Why this earnings season is key to predict 2023 | January 14th, 2023 Newsletter

$AMZN $ACIW $WWE $SLG $WSM $VWS.CO $CALM $NVDA $GIS $KBE $CSCO $DEN $LIT $QCOM $BRK.B $SIG $NUE $DIS $THO $MP $KSS $GL $WMT $TGT $GILD $AIG $ORI $USB $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT $META $BWA $LEA $PSQ $SRTY $SQQQ

Weekly summary in a paragraph

Second week of upside in a row in this 2023 as last Thursday’s CPI report pleased more the bulls than it did the bears. Despite the disinflation narrative, China re-opening and more resilient than expected European market, the positive sentiment does not seems entirely justifiable.

The first Q4 earnings reports have started to come in, traditionally kicked off by the major US banks, which mostly surprised and finished higher in the Friday session as well as for the week. While the P/E multiple might have contracted as much as it will for this cycle, the fate of earnings is much more uncertain and it is therefore key to closely watch the Q4 earnings results and forecasts for any sign of weakness.

Asset classes weekly performance

This week the Dow gained +2.0% (+3.6% YTD) while the S&P500 did better with a +4.1% jump (+4.4% YTD, we are 1x short), the Nasdaq finished +4.8% higher (+6.6% YTD, we have a 3x inverse position) and the Russell 2000 gapped up +5.3% (+7.6% YTD). $Gold finished higher +2.9% (5.4% YTD, we are long) while silver was +1.8% stronger (+1.5% YTD, we are long). $Oil rebounded +8.5% (1.4% YTD). The 20-y advanced +1.5% this week (+6.8% YTD). The European stock market beat the main US stock market indices and gained +5.2% (+10.8% YTD). The Euro gave up 1.8% against the USD (1.2% YTD).

Weekly pitch

Stocks follow earnings and earnings expectations. If the earnings of a publicly listed company grow, so does its stock price. That is why the bull market which started in March 2009 and lasted 10+ years: in fact the S&P500 average earnings bottomed back then and have grown year on year. The spanner in the works of this more than decade-long favourable trend has been the sudden rise of interest rates, which has contracted the P/E multiple: that is the main reason why the major stock markets around the world entered into bear market territory in 2022. With the FED expected to soon pivot to a more dovish (or less hawkish) monetary policy, all eyes are now on earnings, especially for 2024 because the markets are forward looking: should the earnings continue to grow, a new bull market will be born; else there will be more pain ahead for investors putting their money to work on the long side.

Weekly Portfolio Update

Here are this week’s movements: we started a position in $AMZN and $ACIW, took partial profits on $PSQ (+5.1%), took profits on $BSX.US (+9.41%), reduced our hedge position in $SH (+3.3%), and initiated a sell position on $WWE and $SLG while a SL was triggered on our $SIG short position. Cash, precious metals and hedges amount to 38% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

$CPE +10.61% (Oil)

$THO +10.19% (Consumer durables, recreational products)

$GPS +9.59% (Apparel of footwear retail)

$NUE +9.47% (Steel)

$CMG +8.75% (Restaurants)

Portfolio Asset Allocation

Long stock positions 54% (reduced)

Short stock position 8% (increased)

Hedges 8% (reduced)

Silver & Gold 4% (unchanged)

Cash 26% (increased)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance in Euro is +2.43% (excl. dividends) vs the European market gain of +9.6% and +3.63% in USD vs the S&P500 gain of 4.4%.

…in case you missed it…

Check out last week’s newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.

Invest responsibly!!!

5 things I got right in 2022..and 5 I got wrong | January 7th, 2023 Newsletter

$WSM $VWS.CO $CALM $NVDA $GIS $SRTY $KBE $CSCO $DEN $LIT $QCOM $BRK.B $SIG $NUE $PLUG $TELL $DIS $THO $MP $KSS $GL $WMT $TGT $GILD $AIG $ORI $USB $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT $META $BWA $LEA

Weekly summary in a paragraph

While the Santa rally did not materialise, the first trading week of 2023 did not disappoint for stock markets around the world which finished higher. In the US the 4 days of trading were choppy with the Friday session bringing it home thanks to the justification which came from falling ISM services and a less than expected rise in the average hourly earnings, both of which offset the strong jobs report.

The stock market rally continued in China, particularly for tech, as investors are bullish on rumours that the crack-down on publicly listed companies may ease. Europe outperformed the US even though its gains were offset by a sharp weakening of the Euro relative to the Dollar.

There is a growing bullish sentiment, even in the Nasdaq who some analysts believe to have found the bottom. With the Q4 earnings season due to kick off next week, investors need to remain vigilant as this will be a key quarter to watch for signs of weakness especially with regards to 2024 estimates: the markets are forward-looking!

Asset classes weekly performance

This week the Dow gained +1.45% (+1.45% YTD) just like the S&P500 (+1.45% YTD, we are 1x short), the Nasdaq finished +0.98% higher (+0.98% YTD, we have a 3x inverse position) and the Russell 2000 gapped up +2.4% (+2.4% YTD, we are 1x short). $Gold finished higher +2.4% (2.4% YTD) while silver was -0.6% lower (-0.6% YTD). $Oil fell sharply by -4.1% (-4.1% YTD). The 20-y was markedly higher with a +3.7% gain this week (+3.7% YTD). The European stock market gained +4.7% (+4.7% YTD). The Euro gave up -1.5% against the USD (-1.5% YTD).

Weekly pitch

5 things I got right in 2022:

Sold $AAPL and $GOOG close to the peak (August), plus other long-duration stocks which do not do well in a rising interest rate environment
Hedged, including raising cash
Sold short $TLT
Monitored the markets more closely than I would do in a bull market
Followed macro trends and invested accordingly, for example in oil and energy stocks in general

..and 5 I got wrong:

Did not hedge enough and early enough
Did not exploit the energy rally enough and missed the opportunity to invest in LNG stocks
Was too attached to some of my historical long positions without sufficient justification
Covered the $TLT short too early in the year
Partly missed the rally in commodities

Weekly Portfolio Update

Here are this week’s movements: we started a position in the Danish company $VWS.CO, we accumulated on our long position in $META, took profits on the $CSCO short position and initiated a sells position on $WSM. Cash, precious metals, hedges and short stock positions amount to 41% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

$NEM +11.53% (Precious metals)

$FCX +11.26% (Precious metals)

$MC.PA +10.44% (Luxury)

$THO +10.24% (Consumer durables, recreational products)

$SBSW +9.38% (Precious metals)

Portfolio Asset Allocation

Long stock positions 59% (increased)

Short stock position 4% (increased)

Hedges 9% (unchanged)

Silver & Gold 4% (unchanged)

Cash 24% (reduced)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance in Euro is +0.22% (excl. dividends) vs the European market gain of +3.2% and the S&P500 gain of 1.45% (+0.27% US market beat, expressed in $).

Invest responsibly!!!

Lessons learnt from beating the stock market | December 31st, 2022 Newsletter

Weekly summary in a paragraph

The last trading week of 2022 in the US stock disappointed: despite a strong leg up in the Thursday session, the Santa rally did not materialise and all the major US market indices were mildly lower. Some late earnings report dominated the news in a week characterised by low volume due to the holiday season: $NKE surprised while $MU disappointed.

The Bank of Japan made another unexpected move by launching ‘emergency buys’ of 2 and 5-year bonds. Mild weather in Europe have helped ease the pain of a still unresolved energy infrastructure and base load crisis.

Meanwhile in China a total U-turn on Covid restrictions is allegedly causing millions of deaths with consequences on policies all over the world. Investors need to watch this development as it may impact earnings as well as commodity prices.

Asset classes weekly performance

This week the Dow lost -0.1% (-8.58% YTD) just like the S&P500 (-19.44% YTD, we are 1x short), the Nasdaq retraced -0.3% (-33.03% YTD, we have a 3x inverse position) and the Russell 2000 finished flat (-21.40% YTD, we are 1x short). $Gold finished higher +1.4% (-1.23% YTD) and silver gained +0.8% (+2.14% YTD). $Oil continued its climb with a +0.9% gain (4.24% YTD). The 20-y lost -2.6% this week (-30.04% YTD). The European stock finished -0.3% lower (-15.86% YTD). The Euro gave up -0.8% against the USD (-6.14% YTD).

Weekly pitch

The year that just ended was one the of the worst for investors long stocks and bonds – here are a few lessons learnt along the way: 1) a rising interest rate environment hurts intangible, long-duration stocks much more than companies operating in the so-called real economy; 2) dollar strength negatively impacts on precious metals and emerging markets; 3) the war economy accelerates de-globalisation and is one of the contributors to sustained high inflation; 4) hedging is a critical tool available to investors that allows them to follow a risk-based approach. Many of these themes will continue to dominate in the new year, or at least for part of it, so if investors want to beat the market in 2023 (just like we did in 2022), they need to adopt an active (as opposed to a passive, ‘buy-and-hold’) approach to investing and hedge.

Weekly Portfolio Update

Here are this week’s few movements: we initiated a long position in $CALM, took profits on our $NVDA short position (+9.5% gain) and a stop loss was triggered on $PLUG. Cash, precious metals, hedges and short stock positions amount to 44% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

$CPE +2.92% (Oil)

$JPM +2.15% (Banking)

$META +1.95% (Social Media)

$LEA +1.72% (Auto Parts)

$CHTR +1.55% (Communications)

Portfolio Asset Allocation

Long stock positions 56% (unchanged)

Short stock position 3% (unchanged)

Hedges 9% (unchanged)

Silver & Gold 4% (unchanged)

Cash 28% (unchanged)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -9.47% (excl. dividends) vs the European market loss of -10.43% (+0.3% European market beat, expressed in €) and the S&P500 loss of -19.33% (+3.8% US market beat, expressed in $).

Invest responsibly!!!

IS THE SANTA RALLY ONE WEEK LATE ? | December 24th, 2022 | $NVDA $GIS $SRTY $KBE $CSCO $DEN $LIT $QCOM $BRK.B $SIG $NUE $PLUG $TELL $DIS $THO $MP $KSS $GL $WMT $TGT $GILD $AIG $ORI $USB $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT

Weekly summary in a paragraph

Mixed results in the US stock market this week: while the Dow finished higher, the S&P500 was mildly lower whereas the Nasdaq closed markedly down and is in the red for the third straight week. Good performance for precious metals and related stocks. The jobs report indicated resilience in the US labour market and the inflation data points were either in line with expectations or mildly hotter.

The Bank of Japan shocked the world with its decision to end its long-standing money printing policy. Oil showed its strength after Russia declared that production could be cut to counteract the price cap decision by the EU. All of this while the largest ever US equities outflow was recorded.

Meanwhile in China there are reports of record 34M Covid infections in a single day as well as growing concerns for headwinds due to the virus surge. Can a belated Santa Rally in the last trading week of 2022 relieve the pain of a so far rather negative month of December?

Asset classes weekly performance

This week the Dow gained +0.9% (-9.11% YTD) while the S&P500 fell -0.2% (-19.33% YTD, we are 1x short), the Nasdaq retraced -1.9% (-33.04% YTD, we have a 3x inverse position) and the Russell 2000 finished flat (-21.96% YTD, we are 1x short). $Gold finished marginally higher +0.3% (-2.46% YTD) and silver gained +2.2% (+0.84% YTD). $Oil showed its strength with a +7.2% gain and is now back in positive territory for this year (3.03% YTD). The 20-y lost -4.6% this week (-30.04% YTD). The European stock finished +0.3% higher (-16.80% YTD). The Euro recovered +0.3% over the USD (-6.31% YTD).

Weekly pitch

This week’s market behaviour should serve as a reminder that nobody knows what happens next, even when estimates or predictions are met. Investors should follow a risk-based approach and hedge. Simply put, hedging means investing on the opposite side of your main portfolio, though for a smaller proportion, in order to limit losses if the market turns against you. While this reduces your profits when you have the wind in your back, it does offer a parachute when the opposite occurs. Many of those who are beating the market in 2022, like us (see below), have hedged and are either in the black or simply less in the red. The Santa Rally may well just be one week late but why risk and not hedge?

Weekly Portfolio Update

Here are this week’s movements: we took profits on $GILD (+35% gain) and partial profits on our short position in $SIG (+10.88%); we started short positions on $NVDA and $GIS. Stop loss was triggered on $TELL. Cash, precious metals, hedges and short stock positions amount to 44% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

$CHTR +9.50% (Communications)

$NVDA +8.24% (Semiconductors, short position)

$SQQQ +6.49% (3x inverse Nasdaq)

$SBSW +6.16% (Precious metals)

$NEM +3.71% (Precious metals)

Portfolio Asset Allocation

Long stock positions 56% (reduced)

Short stock position 3% (unchanged)

Hedges 9% (unchanged)

Silver & Gold 4% (unchanged)

Cash 28% (increased)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -9.17% (excl. dividends) vs the European market loss of -10.43% (+1.3% European market beat, expressed in €) and the S&P500 loss of -19.33% (+3.9% US market beat, expressed in $).

Invest responsibly!!!

THE POWER OF HEDGING: WHAT IT IS AND WHY YOU NEED IT | December 17th, 2022 | $KBE $CSCO $DEN $LIT $QCOM $BRK.B $SIG $TSM $NUE $HZNP $AMGN $PLUG $TELL $DIS $THO $MP $KSS $GL $WMT $TGT $GILD $AIG $ORI $USB $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT

Weekly summary in a paragraph

Second week of decline for global stock markets as cooler inflation data published in the US was not enough to offset the impact of hawkish central banks. While the rate hikes confirmed by the FED and the ECB were in line with estimates, in the press conference Jay Powell kept pushing back against pivoting.

Meanwhile in China reports of more infections, increasing deaths as well as political speculation about propping the housing sector dominated the news cycle and resulted in further weakness.

The pressure is mounting on earnings estimates as the risk of further downside is materialising and spreading amongst analysts. Perhaps the only playable narrative for the bulls is the expected seasonal tailwind (aka the “Santa rally”).

Asset classes weekly performance

This week the Dow lost -1.7% (-8.63% YTD) while the S&P500 fell -2.1% (-19.17% YTD, we are 1x short), the Nasdaq retraced -2.8% (-30.90% YTD, we have a 3x inverse position) and the Russell 2000 gave up -2.4% (-21.03% YTD, we are 1x short). $Gold finished marginally lower -0.2% (-3.28% YTD) and silver lost -0.8% (-1.26% YTD). $Oil showed its strength with a +4.0% gain and is now back in positive territory for this year (+1.20% YTD). The 20-y gained +0.8% this week (-26.90% YTD). The European stock finished -2.3% lower (-16.16% YTD). The Euro recovered +0.6% over the USD (-5.73% YTD).

Weekly pitch

Weekly Portfolio Update

Here are this week’s movements: we benefitted from $HZNP being bought out by $AMGN (+14% average gain); we started a short position on $CSCO as well as long positions on $LIT, $KBE, $QCOM and $BRK.B; we sold our short position on $TSM, perhaps prematurely. Cash, precious metals, hedges and short stock positions amount to 40% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

$HZNP +16.02% (Pharma)

$TELL +13.08% (Oil)

$SQQQ +8.07% (3x inverse Nasdaq)

$DEN +6.70% (Oil)

$PLUG +4.94% (Alternative Energy-Fuel Cell)

Portfolio Asset Allocation

– Long stock positions 60% (increased)

– Short stock position 3% (increased)

– Hedges 7%, though equal to 9% considering leveraged ETFs (reduced)

– Silver & Gold 4% (unchanged)

– Cash 26% (reduced)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -8.97% (excl. dividends) vs the European market loss of -10.43% (+1.5% European market beat, expressed in €) and the S&P500 loss of -19.2% (+4.5% US market beat, expressed in $).

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!!!

WEAKNESS IN PERSONAL SAVINGS MAY TRIGGER A FURTHER DROP IN THE STOCK MARKET | December 3rd, 2022 | $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

While Jay Powell’s speech lifted the stock markets on Wednesday, nothing really changed in the narrative or the course of action of the Fed. In fact, the positive labour data published on Friday poured cold water over this week’s rally. More critical data is expected over the next 10 days before the traditionally positive seasonality kicks in (aka “Santa rally”), hence caution is key.

The European stock market continues its sharp recovery, has risen +26.5% from the October 13^th lows and has now overtaken the S&P500.

Asset classes weekly performance

This week the Dow gained +0.4% (-5.35% YTD) while the S&P500 rose +1.6% (-14.6% YTD, we are 1x short), the Nasdaq did better with a +2.4% gain (-26.6% YTD, we have a 3x inverse position) and the Russell 2000 added +1.4% (-15.95% YTD, we are 1x short). $Gold finished higher this week too and gained +2.7% (-1.83% YTD) while silver is the clear winner with its +8.4% spike (-2.46% YTD). $Oil recovered +7.2% (+7.99% YTD). The 20-y added +3.3% this week (-28.63% YTD). The European stock finished +2.1% higher (-13.74% YTD). The Euro recovered +0.9% on the USD (-7.94% YTD).

Weekly pitch

The US economy is 70% consumer-based hence savings are closely watched as any significant changes may constitute a stock market bell weather. The data published this week is concerning in this respect as the percentage of personal savings to disposable income fell to 2.3% which corresponds to levels not seen since 2005. This weakness in savings may affect earnings for Q4 2022 as well as earnings estimates for next year thereby resulting in a further drop in the US stock market.

Weekly Portfolio Update

Quite a few movements this week: we took profits on $FIVE (+3.7%) and $AJRD (3.6%). We initiated long positions on $PLUG, $HZNP $NUE and $TELL. Cash, precious metals and hedges amount to 43% in our portfolio (+1% compared to last week).

Top 5 Weekly Portfolio Performers

$FIVE +13.94% (Consumer-Discount/Variety)

$META +10.84% (Technology-Social Media)

$SBSW +9.99% (Precious Metals)

$FCX +8.26% (Basic Materials-Metal Ores)

$SLV +7.96% (Silver ETF)

Portfolio Asset Allocation

– Long stock positions 57% (reduced)

– Hedges 8%, though equal to 11% considering leveraged ETFs (reduced)

– Silver & Gold 4% (unchanged)

– Cash 31% (increased)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -4.2% (excl. dividends) vs the European market loss of -5.7% (+1.5% European market beat, expressed in €) and the S&P500 loss of -14.57% (+2.4% US market beat, expressed in $).

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 19th, 2022 | Short-selling Visa and Mastercard: is that a joke or an obvious investment opportunity? | $SQQQ $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

The enthusiasm that characterised the previous week market rally was quickly suppressed by this week’s trading as US markets finished generally lower. The earnings beat by $WMT and the earnings miss by $TGT support the narrative of the consumer needing to reduce spend in these inflationary times. The European stock market continued its reversal and would actually now be outperforming the S&P500 was it not for the YTD Euro weakness.

Asset classes weekly performance

This week the Dow gained a meagre +0.1% (-7.68% YTD) while the S&P500 lost -0.5% (-16.8% YTD, we are 1x short), the Nasdaq did worse by falling -1.5% (-28.76% YTD, we have a 3x inverse position) and the Russell 2000 lost -1.7% (-17.94% YTD, we are 1x short). $Gold gave up -1.1% (-4.78% YTD) while silver finished -3.5% lower (-10.32% YTD). $Oil tanked -9.8% (+6.48% YTD). The 20-y recovered +1.1% this week (-32.3% YTD). The European stock market outperformed the US market indices and finished +0.8% higher (-16.59% YTD). The Euro lost -0.4% to the USD (-8.21% YTD).

Weekly pitch

If inflation imposes an immediate burden on the consumer, credit card debt is its long-term yoke. Credit card debt default rates have been increasing since Q2 2021 and while they are way below the highest levels seen in this bull market cycle, they are expected to go up. The next quarterly print is due next week. Most investors typically focus on the long side, even in bear markets, but sometimes investment opportunities are on the short side: credit card debt defaults may offer such an opportunity even if it means shorting stock market darlings like Visa, Mastercard and American Express.

Weekly Portfolio Update

We sold three positions: $KSS (+3.4%), $MP (+4.2%) and $GL (+13.47%). We increased cash and hedges, in other words our profit-taking did not go back into more investments, at least for now. Cash, precious metals and hedges now amount to 42% in our portfolio.

Top 5 Weekly Portfolio Performers

$GPS +11.32% (Consumer-Apparel/Shoes)

$WMT +5.37% (Consumer-Major Discount Chains)

$AJRD +4.36% (Aerospace)

$GL +3.66% (Insurance)

$SQQQ +3.29% (3x inverse the Nasdaq)

Portfolio Asset Allocation

– Long stock positions 58% (reduced)

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

– Silver + Gold 4% (increased)

– Cash 28% (increased)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -5.6% (excl. dividends) vs the European market loss of -8.4% (+2.8% European market beat) and the S&P500 loss of -16.8% (+3.0% US market beat).

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!!!