.6% in US Dollars vs the S&P500 gain of 7.7%.

…in case you missed it…

Check out our first 2023 weekly newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.

Podcasts

You can now listen to this newsletter on Apple Podcasts and Spotify.

Invest responsibly!!!

October 29th, 2022 | Should you still be invested in Apple, Microsoft, Google and Amazon? | $GOOG $AMZN $MSFT $AAPL $META $GILD $TLT $GL $AIG $CHTR $ORSTED.CO $PINS $BWA $FIS $CMG $V $MBG.DE $CARLB.CO $EL.PA $DSV.CO $GMAB

Weekly summary in a paragraph

It was a tale of two stock markets in the US: while all the major indices continued to rally for the second week in a row, major tech companies reported poor earnings and most importantly week outlook which limited gains for the Nasdaq. Given the hotter than expected inflation data (core PCE came in at 0.5% vs 0.4% consensus) this recent optimism seems largely unjustified although we are heading towards a period of positive seasonality coupled with favourable technicals.

Asset classes weekly performance

This week the Dow gained +3.9% (-11.9% YTD) just like the S&P500 (-18.2% YTD, we are 1x short) and the Nasdaq limited its advance to +2.2% (-31.0% YTD, we have a 3x inverse position). The Russell 2000 skyrocketed +6.0% (-19.5% YTD, we are 1x short). $Gold lost 0.6% (-9.5% YTD) while silver finished flat -0.1% (-16.4% YTD). $Oil rose 3.4%. The 20-y recovered +5.7% this week (-34.2% YTD). The European stock market rose +4.9% (-26.5% YTD). The Euro recovered 1.0% against the USD (-10.9% YTD).

Weekly pitch

The four biggest tech companies in the US stock market all reported earnings this week. There are clear signs of weakness in all four although $AAPL appears more resilient. These are all companies full with an incredible pool of talented individuals though more short-term pain ahead is likely. We had exited our position in $AMZN and $AAPL at the beginning of August, just before they peaked. $META’s earnings were particularly concerning especially the reported losses from investments associated to the metaverse.

Weekly Portfolio Update

After the blowout earnings report $GILD rose sharply and finished with a 19% weekly gain: we have taken partial profit (+26.45%) on our long position. We have also taken partial profits on our short-term $TLT trade (+3.8%). Finally, we initiated long positions on $MP and $AJRD. Cash, precious metals and hedges were reduced to 37% in our portfolio which finished 1.64% higher this week.

Here are the top 5 performers of our portfolio this week:

$GILD +16.93% (Drug-Biotech)

$CHTR +11.45% (Telecom Services)

$BWA +9.55% (Auto/Truck-Original Equipment)

$ORSTED.CO +9.54 (Green Energy)

$FIS +9.08% (Financial)

This is our asset allocation as things stand:

– Long stock positions 63% (increased)

– Hedges 9%, though equal to 15% considering leveraged ETFs (unchanged)

– Silver + Gold 3% (unchanged)

– Cash 25% (decreased)

Our currency-adjusted YTD portfolio performance is -3.8% (excl. dividends) vs the European market loss of -15.6% (+11.8% market beat).

Invest responsibly!!!

Responsible Investor Portfolio Weekly Update, May 8th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

Our weekly blog returns after a week of gains for most stock markets with the notable exception of the Nasdaq which finished 1.5% lower and has now lost ground for the third consecutive week: if you are still holding on to the stocks which made great gains in 2020, chances are that you are in the red so far in 2021. There appear to be greater opportunities for capital appreciation in value stocks which also feature good momentum.

The jobs report unexpectedly disappointed and this fuelled a rally on Friday as retail investors pumped more money in the stock market on the assumption that heavy borrowing and low interest rates will continue indefinitely. Despite some of the indices hitting all time highs the risk for a correction is still there which is why it is important not to be fully invested at this time. Scroll below to see what percentage of our portfolio is in cash.

88% of the S&P500 stocks have reported their Q1 earnings so far: the numbers are impressive such that there are several analysts discussing the possibility of this past quarter coinciding with the peak in earnings which would suggest an impending bearish cycle.

Market Performance

Most of the stock market indices recovered this week following last week’s decline: in the US the Dow was the best performer with a 2.7% gain, followed by the S&P500 which finished 1.2% higher whereas the Nasdaq which finished markedly lower (-1.5%). In Europe, the Stoxx gained 1.8% while the Italian stock market was even stronger and finished 2.0% higher. The Danish OMX20 is on a bullish 9-week streak and was 1.0% higher this week. The US Dollar lost 1.1% on the Euro. Crude $oil gained 2.8% and $Gold showed great strength by appreciating 3.6%. $BTC-USD swung within a 10% range and finished 2.1% higher.

Earnings

Eight of our stocks reported Q1 earnings the week before last:

DSV beat on earnings and revenue

DANSKE beat on net profit

ORSTED missed on revenue

SYF beat on earnings and revenue

UFC beat on earnings and missed on revenue

NEM missed on both the top and the bottom line but the

PCG missed on earnings but beat on revenue and reaffirmed guidance

BRK-B beat on earnings.

$GMAB announced their Q1 earnings on Wednesday with solid gains compared to the same quarter in 2020. The company reported a five-fold increase in operating results and maintained the guidance for 2021 set out earlier in the year. $ELC.MI reported their earnings on the same day and beat consensus as well as raised their guidance: we have a 4.4€ target price on this stock which is already up 41.4% since we bought it.

Next week $JD and $INW.MI will report their Q1 earnings.

Dividends

$OR.PA and $STLA.MI paid their dividend the week before last: our total dividend yield so far is 1.3%. Next week $WBD.MI goes ex-dividend. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 1.8% this week whereas the weighted average of the relevant market indices finished 1.5% higher, which corresponds to a 0.3% market beat.

This week’s portfolio winners were $STLA.MI which was up 8.1% and mining company $NEM which gained 7.9% (+16.6% since initiation) helped by gold strength.

Our Responsible Investor portfolio is now up 35.1% (36.4% including dividends) in 49 weeks and is beating the market by 3.3% over the same period. We are about 64% in stocks & ETFs and 36% in cash.

The table below summarises the portfolio performance since inception.

If you don’t want to miss my alerts, please subscribe to Responsible Investor or follow me on Twitter. I also run an eToro portfolio which currently has 35+ positions and can be accessed via this link.