Tag: investing

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

Weekly summary in a paragraph

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

Asset classes weekly performance

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

Weekly pitch

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

Weekly Portfolio Update

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

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

$GILD +16.93% (Drug-Biotech)

$CHTR +11.45% (Telecom Services)

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

$ORSTED.CO +9.54 (Green Energy)

$FIS +9.08% (Financial)

This is our asset allocation as things stand:

– Long stock positions 63% (increased)

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

– Silver + Gold 3% (unchanged)

– Cash 25% (decreased)

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

Invest responsibly!!!

October 22nd, 2022 | What do declining 2023 and 2024 earnings estimates mean for your portfolio? | $FCX $FTNT $SAND.ST $TGT $JPM

Weekly summary in a paragraph

The stock market staged a significant rally this week with most indices finishing 3% or more higher, in part fuelled by a rumour that the Fed is going to become less hawkish in December. Is it yet another bear rally? Only time will tell, though something seems to have changed now that the fed funds futures are reaching 5%. Earnings season is now in full swing and 165 S&P500 companies will report next week.

Asset classes weekly performance

This week the Dow gained +4.8% (-16.5% YTD) while the S&P500 did slightly worse +4.7% (-21.3% YTD, we are 1x short) and the Nasdaq outperformed both +5.2% (-32.2% YTD, we have a 3x inverse position). The Russell 2000 recovered +3.5% (-24.1% YTD, we are 1x short). $Gold gained 0.8% (-8.4% YTD) while silver skyrocketed +5.5% (-14.5% YTD). $Oil inched 0.5% higher. The 20-y fell by -5.5% this week (-34.7% YTD). The European stock market staged a +6.0% comeback (-30.3% YTD). The Euro recovered 1.4% against the USD (-13.8% YTD).

Weekly pitch

Stocks follow earnings and earnings expectations. Declining earnings put pressure on stock prices and so do higher interest rates. So far, the ongoing bear market has mainly been caused by higher interest rates but if earnings start rolling over, the downward slope may steepen. For 2024, analysts now expect 250$ in earnings for the S&P500 which corresponds to a 9.9% appreciation relative to the current price assuming a 16.5 multiple. Earnings estimates continue to decline as time goes by, though, which reduces opportunities for appealing returns.

Weekly Portfolio Update

We covered 1/3 of our short position in IWM with a 22% gain, thereby reducing the overall weight of hedges in our portfolio. We also initiated a trade on TLT as there is a potential short-term shift in sentiment. Cash, precious metals and hedges now amount to 40% in our portfolio which finished flat this week while the market fell.

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

$FCX +15.88% (Basic Materials-Metal Ores)

$FTNT +11.68% (Technology-Software-Security)

$JPM +9.93% (Banks-Money Center)

$TGT +9.27% (Consumer-Major Disc. Chains)

$SAND.ST +8.61% (Specialty Industrial Machinery)

This is our asset allocation as things stand:

– Long stock positions 60% (increased)

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

– Silver + Gold 3% (unchanged)

– Cash 28% (decreased)

Our currency-adjusted YTD portfolio performance is -2.3% (excl. dividends) vs the European market loss of -16.5% (+14.2% market beat).

Invest responsibly!!!

A successful short term trade on $EHTH

Another week of consistent recovery for the US stock market as well as for many others around the world. I remain cautious and still hold onto some hedges because this sudden reversal cannot be fully trusted and due to it being reportedly fueled by a short squeeze for the most part.

While I like to make investments for the long term, I do occasionally perform short term trades and this week I have managed to pull two off! One of them could be traded on eToro and related to eHealth (ticker: $EHTH ). What happened is the classic short selling amplified by the media, with a stock which was trading at 136$ until last week and dropping to below 100$ on Wednesday. I took the opportunity, bought at 99$ and exited at 114$ over the course of two days ! I believe the stock has the potential to go even higher and if I was a more aggressive investor, I would hold on to part of it, but decided to lock in the profit this week.

20200410

There were two more positions we closed this week, on two of the food-related stocks owned in my eToro portfolio, both with a 5% gain, Conagra Foods (ticker: $CAG ) and General Mills (ticker: $GIS ). These were both sold with the automatic sell function available on eToro. I am ready to get back into these two but when any my positions goes above a 10% gain, I have a take profit ready at 5% in order not to give up all the profit if the stock price goes down passed that mark. I then set up a price alert to be notified if the price goes up again past the sell price and re-evaluate my view on that particular stock.

I am also very satisfied with this week’s recovery in my $WFC position, with a 26% jump in just 4 trading days.

So now I am 49% in cash on my eToro portfolio and continue to look for more investment opportunities. One from my watchlist I am prepared to jump into is $BABA , but that will depend on how next week goes.

Enjoy the long weekend and for those who celebrate it, have a happy Easter !

 

Has the #market bottomed ?

If anyone claims to have the answer to this question, they really don’t know what they are saying because the truth is nobody knows. So the best thing to do is to objectively assess what is going on, to invest responsibly and be patient.

This past week has been another rollercoaster with the US markets rallying more than 13% as you can see from the $SPY (an ETF which reproduces the SP500 index), however the #volatility has not moved much, with a weekly reduction of just over 1% (see $VXX the ETF which reproduces the VIX). This means that it is too early to call the bottom in my opinion.

SPY

All investors who are predominantly long are obviously pleased to see this week’s jump, don’t get me wrong, but there are many examples of rallies which have followed large drops. Look at what happened during the 2008 crisis for example, there were 6 positive jumps between +9 and +19% on the way down. Before the market finally bottomed in Q1 2009 the volatility was greater than 30.

File 28-03-2020, 15.14.28

So what can investors do in the meantime ? Be patient and take one day at a time. As I have a long term horizon and the market has already dropped a lot, I did do some nibbling this past week, focusing on dividend payers with a good valuation such as $BMY, but I still have a large cash position overall as I don’t reckon it is time to go all in yet.

I have also increased my hedges, by upping my position on a double inverse SP500 by 50%. One might ask, why enter or increase a long position on a stock while at the same time increasing a short position ? The answer lies in the time horizon, once again. I invest long when there is upside potential in the long term (most of the times), whereas I introduce hedges when markets are volatile, therefore in the short term. If there is another drop next week, my loss will be reduced; if it goes up again, I will gain less but hedges are typically a smaller percentage of one’s portfolio so the loss is limited. In fact, I wish I could always lose on my hedges !!!

If you are interested in seeing what additional stocks I might get long on when the conditions are right, please keep reading my weekend updates !

Stay safe everyone and invest responsibly.

 

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