Responsible Investor Portfolio Update, July 25th, 2020 | $TCEHY $NEM $BK $SYF $GILD $GRUB $SQQQ $SCO $PCG $LVMUY $LRLCY

I was on holidays for the last two weeks and while I took a break from the weekly blog, I kept an eye on the markets and even sent three buy alerts over this period. So much has happened within the span of a fortnight, from the worsening of the pandemic in the US, to the diplomatic tension between the US and China and the start of the earnings season. While the first two may offer an excuse for a correction, all eyes are on earnings which will be the reality check for this frothy market.

Two months have passed since the inception of the Responsible Investor Portfolio and we are still in the black with a total return of 1.9% (excluding dividends) whereas the market is up 1.3% (0.6% market beat).

The majority of our 18 portfolio positions are traded in European currencies whereas 43% is in USD. Over the last two weeks the USD has lost 4.4% vs the Euro and this impacts on our portfolio on which I report in USD.

We initiated a position in Tencent the week before last and also one in the Italian contractor WeBuild (previously trading as Salini). Following the approval of the EU Recovery Fund and a positive technical signal, I also sent a buy alert for an ETF which reproduces the price of a selection of European dividend stocks and is traded on the Italian stock market, EUDV.MI.

The table below summarises the portfolio performance since inception.

200724 RIP

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$LVMUY $LRLCY $BK $SYF $GILD $GRUB $SQQQ $SCO $PCG | Responsible Investor Portfolio Update, June 20th, 2020

The global markets were consistently positive this past week, with Italy’s #FTSEMIB leading with a 3.9% gain. Our RI Portfolio lagged behind due to the hedges I had put in place. I had increased our hedges as I felt the markets were “tired” of going up but the week was largely positive in the end. Well, we are still showing a positive total return and we are only 3 weeks in since inception ! Also, I’d rather always loose on my hedges than on my core positions..

We have initiated 4 new positions this week, all in the European markets: two consumer French large caps, Luis Vuitton and L’Oreal and two Italian stocks, one in the media sector and the other one in the technology sector. We have also accumulated on Pacific Gas and Electric Company. With reduce and accumulate alerts the relative weight of the open positions change of course.

This week’s winners in our RI Portfolio were Italy-based Terna (+8,4% gain) and Grubhub (+6,2% gain).

The USD lost some ground compared to the EUR (0.9%) while there was no impact of the Danish krona. This means that in a portfolio in USD, the European stocks will have lost some of their value.

We now have 14 open positions, 2 of which are leveraged hedges (inverse ETFs). We are almost half way through along the path to achieve a complete portfolio. The table below summarises the portfolio performance since inception and now includes the investment strategy for each position.

200619 RIP

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 has 20+ positions and can be accessed via this link.

$GRUB $SCO $SQQQ : was your portfolio up on Thursday June 11th ?

The markets were way overbought and last Wednesday I decided to add a couple of hedges, namely $SCO (a double inverse ETF on oil) and $SQQQ (a triple inverse ETF on the Nasdaq). The relative weight of these positions meant that as the US markets tanked about 5% on Thursday the 11th of June, my Responsible Investor portfolio was up. Only a little, but green.

Photo 12-06-2020, 08.22.10

If on average over the mid to long term the markets go up, and you beat them, you should do well with your investments.

Enjoy the weekend !

stock-photo-hedging-abstract-hand-writing-word-to-represent-the-meaning-of-financial-word-as-concept-the-560758789

$INDA and $EWZ : two ETFs to invest in G20 stock markets

ETFs are an efficient way of investing in markets or sectors for which one would otherwise have to hold multiple positions to reproduce. This is especially true is you have a limited capital to invest, say up to 10k Euro or Dollars.

We opened a 2% position in $EWZ which reproduces the Brazilian stock market. While the outbreak seems to be nearing the peak only now over there, the stock market fall has been so significant that some of the stocks in that market are greatly undervalued, e.g. Petrobras. As always, we will be vigilant and prepared to act if the outlook changes.

We also hold a 2% position in $INDA which mirrors the Indian stock market. I have opened this one due to a favourable technical pattern, something I do rarely as I am mainly guided by fundamentals when selecting stocks and ETFs.

Brazil and India

At present I have 21 open trades (4 of which at $SQQQ trades bought at different price levels). When I am fully invested, I target having 30-40 open trades with an average percentage of 3% each, though some positions may be higher or smaller depending on the strategy. It is very important to be diversified across the various sectors but also to have enough positions to avoid being severely affected by a major swing in an investment with too high a relative weight. While this limits the potential for greater gains, it does protect you on the downside and makes your portfolio more resilient.

Here are the 4 trades in my eToro portfolio from this past week (May 18th to May 22nd):

  • $AMAT +5%
  • $XLK +2 %
  • $DUE.DE +2% (thanks to the positive Zew numbers in Germany, we might be back)
  • $EWZ +2% (we might be back in this one too)

The US stock market is up about 3% this week and 5 of my positions have outperformed them, namely $KO, $SYF, $USO, $IRM, $VIAV. The European stock markets have also grown by about 2%.

In my eToro portfolio I am 35% in cash, 8% in hedges and the rest are long positions in stocks and, to a lesser extent, ETFs and cryptocurrencies.

$SQQQ as a hedge proved to be a winner

Over the past two weeks the market has been quite choppy, especially intraday, but overall it has continued to hold. In fact, the Nasdaq has gained 4.4% and the S&P500 1.1% while the Dow was basically flat at -0.2%.

The difference in performance can be explained by the stocks which compose these indices, with the Nasdaq obviously being packed with many technology stocks which have been outperforming most indices. To give a couple of examples, one of the technology ETF $XLK is up 5.1% this past two weeks, and the so called FAANG stocks are all above 4% with $NFLX up 9.4%.

The relative lack of technology stocks in the European indices, which are dragged down by many bank stocks ($XLF), is the main reason why the European stock markets have been laggards. The financial sector was already suffering from the dovish monetary policies of various areas of the world, with negative interest rates in Japan and Europe for example. The pandemic has only increased their pain as money printing continued everywhere, including the US.

Some say that March 23rd is when the markets bottomed: since then the 3 main US indices have recovered a lot of the previous losses due to the pandemic crisis with a gain ranging between 27 and 31%, while the European stock market has only rebounded by 14%. When they say that it is a market of stocks rather than a stock market, what they mean is that you have to pick the right indices if you want to invest in ETFs, or the right stocks if you want to have more chances of beating the market.

Here are my top 3 winners for these past two weeks:

$SQQQ +6.96% (this is a hedge)

$AMAT +5.07%

$BMY +4.51%

The earnings seasons is not over but its pace is certainly slowing down with a lot fewer companies reporting earnings next week: the one I will be watching most closely is $BABA on Friday.

If you want to see which stocks, ETFs and currencies I own in my eToro portfolio, please follow this link.

Have a great weekend everybody and invest responsibly !

A potential takeover target: Nokia $NOK

This week saw the first group of earnings come in with the financial sector under the spotlight. The big US banks did rather poorly, for the most part: this is for example the case for Wells Fargo, which we own in one of our portfolios, who took a 14.6% weekly loss while the Dow was up 2.2%. On the flipside, our other bank stock, the Bank of New York Mellon Corp (ticker: $BK ) reported better an expected earnings and ended the week with a 0.6% gain. Even within a badly hit sector, there can be outperformers.

But our last week’s biggest winners were Danone (ticker: $BN.PA ) and AstraZeneca, both European stocks, one operating in the food industry and the other in the pharmaceutical sector, who boasted a 9.1% and a 12.1% gain, respectively !

We have made several buys and sells this week. For starters we have locked in a 5.41% gain on Dexcom (ticker: $DXCM ). This company is so promising that I am sure we will be back, but I don’t trust this overly positive sentiment at the moment and, feet to fire, I would guess that next week the market may pause.

The ETF we own which reproduces the German stock market has run a lot lately, after a period of consolidation (those who swear by technical analysis would say “bull flag”), and this week we have exited the position on $EWG with a 7.12% gain in just 2 weeks !

Finally, we have closed our long position on gold, via the $GLD ETF, with a nice 5% gain in less than two months.

From the buy side, we have initiated a long position on Nokia (ticker; $NOK ) which is a potential takeover target. We’ll keep a close watch on it and if it plays out it can result in a significant upside.

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