Was this week’s rally justified? | Responsible Investor Weekly Newsletter, November 11th, 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 “Was this week’s rally justified?”, and was written on November 11th, 2023.

Weekly summary in a paragraph

The US stock market indices were mostly higher this week, despite somewhat hawkish commentary from chair Powell and a weak US bond auction. Small caps lagged and which finished significantly lower. The European stock market managed to stay afloat despite more companies missing earnings estimates and warning about lower full-year profits. The 2-10y spread continues to widen this week after the trend reversal experienced in late October and is still inverted at -41 basis points. There was nothing incremental in terms economic data. In corporate news, Disney and Gilead Sciences published strong earnings reports while The Trade Desk disappointed. Next week more Q3 earnings will come in, as companies such as Home Depot, Target, Palo Alto Networks, Applied Materials and The Gap report.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+3.4% year to date) while the S&P500 gained +1.3% (+15.0% year to date), the Nasdaq rose +2.4% (+31.8% year to date) and the Russell 2000 gave up -3.2% (-3.2% year to date). Gold slid -2.2% (+0.9% year to date) while Silver tanked -4.0% (-11.2% year to date). Crude Oil dropped -4.3% (+3.2% year to date). The 10-y US treasury yield lost -0.7% (+22.0% year to date). The European stock market gained +0.9% (+11.6% year to date). The Euro lost -0.43% against the US Dollar (-0.22% year to date).

Weekly pitch

It was not a very convincing week as the markets rallied with no significant news to justify the move. In fact, hawkish statements by Powell and a poor auction would have suggested a drop from last week’s levels. From a technical perspective, the Dow is very close to a death cross and if the S&P500 and the Nasdaq are not able to keep up the recent momentum, they too will be in a similar position. Next week the all-important CPI and PPI reports will be published: these have the potential to be market movers and are closely watched by the Fed who, together with labour market report, use this data to define their monetary policy. 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 and to emerging markets.

Weekly Portfolio Update

Here are this week’s movements: stop losses were triggered on our Denbury Resources long position and on our XPO Logistics short position. Cash, US treasury bills, precious metals and hedges amount to 37% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +9.6% (3 times inverse the Russell 2000 ETF)

ACI Worldwide +8.3% (Tech)

VanEck Vectors Semiconductor ETF+5.2% (Semiconductors ETF)

Meta +4.5% (Tech)

Rational AG +4.5% (Industrial Machinery)

Portfolio Asset Allocation

US stocks long positions 49.5% (reduced)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 5.0% (unchanged)

US stocks short positions 0% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 2.5% (unchanged)

US Treasury bills 2% (unchanged)

Cash 25.0% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +4.5% (excl. dividends) vs the S&P500 gain of +11.6%.

Invest responsibly!!!

What’s up with emerging markets? | Responsible Investor Weekly Newsletter, August 26th, 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 “What’s up with emerging markets?”, and was written on August 26th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed this week, with the Dow and the Russell 2000 finishing lower while the S&P500 and the Nasdaq halted the last three weeks’ downward trend. The European stock market finished marginally higher though this was muted by a marked drop of the Euro relative to the US Dollar. The 2-10y spread widened significantly this week and is still inverted at -78 basis points. The Fed symposium at Jackson Hole did not provide any clear signal on the short-term policy as Powell will continue to rely on economic data. The next FOMC meeting is in September. Economic data included initial jobless claims which came in lower than expected and durable goods which was mixed. In corporate news, Nvidia smashed Q2 earnings expectations while Foot locker cratered after a significant miss. Despite the vast majority of the S&P500 companies having now reported Q2 earnings, there are still notable ones due to be published next week such as Nio, Salesforce, Lululemon and Broadcom.

Asset classes weekly performance

This week the Dow finished -0.5% lower (+3.6% year to date) while the S&P500 gained +0.8% (+14.8% year to date), the Nasdaq advanced +2.3% (+29.9% year to date) and the Russell 2000 was -0.3% weaker (+5.3% year to date). Gold finished +1.1% higher (+0.9% year to date) while Silver jumped +4.1% (-2.1% year to date). Crude Oil depreciated -0.1% (+5.6% year to date). The 10-y US treasury yield gave up -2.4% (+11.8% year to date). The European stock market gained +0.2% (+13.6% year to date). The Euro lost -0.72% against the US Dollar (+0.8% year to date).

Weekly pitch

Emerging markets offer a tremendous opportunity to invest in countries that are fast-developing as well as to diversify one’s portfolio. Rather that stock-picking, a more efficient way of doing so is purchasing country-specific ETFs. From this week onwards Responsible Investor will declare the percentage allocation in emerging market ETFs. At the moment the Responsible Investor portfolio holds four emerging markets ETFs: Vietnam, Thailand, China and Brazil. BRICS, a collective consisting of Brazil, Russia, India, China and South Africa are looking to expand by adding 40 countries and to attack 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 and to emerging markets.

Weekly Portfolio Update

Here are this week’s movements: we have taken full profits on our Thor Industries (+9.8%) and Array Technologies (+7.1%) short positions. We have also accumulated and completed our Hershey’s long position. Sell stops were triggered on our World Wrestling Entertainment short position and on our Tellurian long position. Cash, US treasury bills, precious metals and hedges amount to 42.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Sibanye Stillwater +10.5% (Precious Metals)

iShares Silver Trust +6.5% (Silver ETF)

Ørsted A/S +4.4% (Green Energy)

Thailand Index MSCI iShares +4.2% (Thailand ETF)

Brazil Index MSCI iShares +2.6% (Brazil ETF)

Portfolio Asset Allocation

US stocks long positions 44.0% (increased)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 4.5% (unchanged)

US stocks short positions 0.5% (reduced)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 30.5% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +9.5% (excl. dividends) vs the S&P500 gain of +4.9%, which corresponds to a +4.6% market beat.

Invest responsibly!!!

Is the recent correction just driven by raising interest rates? | Responsible Investor Weekly Newsletter, August 19th, 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 “Is the recent correction just driven by raising interest rates”, and was written on August 19th, 2023.

Weekly summary in a paragraph

The US stock market indices tanked this week, with all major indices finishing lower, most of them for the third week in a row. The European stock market’s downward move was even worse and exacerbated by the Euro depreciating relative to the US Dollar: it has been overtaken by the S&P500 (currency adjusted) for the first time this year. The 2-10y spread reduced significantly this week as long duration yields increased and is still inverted at -66 basis points. The minutes of the last FOMC meeting had a bearish slant. Economic data were mixed with Atlanta Fed GDP standing at 5% versus 4.1% prior and NAHB Housing Market Index coming in at 50 versus 56 consensus. In corporate news, Q2 earnings of Applied Materials beat expectations. There was also a number of strong reports from retail stocks such as Walmart, Home Depot and Target. Despite the vast majority of the S&P500 companies having now reported Q2 earnings, there are still notable ones due to be published next week such as Nvidia, Zoom, Foot Locker and The Gap.

Asset classes weekly performance

This week the Dow finished -2.2% lower (+4.1% year to date) while the S&P500 lost -2.1% (+13.8% year to date), the Nasdaq depreciated -2.6% (+27.0% year to date) and the Russell 2000 was -3.4% weaker (+5.6% year to date). Gold finished -1.3% lower (-0.4% year to date) while Silver gained +0.41% (-8.1% year to date). Crude Oil depreciated -1.4% (+6.8% year to date). The 10-y US treasury yield gained +1.6% (+12.1% year to date). The European stock market fell -3.2% (+13.4% year to date). The Euro lost -0.64% against the US Dollar (+1.5% year to date).

Weekly pitch

When bond yields rise, stocks typically experience a sell-off as investors are lured into putting their savings to work at a relatively low risk. The recent weakness in the stock market may well have been driven by the longer term bond yield rising, but there may be other reasons to justify three consecutive weeks of softness. Last week we warned about the implications of the sharp drop in China’s exports. This week’s focus is on the ailing Chinese housing market which culminated with the news of the country’s largest developer Evergrande filing for bankruptcy on Friday. Chinese bonds have not done well lately and the same applies to Chinese stocks. Until this correction is over, 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 full profits on our Molson Coors Brewing short position (+9.7%). We have also initiated a long position on Desktop Metal and accumulated on our Brazil ETF, Newmont Mining and Hershey’s long positions. Sell stops were triggered on our Zimmer Biomet Holdings long position. Cash, US treasury bills, precious metals and hedges amount to 44% in our portfolio (reduced compared to last week). It is mostly thanks to our hedges that we beat the market by +1.0% this week.

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +10.7% (3x inverse Russell 2000 ETF)

iPath Series B S&P 500 VIX Short-Term Futures ETN +8.1% (Volatility ETN)

ProShares UltraPro Short QQQ +7.9% (3x inverse Nasdaq ETF)

ProShares UltraPro Short Dow30 +6.8% (3x inverse Dow Jones ETF)

ProShares Short QQQ +2.4% (1x inverse Nasdaq ETF)

Portfolio Asset Allocation

US stocks long positions 47.5% (increased)

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 29.5% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +8.0% (excl. dividends) vs the S&P500 gain of +2.0%, which corresponds to a 6.0% market beat.

Invest responsibly!!!

What are the risks of a China-dependent portfolio? | Responsible Investor Weekly Newsletter, August 12th, 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 “What are the risks of a China-dependent portfolio?”, and was written on August 12th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed this week, with all major indices finishing lower except the Dow sustained by the energy, financial and industrial sectors. The European stock market managed to stay afloat with no significant economic data to move the needle. The 2-10y spread was flat and is still inverted at -73 basis points. In economic data CPI and PPI data ended up being a non-event as the reports were substantially in line with expectations, while labour market data showed some signs of weakness. In corporate news, 34 S&P500 companies reported Q2 earnings with Disney missing estimates though finishing higher on future subscription prices hike, and Novo Nordisk crushing expectations. Despite 95% of the S&P500 companies having now reported Q2 earnings, there are still some notable ones due to be published next week such as John Deere, Home Depot, Target and Applied Materials.

Asset classes weekly performance

This week the Dow finished +0.6% higher (+6.4% year to date) while the S&P500 lost -0.3% (+16.3% year to date), the Nasdaq depreciated -1.9% (+30.4% year to date) and the Russell 2000 was -1.7% weaker (+9.3% year to date). Gold finished -1.2% lower (+1.0% year to date) while Silver slid -2.1% (-8.3% year to date). Crude Oil appreciated +1.3% (+8.9% year to date). The 10-y US treasury yield gained +2.2% (+9.9% year to date). The European stock market was flat at +0.1% (+17.1% year to date). The Euro lost -0.46% against the US Dollar (+2.3% year to date).

Weekly pitch

There is generally more focus on the CPI compared to the PPI reports. This unbalance is unjustified and especially so considering the reports published last week. The PPI report actually came in hotter than expected which suggests two arguments: first, inflation is still not under control and is likely to stay at these levels for longer than expected; second, the sharp drop in China’s exports may be a reflection of the deglobalisation narrative which explains sustained inflation levels. Further uncertainty comes from the growing geopolitical tension between the US and China, particularly as the odds of an invasion of Taiwan are rising. The markets do not like uncertainty and 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 full profits on our Microsoft (+5.5%) long position. We have also initiated long positions on a Brazil ETF as well as a short position on Array Technologies. Cash, US treasury bills, precious metals and hedges amount to 45% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Novo Nordisk +15.9% (Pharma)

ProShares UltraPro Short Russell 2000+5.3% (3x inverse Russell 2000 ETF)

ProShares UltraPro Short QQQ +5.1% (3x inverse Nasdaq ETF)

Denbury Resources +4.0% (Integrated Oil)

Disney +3.2% (Entertainment)

Portfolio Asset Allocation

US stocks long positions 46.5% (reduced)

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 29.5% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +8.3% (excl. dividends) vs the S&P500 gain of +6.1%, which corresponds to a 2.2% market beat.

Invest responsibly!!!

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!!!

Will the US debt ceiling crisis hurt the stock market? | Responsible Investor Weekly Newsletter, May 20th, 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 “Will the US debt ceiling crisis hurt the stock market?”, and was written on May 20th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, despite Friday’s sell-off triggered by US debt debate stalling, with the Nasdaq showing its strength thanks to AI bullishness. The European stock market also finished higher. The Japanese stock market index rose to levels not seen since August 1990 this week. The 2-10y spread continues to be range-bound and has an inverted value of -58 basis points. It was a slow week for economic data. In corporate news, Home Depot’s earnings disappointed with the biggest miss in 20 years, while Walmart beat expectations. In Europe, Siemens Energy rose on a 22% year-on-year turnover increase. While most S&P500 companies have now reported Q1 2023 earnings, there are still a few to watch next week including Nvidia, Low’s, Kohl’s and Dollar Tree.

Asset classes weekly performance

This week the Dow finished +0.4% higher (+0.8% year to date) while the S&P500 gained +1.65% (+9.2% year to date), the Nasdaq advanced +3.0% (+20.9% year to date) and the Russell 2000 appreciated by +1.9% (+0.7% year to date). Gold finished -2.1% lower (+5.4% year to date, we are long) while Silver lost -1.1% (-2-4% year to date). Oil gained +0.8% (-7.2% year to date). The 10-y US treasury yield rose +5.3% (-2.7% year to date). The European stock market finished +1.5% higher (+19.4% year to date). The Euro lost -0.4% against the US Dollar (+0.9% year to date).

Weekly pitch

Despite the alleged advances in the negotiations on the US debt ceiling this week, the crisis is yet to be resolved. Analysts maintain that a solution will be found but few discuss the drawbacks of this scenario. While the resolution of this crisis is key to ensure that the US administration continues to run smoothly, the risk the stock market faces is the drying up of liquidity as more bonds are issued to replenish the coffers. This risk is particularly significant for riskier assets, for example in the tech sector which has run a lot in 2023. 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 Chipotle Mexican Grill (+23%) long position and the Five Below (+1%) short position; sell stops were triggered on our Newmont Mining long position as well as on the Adobe and Affirm short positions. We initiated a long positions on Foot Locker and a short position on Weight Watchers. Cash, precious metals and hedges amount to 41% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Range Resources +11.2% (Oil)

Halliburton +5.5% (Oilfield services & equipment)

Callon Petroleum +5.1% (Oil)

Meta +5.1% (Tech)

Google +4.5% (Tech)

Portfolio Asset Allocation

US Long stock positions 49.5% (increased)

EU Long stock positions 9.5% (unchanged)

US Short stock position 3.5% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 3% (unchanged)

Cash 27% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +9.7% (excl. dividends) vs the S&P500 gain of +7.5%, which corresponds to a +2.2% market beat.

Invest responsibly!!!

Why is Dr. Copper important for a healthy portfolio? | Responsible Investor Weekly Newsletter, May 13th, 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 “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).

Weekly pitch

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.

Invest responsibly!!!

November 26th, 2022 | I am beating the market this year: are you? | $DIS $THO $MP $KSS $GL $WMT $TGT $GILD $AIG $ORI $USB $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $FIVE $JPM $CMG $MSFT

Weekly summary in a paragraph

Thanksgiving week is statistically a positive week for the US market and characterised by low volume as trading desks are manned by junior staff. The festive sentiment has overshadowed the bad news about further Covid outbreaks which continue to pour in from China – it seems that only commodities are in sync, with further weakness observed in oil and copper to name two. There is also technical resistance ahead around the 4050-4100 area for the S&P500 which closed at 4026 this week.

The European stock market continued its recovery and has now risen 15.7% from the October 13^th lows.

Asset classes weekly performance

This week the Dow gained +1.7% (-5.3% YTD) while the S&P500 rose +1.5% (-14.6% YTD, we are 1x short), the Nasdaq limited its gains to +0.7% (-25.9% YTD, we have a 3x inverse position) and the Russell 2000 lost -1.7% (-14.6% YTD, we are 1x short). $Gold recovered +0.3% (-4.15% YTD) while silver finished +2.8% higher (-6.32% YTD). $Oil tanked -4.9% (+6.48% YTD). The 20-y recovered +3.1% this week (-28.3% YTD). The European stock finished +1.6% higher (-15.7% YTD). The Euro recovered +0.8% on the USD (-6.08% YTD).

Weekly pitch

The performance of the S&P500 over the last 30 years is 9.2% annual return (excl. dividends) which means that a 10,000$ investment made in 1993 would have become 92,000$ today. You could say that this is very good especially if you stay invested and navigate both bull and bear markets. That is the argument of the Vanguards of the world and their ETF products. Successful investors manage to beat the market thereby increasing the average annual return. The power of compounding is immense if you think that a simple +2% year on year market beat would become 166,000$ for that same initial investment in 30 years and a whopping 397,000$ with a +5% market beat.

Weekly Portfolio Update

No movements in our portfolio this week. $DIS celebrated the return of Bob Iger as CEO with a +7.70% weekly gain helping the Dow and the S&P500 outperform the Nasdaq. Cash, precious metals and hedges amount to 42% in our portfolio.

Top 5 Weekly Portfolio Performers

$GPS +8.56% (Consumer-Apparel/Shoes)

$DIS +7.70% (Media-Diversified)

$FIVE +4.40% (Consumer-Discount/Variety)

$CHTR +3.66% (Telecom Services-Integrated)

$THO +3.61% (Building-Mobile Mfg./RV)

Portfolio Asset Allocation

– Long stock positions 58% (unchanged)

– Hedges 10%, though equal to 15% considering leveraged ETFs (unchanged)

– Silver + Gold 4% (unchanged)

– Cash 28% (unchanged)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -5.0% (excl. dividends) vs the European market loss of -7.5% (+2.5% European market beat, expressed in €) and the S&P500 loss of -14.6% (+1.4% US market beat, expressed in $).

Invest responsibly!!!

November 12th, 2022 | Zero earnings growth for 2023: is this week’s rally short-lived? | $META $FTNT $THO $KSS $GLD $SLV $MP $GILD $AIG $GL $USB $ORI $AJRD $NEM $FCX $DIS

Weekly summary in a paragraph

A mildly positive inflation data point on Wednesday was all it took to send the global stock markets higher and induce weakness in the US dollar. I don’t want to be the Cassandra of the situation here, but one month on month data point does not seem enough to justify a reversal of the general trend though technical analysis would suggest further strength ahead at least in the short term.

It was an even stronger week for the European stock market which was further amplified by strength in the Euro.

Asset classes weekly performance

This week the Dow gained +4.1% (-7.2% YTD) while the S&P500 went +5.6% higher (-16.2% YTD, we are 1x short), the Nasdaq skyrocketed +8.0% (-29.0% YTD, we have a 3x inverse position) and the Russell 2000 gained +4.6% (-16.7% YTD, we are 1x short). $Gold rose +5.2% (-4.4% YTD) while silver finished +3.6% higher (-7.2% YTD). $Oil gave up -4.0% (+18.3% YTD). The 20-y recovered +3.9% this week (-33.7% YTD). The European stock market outperformed the US market indices and finished +9.6% higher (-19.2% YTD). The Euro recovered as much as +4.0% relative to the USD (-11.5% YTD).

Weekly pitch

As most of the S&P500 companies have reported Q3 earnings, there is now sufficient data to update earnings forecasts. This week Goldman Sachs revised their S&P500 earnings forecast to the downside ($224 USD) to conclude that they now expect zero earnings growth for 2023. Because stocks follow earnings and earnings expectations, investors will now have to look to 2024 (current estimate is $237 hence +6% compared to ’22 and ‘23) to justify staying invested on the long side.

Weekly Portfolio Update

We initiated three new positions on $NEM, $KSS, and $USB which are already profitable trades. We have also increased our position in gold: if dollar continues its weakness this will send its price higher. Cash, precious metals and hedges were reduced to 37% in our portfolio which rose +2.77% this week.

Top 5 Weekly Portfolio Performers

$META +24.49% (Technology-Social Media)

$FTNT +19.17% (Technology-Software-Security)

$THO +17.38% (Building-Mobile Manufacturing/RV)

$DUE.DE +15.52% (Industrial – Germany)

$KSS +15.24% (Consumer-Dept. Stores)

Portfolio Asset Allocation

– Long stock positions 63% (increased)

– Hedges 9%, though equal to 14% considering leveraged ETFs (unchanged)

– Silver + Gold 4% (increased)

– Cash 24% (decreased)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -2.2% (excl. dividends) vs the European market loss of -7.7% (+5.5% market beat).

Invest responsibly!!!

Featured stock of the month: #Verizon $VZ

Verizon (ticker: $VZ ) has been a great investment for me so far, I have owned it for about 2 years now. It is one of the value stocks which offers both a solid dividend (>4%) and capital appreciation.

It is considered a 5G play and its deal with $DIS related to Disney+ has helped it soar.

Verizon is a mega cap, with a market value of 240B $. It currently trades at 58.13$ and it was trading at about 48$ when I bought it. This means a 20+% capital appreciation which outperformed the SP500 by 15 percentage points over the same period. And then you have to add the dividend, which was about 5% at the start of my investment and is now 4.28%. American stocks typically pay dividends out on a quarterly basis which gives you the option of re-investing more frequently than, say, most European stocks which pay a dividend on a yearly basis.

In terms of valuation, the stock is actually quite pricey at the moment and the projected total return over the next 5 years, including dividend, is of 41%. There are plenty of better valued stocks out there which offer a greater growth potential (even >100%), like $AMZN and $TSLA, but you probably want to combine more aggressive plays with other less volatile investments in order to stabilise your portfolio. In 2008, when the market was down 38.5%, Verizon was “only” down 21%. So far in 2020 Verizon is down 7% compared to a 15% fall of the SP500.

The stock has had a steep recover from the late March lows and is now trading above the 5 and the 50 moving average, with the 200 moving average within grasp.

VZ TA

It reports earnings for Q1 of 2020 on Friday the 24th of April. Consensus estimates are EPS of $1.22 and revenue of $32.37B.

If you want to see all the positions of one of my portfolios, you are welcome to follow me on eToro here.