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!!!

The Fed’s Beige Book: read or ignore? | Responsible Investor Weekly Newsletter, April 22nd, 2023

$WWE $HAL $EA $SDOW $SNAP $ADBE $FIVE $ACIW $XLV $AAPL $SNY $GOOG $QQQ $RTX $CPR.MI $SAND.ST $AMZN $WSM $NVDA $DEN $LIT $QCOM $BRK.B $NUE $DIS $MP $GL $WMT $TGT $GILD $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT $META $BWA $LEA $PSQ $SRTY $SQQQ

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 “The Fed’s Beige Book: read or ignore?”, and was written on April 22nd, 2023.

Weekly summary in a paragraph

The US stock market indices finished mildly lower this week, with the exception of the Russell 2000. In the UK, the latest economic data revealed that inflation is still high: this report spooked global markets on Wednesday. The European stock market finished higher again this week, and is now up 20% year to date. The 2-10y spread increased and is still inverted at -60 basis points: this corresponds to a 22 basis points increase in the past month. In corporate news, Tesla tanked on Thursday as more price cuts were announced and Q1 2023 earnings showed a significant reduction in profit margin. Netflix also disappointed reporting weaker-than-expected results. Procter & Gamble, conversely, beat on both the top and the bottom line, thanks to price hikes which meant that the company could pass the impact of inflation on to its customers (we are long). Next week is very busy in terms of earnings as mega cap tech companies report: by the end of the week, more than 40% of the S&P500 companies will have reported, allowing to draw some initial conclusions on the Q1 2023 earnings.

Asset classes weekly performance

This week the Dow finished -0.2% lower (+2.0% year to date) while the S&P500 lost -0.1% (+7.7% year to date), the Nasdaq gave up -0.4% (+15.3% year to date) and the Russell 2000 advanced +0.6% (+1.7% year to date). Gold finished -1.3% lower (+6.2% year to date, we are long) while Silver lost -0.4% (+3.1% year to date, we are long). Oil tanked -3.7% (+0.9% year to date). The 10-y US treasury yield finished flat (-5.9% year to date). The European stock market rose +0.5% (+20.2% year to date). The Euro finished flat against the US Dollar (+2.6% year to date).

Weekly pitch

Perhaps the most significant piece of economic news this week consisted in the Fed’s Beige Book, which was published on Wednesday. The main takeaway message in it was the fact that the loan demand dropped significantly in the US. Its relevance arises from the implicit indication that slower economic activity is expected, therefore. This, in turn, suggests an increased risk of negative impact on earnings and on the stock market. Analysts now believe that another quarter point rate hike will happen at the May FOMC meeting, with an 86% probability. 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. This week we have beaten the market again and have initiated new long and short positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our EOG Resources long position (+10.5%) and partial profits on our Google long position (+7.9%). We initiated long positions on Rational and Fielmann, and added to our Range Resources and Berkshire Hathaway long positions; we also initiated a short position on XPO Logistics and on World Wrestling Entertainment. Cash, precious metals and hedges amount to 39% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Essilor Luxottica +5.73% (Medical Specialties)

Sibanye Stillwater +4.75% (Precious Metals)

Mariott International +3.75% (Hotels & Leisure)

Chipotle Mexican Grill +3.55% (Restaurants)

Procter & Gamble +3.36% (Consumer non durables)

Portfolio Asset Allocation

US Long stock positions 51% (reduced)

EU Long stock positions 10% (increased)

US Short stock position 4.5% (unchanged)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 22% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +2.4% (excl. dividends) vs the S&P500 loss of -5.9%, which corresponds to a +8.3% market beat.

Invest responsibly!!!

Is disinflation a precursor of a recession? | Responsible Investor Weekly Newsletter, April 15th, 2023

$WWE $DXCM $HAL $EA $SDOW $SNAP $ADBE $FIVE $ACIW $XLV $AAPL $SNY $GOOG $QQQ $RTX $CPR.MI $SAND.ST $AMZN $WSM $NVDA $DEN $LIT $QCOM $BRK.B $NUE $DIS $MP $GL $WMT $TGT $GILD $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT $META $BWA $LEA $PSQ $SRTY $SQQQ

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 disinflation a precursor of a recession?”, and was written on April 15th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher for the week, despite a sell-off on Friday. The main catalyst consisted in the declining PPI data published on Thursday, just a day after the CPI report came in cooler-than-expected. The European stock market continued to show its strength and so did the Euro. The 2-10y spread finished flat and is still inverted at -56 basis points. In corporate news, Tesla announced a series of price cuts in the US and three of the major US banks (JP Morgan, Citigroup and Wells Fargo) were the first to report a Q1 2023 earnings beat this week, with JP Morgan results being the most impressive. The earnings season kicks off in earnest next week: any significant misses may exert pressure on the market.

Asset classes weekly performance

This week the Dow finished +1.2% higher (+2.2% year to date) while the S&P500 gained+0.7% (+7.7% year to date), the Nasdaq rose +0.3% (+15.8% year to date) and the Russell 2000 advanced +1.5% (+1.1% year to date). Gold finished +0.7% higher (+7.5% year to date, we are long) while Silver gained +2.2% (+4.3% year to date, we are long). Oil was +3.7% higher (+6.9% year to date). The 10-y US treasury yield gained +3.1% (-7.1% year to date). The European stock market rose +0.7% (+16.8% year to date). The Euro finished +0.76% higher against the US Dollar (+2.7% year to date).

Weekly pitch

The economic data published this week supports the disinflation narrative and leaves the Fed in the challenging position of timing the pivot correctly, if that’s at all possible: not too early to avoid inflation picking up again, and not too late to risk sending the economy into a deep recession. While a recession in late 2023 or early 2024 seems to be in the cards, the real question is how severe it may be and how long it may last. Thankfully not everything is in the hands of the monetary policy makers: the Q1 2023 earnings and especially the future earnings forecasts will provide an objective read of the state of publicly traded companies. Ultimately, it is the growth in earnings that has pushed the markets higher over the decades. Responsible investors should keep an eye on their positions during the earnings seasons, and adjust their portfolio depending on how the companies they have invested in guide for future quarters. This week we have beaten the market again and have deployed some cash.

Weekly Portfolio Update

Here are this week’s movements: we took partial profits on our Newmont Mining long position (+7.4%) and exited our Coinbase short position with a nominal gain; a sell stop was triggered on our Dexcom short position. Cash, precious metals and hedges amount to 39% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Palantir +8.90% (Tech)

JP Morgan +8.83% (Banking)

Callon Petroleum +7.57% (Oil)

Freeport McMoRan +7.12% (Non-energy minerals)

BorgWarner +5.80% (Automotive)

Portfolio Asset Allocation

US Long stock positions 52% (increased)

EU Long stock positions 9% (unchanged)

US Short stock position 4.5% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 22% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +0.1% (excl. dividends) vs the S&P500 loss of -5.8%, which corresponds to a +5.9% market beat.

Invest responsibly!!!

OIL PRODUCTION CUT AND THE SPECTRE OF STAGFLATION | Responsible Investor Weekly Newsletter, April 8th, 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 “Oil production cut and the spectre of stagflation”, and was written on April 8th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed in a 4-day week of trading which was dominated by the surprise oil production cut by OPEC (more in the weekly pitch). Economic data included the ISM manufacturing PMI on Monday and non-manufacturing PMI on Wednesday which both missed, and the March nonfarm payroll data which came in near expectations on Friday. The European stock market continued to show its strength and so did the Euro. The 2-10y spread finished flat at -52 basis points. In corporate news, Fedex announced a restructuring and General Motors overtook Toyota as the top US automaker last year. Next week the Q1 2023 earnings season kicks off: any significant misses may result in another market leg down.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+1.02% year to date) while the S&P500 lost -0.1% (+6.9% year to date), the Nasdaq gave up -1.1% (+15.5% year to date) and the Russell 2000 tanked -2.5% (-0.39% year to date, we have a 3x inverse position). Gold finished +1.8% higher (+7.8% year to date, we are long) while Silver gained +3.4% (+3.0% year to date, we are long). Oil was +6.5% higher (+4.05% year to date). The 10-y US treasury yield lost -6.1% (-13.3% year to date). The European stock market gained +0.7% (+16.8% year to date). The Euro finished +0.7% higher against the US Dollar (+1.84% year to date).

Weekly pitch

Rumour has it that OPEC decided to cut oil production by 1.6 million barrels as a reaction to Biden’s decision to not refill the Strategic Petroleum Reserve (SPR). For us investors the main consequence is that this is an inflationary move which comes at a rather delicate time: will it delay the Fed’s pivot? The main reason inflation has cooled off lately is that energy prices have come down from the 2022 cycle highs: if oil prices go up, the risk of stagflation will increase and this may contract earnings. Last week we went over the strong link that exists between earnings and stock prices, hence prudence is of the essence. In order to protect themselves on the downside, responsible investors should raise cash, buy hedges (including precious metals and carefully selected corporate bonds) and be well-diversified.

Weekly Portfolio Update

Here are this week’s movements: we took profit on our World Wrestling Entertainment long position (+3.0%). Cash, precious metals and hedges amount to 39.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Ely Lilly & Co. +7.24% (Pharmaceuticals)

ProShares UltraPro Short Russell 2000 +8.11% (3x short the Russell 2000)

Newmont Mining +6.18% (Precious metals mining)

Denbury Resources +5.84% (Oil)

Callon Petroleum +5.80% (Oil)

Portfolio Asset Allocation

US Long stock positions 51.5% (unchanged)

EU Long stock positions 9% (unchanged)

US Short stock position 4% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 23% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -1.5% (excl. dividends) vs the S&P500 loss of -8.8%, which corresponds to a +7.3% market beat.

Invest responsibly!!!

Declining earnings alert! | Responsible Investor Weekly Newsletter, April 1st, 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 “Declining earnings alert!”, and was written on April 1st, 2023.

Weekly summary in a paragraph

The US stock market indices rallied this week, enough that they all finished positive for the quarter. The Nasdaq had the best quarter since 2020. The European stock market staged an even stronger gain and has now more than doubled its year to date return compared to the US stock market; in fact, since the mid-October 2022 bottom, the European stock market is up 36% versus a 10% gain by the S&P500. The PCE core inflation data published on Friday was slightly softer than expected, which helped the rally. Next week more economic data are due, including the ISM manufacturing on Monday and the ISM services on Wednesday. The banking sector borrowing continued and so did outflows in deposits, albeit at a slower pace than in recent weeks. The 2-10y spread reversed and reached -58 basis points, corresponding to a 20 basis points drop: these are not small changes. In corporate news, both Electronic Arts and Roku announced cuts of their respective workforce by 6%.

Asset classes weekly performance

This week the Dow finished +3.22% higher (+0.38% year to date) while the S&P500 gained +3.48% (+7.0% year to date), the Nasdaq rose +3.37% (+16.8% year to date) and the Russell 2000 appreciated +3.89% (+2.34% year to date). Gold finished -0.1% lower (+4.9% year to date, we are long) while Silver gained +4.71% (-0.7% year to date). Oil was +3.97% higher (-2.11% year to date). The 10-y US treasury yield lost -0.96% (-7.88% year to date). The European stock market gained +5% (+16.2% year to date). The Euro finished +0.64% higher against the US Dollar (+1.3% year to date).

Weekly pitch

Stock prices follow earnings and earnings expectations. Analysts continuously track earnings forecasts for all S&P500 companies: this enables to determine a bottom-up target price for the index. Over the past 3 months, the 2023 S&P500 target price has declined and is now 221.5$; with a current price of 4040$, the P/E multiple of the S&P500 is just over 18. According to Facset, the cut in the forecasted Q1 2023 earnings per share is the largest recorded in the 5-year, 10-year, 15-year and 20-year average. The earnings decline and the credit crisis are two reasons to stay nimble if you are invested in the stock market. In order to protect yourself on the downside, responsible investors should raise cash, buy hedges (including precious metals and carefully selected corporate bonds) and be well-diversified.

Weekly Portfolio Update

Here are this week’s movements: we initiated a new short position on Dexcom. Cash, precious metals and hedges amount to 39.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Gap +11.56% (Retail)

Sandvik +9.74% (Construction Machinery)

Denbury Resources +8.57% (Oil)

Freeport McMoRan +7.63% (Non energy minerals)

World Wresting Entertainment +7.43% (Consumer services)

Portfolio Asset Allocation

US Long stock positions 51.5% (unchanged)

EU Long stock positions 9% (unchanged)

US Short stock position 3.5% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 23.5% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -2.4% (excl. dividends) vs the S&P500 loss of -9.3%, which corresponds to a +6.9% market beat.

Invest responsibly!!!

From credit crunch to credit crisis: brace for impact! | Responsible Investor Weekly Newsletter, March 25th, 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 “From credit crunch to credit crisis: brace for impact!”, and was written on March 25th, 2023.

Weekly summary in a paragraph

All the US stock market indices finished higher in a week which saw a 0.25% interest rate increase by the Fed and a dovish commentary. Consensus sees a 90% probability for a rate hike pause at the May FOMC meeting. The banking sector continued borrowing at a pace which reduced the systematic quantitative tightening by a third. Europe had a strong week despite concerns of the Credit Suisse contagion spreading to Deutsche Bank. 94% of European Stoxx 600 companies have reported Q4 2022 earnings now, with an 8% growth which is superior compared to the US (-5%). The 10-y yield continued its fall and resulted in the 2-10y spread dropping again this week to reach -38 basis points. Recall that the spread had reached -107 basis points just two weeks ago. In corporate news, Activision sees the concerns of its merger with Microsoft alleviated, and Disney announced the layoff of 7000 staff at its ESPN unit.

Asset classes weekly performance

This week the Dow finished +1.18% higher (-2.7% year to date) while the S&P500 gained +1.39% (+3.4% year to date), the Nasdaq rose +1.66% (+13.0% year to date) and the Russell 2000 appreciated +0.52% (-1.49% year to date, we have a 3x short position). Gold finished +2.06% higher (+6.39% year to date, we are long) while Silver gained +4.19% (-4.27% year to date). Oil was -0.67% weaker (-10.51% year to date). The 10-y US treasury yield tanked -6.27% (-10.89% year to date). The European stock market gained +2,89% (+10.5% year to date). The Euro finished +0.79% lower against the US Dollar (+0.5% year to date).

Weekly pitch

If you have been affected by the great financial crisis of 2007-2008, you will remember the challenge of borrowing money over that period: whether it is retail or commercial loans, this is what happens in a credit crunch. A credit crisis, however, is a much serious economic phenomenon whereby the banks themselves struggle to borrow either from each other or from the central banks. The graph below shows that the amount banks have borrowed at the Fed discount window in 2023 has exceeded the 110 billion USD top from the GFC and is near-vertical. The earnings decline and the credit crisis are two reasons to stay nimble if you are invested in the stock market. In order to protect yourself on the downside, responsible investors should raise cash, buy hedges (including precious metals and carefully selected corporate bonds) and be well-diversified.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Newmont Mining (+8.1%) and ACI Worldwide (+6.3%) long positions; we initiated new long positions on Halliburton, EOG Resources and MP Materials. Sell stops were triggered on our Adobe and Lennar shorts and on our US Banks ETF. Cash, precious metals and hedges amount to 39.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Sanofi +8.44% (Pharmaceuticals)

Sonoco Products +7.95% (Process Industries)

Meta +5.32% (Technology)

Electronic Arts +5.01% (Gaming)

Denbury Resources +4.63% (Oil)

Portfolio Asset Allocation

US Long stock positions 51.5% (increased)

EU Long stock positions 9% (unchanged)

US Short stock position 3% (reduced)

Hedges 7.5% (increased)

Silver & Gold 5% (unchanged)

Cash 24% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -4.4% (excl. dividends) vs the S&P500 loss of -12.2%, which corresponds to a +7.8% market beat.

Invest responsibly!!!

Has the Nasdaq just saved the stock market? | Responsible Investor Weekly Newsletter, March 18th, 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 “Has the Nasdaq just saved the stock market?”, and was written on March 18th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed in a week which was dominated once again by the banking sector being under pressure despite notable interventions on First Republic in the US, and on Credit Suisse in Europe. The Nasdaq was very strong partly due to a golden cross finally forming on Wednesday, and joins all the other major US indices who already achieved the mother-of-all technical signals weeks or months ago. Europe experienced the second week of decline as the ECB raised interest rates by 0.5%, with more hikes seen ahead due to inflation still being high: this move may help the Fed justify at least a 0.25% hike at next Wednesday’s FOMC meeting. The 10-y yield staged a sharp reversal to the point that the 2-10y spread dropped to -42 basis points. In corporate news, Adobe and Fedex beat Q4 2022 estimates while Dollar General reported in-line.

Asset classes weekly performance

This week the Dow finished -0.15% lower (-3.9% year to date) while the S&P500 gained +1.43% (+2.0% year to date), the Nasdaq shot up +4.41% (+11.12% year to date) and the Russell 2000 lost -2.64% (-2.01% year to date, we have a 3x short position). Gold finished +4.33% higher (+7.07% year to date, we are long) while Silver gained +3.22% (-6.8% year to date). Oil tanked -7.0% (-14.15% year to date). The 10-y US treasury yield finished a whopping -6.68% lower (-10.49% year to date). The European stock market gave up -2.5% (+7.4% year to date). The Euro finished -0.12% lower against the US Dollar (-0.36% year to date).

Weekly pitch

I am fundamentally a value investor but like using technical analysis to guide entry/exit points in my positions from time to time. According to technical analysis a ‘golden cross’ occurs when the 50-day moving average crosses above the 200-day moving average. Many algorithms use this event as a prompt to buy an asset. Conversely, a ‘death cross’, ie when 50-day moving average crosses below the 200-day moving average, is seen as a bearish sign. As mentioned in the weekly summary, the Nasdaq finally saw a golden cross form this week, and is the last of the major US stock indices to do so after the Dow (mid December 2022), the Russell 2000 (late January 2023), and the S&P500 (early February 2023). The flows in equities were stable this week, and it is possible that had the Nasdaq not experience a golden cross the markets may have had another sharp decline.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Williams-Sonoma short position (+6.5%); we initiated new short positions on Adobe, Pinterest, Snapchat and Five Below. Cash, precious metals and hedges amount to 40% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Newmont Mining Corp +14.26% (Precious metals)

ACI Worldwide +13.38% (Technology)

Google +12.58% (Technology)

Microsoft +12.41% (Technology)

Silver +9.38% (Precious metals)

Portfolio Asset Allocation

US Long stock positions 51% (increased)

EU Long stock positions 9% (unchanged)

US Short stock position 4.5% (increased)

Hedges 7.5% (increased)

Silver & Gold 5% (unchanged)

Cash 23% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -3.5% (excl. dividends) vs the S&P500 loss of -11.2%, which corresponds to a +7.7% market beat.

…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.

Invest responsibly!!!

THE BATTLE BETWEEN THE BULLS AND THE BEARS: HERE IS WHAT TO DO | December 10th, 2022 | $LIT $SIG $TSM $NUE $HZNP $PLUG $TELL $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

Sure, everyone is expecting a slowdown in the rates hike next week, but the November headline and core PPI both hotter than expected may indicate that the Fed is not going to pivot any time soon. It was a horrible week on the global stock markets which finished markedly lower with the US indices declining for the first time after 3 weeks.

China was the exception as the reopening narrative gains strength and property support optimism sent Chinese stocks higher. The European stock market did a U-turn and contracted this week as cold weather exerts pressure on its frail energy sector.

Asset classes weekly performance

This week the Dow lost -2.8% (-7.04% YTD) while the S&P500 fell -3.4% (-17.45% YTD, we are 1x short), the Nasdaq retraced -4.0% (-29.17% YTD, we have a 3x inverse position) and the Russell 2000 tanked -5.0%% (-18.715% YTD, we are 1x short). $Gold finished marginally lower -0.1% (-2.63% YTD) and has been overtaken by silver which is the clear winner with its +1.2% gain (-1.39% YTD). $Oil tanked -10.9% and is now in negative territory for the first time this year (-4.99% YTD). The 20-y fell -0.7% this week (-26.33% YTD). The European stock finished -1.5% lower (-14.62% YTD). The Euro finished flat on the USD (-7.17% YTD).

Weekly pitch

While 2022 has clearly seen a bear market, from time to time the battle between the bulls and the bears does not have a clear winner. The bearish narrative is based on sticky inflation, uncertainty in terms of terminal rate, recession risk and the revision of earnings forecasts to the downside. Conversely, the bullish narrative centres around the Fed pivoting on interest rates, disinflation, sustained strength in the labour market and positivity around China’s potential reopening. One may consider not taking sides and using hedges + cash to reduce their exposure to the downside as we are doing in our portfolio.

Weekly Portfolio Update

Here are this week’s movements: we took partial profits on $WMT (+5.1%) and sold our short position on $ISF.L (-9.9%). We initiated short positions on $TSM and $SIG. Cash, precious metals, hedges and short stock positions amount to 43% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

$SQQQ +11.25% (3x inverse Nasdaq)

$VXX +6.40% (Volatility ETF)

$IWM +5.01% (short position on Russell 2000)

$SH +3.57% (1x inverse S&P500)

$SLV +1.27% (Silver ETF)

Portfolio Asset Allocation

– Long stock positions 57% (unchanged)

– Short stock position 2% (increased)

– Hedges 7%, though equal to 10% considering leveraged ETFs (reduced)

– Silver & Gold 4% (unchanged)

– Cash 30% (reduced)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -6.6% (excl. dividends) vs the European market loss of -7.5% (+0.9% European market beat, expressed in €) and the S&P500 loss of -17.5% (+3.7% US market beat, expressed in $).

Invest responsibly!!!

$NEM $LVMUY $LRLCY $BK $SYF $GILD $GRUB $SQQQ $SCO $PCG | Responsible Investor Portfolio Update, June 27th, 2020

This week was a roller-coaster for the global markets which pushed higher in the first two trading days to then loose strength and finish the week down. We still did not manage to have two consecutive negative days though !

In the US markets the #Dow suffered a 3.3% loss, followed by the #S&P500 which closed 2.9% lower than last week and the #Nasdaq which limited the loss to 1.9%. The weekly performance in Europe was no different, however all the three indices we follow more closely fared better than the US markets (#Stoxx -1.1%, #OMXC20 -1.3% and #FTSEMIB -1.6%).

Our RI Portfolio was nominally positive this week (+0,2%) and therefore outperformed these 6 indices by a weighted average of +2.6% thanks to selected stocks and especially to the hedges I had put in place during the preceding week, namely $SQQQ and $SCO.

We now have one full month of track record and I am pleased to see that we are showing a positive total return of 1.4% (+0,4% vs the Market).

There was only one Buy Alert this week, for precious metals stock #Newmont which benefited from the stock markets coming to a screeching halt. We also added to the triple inverse Nasdaq ETF $SQQQ position which proved to be the right move. With reduce and accumulate alerts the relative weight of the open positions change of course.

This week’s winners in our RI Portfolio were $SQQQ (+7,4% gain) and, once again, Grubhub (+8,1% gain).

No relative changes between the three currencies of the RI Portfolio.

We now have 15 open positions, 2 of which are leveraged hedges (inverse ETFs). Even in times of high valuations I keep finding cheap stocks and a possible further drop of the markets next week, especially around the quarter close, may offer an opportunity to initiate new positions.

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 30 positions and can be accessed via this link.

$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.

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.