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 13th 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 13th 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!!!

November 7th, 2022 | Does the recent election in Brazil offer an investment opportunity? | $EWZ $PBR $VALE $SQQQ $FCX $SLV $CPE $CBOE $SBSW $KO $AAPL $GOOG $META $MSFT $MP $NEM $CPE $ORSTED.CO

Weekly summary in a paragraph

A slew of positive economic data and a consistently hawkish Fed sent the US stock market lower this week. Despite indications that the next Fed’s interest rate hike may be contained to 0.5% after this week’s 0.75% increase, the jobs market is still too strong and inflation does not seem to slow down enough for the Fed to change its course such that the tightening monetary policy is limiting any upside potential at least in the short term.

On the other side of the pond, the European stock market staged the second week of gains.

Asset classes weekly performance

This week the Dow lost -1.4% (-11.9% YTD) while the S&P500 gave up -3.3% of gains (-20.9% YTD, we are 1x short), the Nasdaq tanked -5.6% (-33.9% YTD, we have a 3x inverse position) and the Russell 2000 lost -2.4% (-20.9% YTD, we are 1x short). $Gold gained +2.2% (-11.2% YTD) while silver skyrocketed +8.5% (-16.6% YTD). $Oil rose 4.9%. The 20-y recovered +5.7% this week (-35.3% YTD). The European stock market rose +1.3% (-28.3% YTD). The Euro finished flat against the USD (-13.3% YTD).

Weekly pitch

Following the marginal win of former president Lula, Brazil presents itself as more attractive economy to foreign investors. Additionally, rising oil prices are lifting the stock market since the Bovespa is heavily weighted on oil stocks such as $PBR which counts as 10% while the mining company $VALE reaches 15%. Former president Bolsonaro has not yet conceded though has signalled that he will collaborate in the transition. Brazil currently looks like an interesting investing opportunity unlike most of the emerging markets.

Weekly Portfolio Update

We initiated a position on the Brazilian stock market $EWZ which is already a profitable trade. We also went long on $USB, a regional US bank. We sold our positions on $PCTY and $FIS. Cash, precious metals and hedges were increased to 38% in our portfolio which beat the market by +2.2% this week.

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

$SQQQ +18.67% (3x inverse Nasdaq ETF)

$FCX +9.29% (Basic Materials-Metal Ores)

$SLV +8.57% (Silver ETF)

$EWZ +7.69% (Brazil Stock Market ETF)

$CPE +5.08% (Energy)

This is our asset allocation as things stand:

– Long stock positions 62% (increased)

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

– Silver + Gold 3% (unchanged)

– Cash 26% (increased)

Our currency-adjusted YTD portfolio performance is -2.3% (excl. dividends) vs the European market loss of -15.0% (+12.7% market beat).

Invest responsibly!!!

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!!!

Beating the #market

Another week in red has gone by, with the three major US stock market indices losing between 1.7 and 2.6%.

Perhaps the most significant development, however, relates to the price of #oil which has finally seen a spike from the lows of the beginning of the week. This is thanks to the expectation that the major producers may soon agree to cut production which should better align supply with the reduced demand. I have tried to play this with a very short term trade but didn’t actually succeed as I sold my $USO position too quickly with a marginal loss. It has taught me another lesson about how pointless short term trades can be, at least for me, as I am fundamentally a long term investor. Always invest in what you understand ! I did however benefit from a 12% gain in my Occidental (ticker $OXY ) position.

This week I have started a new long position in ConAgra Foods (ticker is $CAG ): I don’t expect it to work wonders, as it is a value stock, but to actually provide a single to low teens return within the next year or so and therefore some stability to my portfolio. I have bought it on Tuesday and have already achieved a 4.28% gain. It also pays a 2.8% dividend and the next quarterly ex-dividend date is expected in late April. I felt the timing was right as they have increased their guidance and now see FY20 adjusted EPS earnings per share above the high end of $2 to $2.07.

A similar investment made earlier in March is in General Mills (ticker is $GIS ) which this week has gained 9.4% !

Here is a simple graph created with Yahoo Finance to compare these two stocks with the three major US indices for this past week. How did your portfolio fare compared to them?

20200404

I currently have 14 long positions in my eToro portfolio and 9 out of 14 have beaten the US market this past week. Ultimately, beating the market is the most important goal.

Be an active investor and invest responsibly.

Have a great weekend, all !

The much talked about #earnings of #Google and #Facebook in two great infographics | #ActiveInvesting