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A welcome to all those who have joined the mailing list and all the readers, to this 34th post of investing, not rocket science! Investing Doesn't Have to Be Rocket Science: this is our Non-Expert Guide to Portfolio Management. In the last four months, this free blog has added 850+ readers to our mailing list.
A quick recap of this blog series (investing, not rocket science) so far:
In the 1st post: I defined a basic portfolio framework. The objective of this million dollar portfolio is beat inflation and an equity index. The investment style presented here is active portfolio management, without the use of leverage and a time horizon greater than 5 years. The benchmark index is the MSCI ACWI Investible Market Index. Typically, there are two posts a week, which includes details of the portfolio and actionable evaluations (Mondays and Fridays).
From posts 2 onwards: I have evaluated 71 stocks and 4 potential bond additions. The portfolio is long 15 stocks, 1 Bond and short 1 stock.
Posts 21 to 27 were focused on the Q1 2023 earnings announcements, particularly of stocks in the portfolio and in the watch-list. You can read all about it in the previous posts here: https://www.claritech.app/blog
You can click on the charts, graphs or illustrations to expand or zoom in. There is no remuneration received to evaluate specific companies or to add to the portfolio or the watch-list.
Economic data last week (5th to 9th June 2023)
North America Economic Data:
Markit US Services PMI for May at 54.9, the highest reading in the last one year.
US Factory orders gain 0.4% MoM in Apr, from a +0.9% in Mar’23
US Trade Balance at -74Bn in Apr from -60Bn in Mar’23. Exports fall, Imports rise MoM
U.K and Europe Economic Data:
German Exports increase 1.2% MoM in Apr, taking the Trade Balance to a 2 year high at EUR 18.4Bn
Euro Area Services PMI for May at 55.1 from 56.2 in April, declining MoM for the first time in 6 months.
German factory orders fall -0.4% MoM in Apr, compared to a -10% drop in March.
Asia Economic Data:
Chinese Exports falls -7.5% YoY in May’23, bringing the Trade Balance to US$ 65Bn, the lowest reading in a year.
China CPI falls -0.2% MoM in May 2023 from -0.1% in Apr’23. CPI at +0.2% YoY.
Japanese GDP rises 0.7% QoQ in Q1, from 0% in Q4 2022 and -0.2% in Q3 2022.
Financial Markets:
Market participants were in Technical Analysis (TA) mode as the S&P500 closed 20% above its October closing lows, which in TA is the definition of a new bull market. This was the fourth straight week of gains for the index.
The S&P 500 Consumer discretionary sector (+2.4%) was the biggest gainer led by Tesla. The Financials sector was among the top gainers, up 1.1% along with industrials (+1.4%) and energy (+1.7%) sectors. Information technology (-0.7%) and consumer staples (-0.5%) sectors saw the biggest declines.
Oil prices continued its decline despite cut in production, Gold was flat for the week, Treasuries fell as yields rose. The dollar index closed the week lower by -0.45%
Portfolio Allocation:
On the buy side (long) of the portfolio:
1. Asset Class Allocation: Equities 33%, Fixed Income 23%, Real Estate 3.5% and Cash 40.5%
2. Regional Allocation: Asia 8.5%, Europe 39%, North America 52.5%
On the sell side (short) of the portfolio:
3. Asset Class Allocation: Equities (100%)
4. Regional Allocation: North America 100%
See illustrations below for Portfolio Holdings and Allocation.
Portfolio review:
1. Since inception of this series (14th Feb 2023), the long portfolio is up +6.03% (annualized 19.1%), while the benchmark is up +3.1%.
2. The biggest gainers on the portfolio are Tesla (+54%), Alphabet (+36%), BMW (+18%) and Glencore (+12%), while Deutsche Bank (-12%), Vodafone (-10%) and Citi (-3%) weigh the most on the long portfolio.
3. The short portfolio is down -17.5%, Nvidia is the only short position and the stock is up 38% from the average sell price.
4. Overall, the portfolio is down -11.5% since inception, underperforming the benchmark.
5. Risk measures: The portfolio has a Sharpe Ratio of -1.29, Sortino of -1.4 and a Standard Deviation of 1.80%.
Portfolio performance last week: Overall, the portfolio was up 3.5% compared to the benchmark performance of +0.53%
In summary, while the long positions continue to outperform the benchmark, the portfolio has under-performed due to the strategy in equities.
If you or someone you know is interested in receiving a free remote consultation on their investment portfolio, regardless of location, please don't hesitate to contact us.
This series is for information purposes only without regard to any particular investment objective, financial situation, suitability or means. It is not be construed as a recommendation, or any other type of encouragement to act, invest or divest in a particular manner (whether explicit or implicit). We recommend that you are familiar with the terms of use.
Economic Data This Week:
US CPI (May 2023)
German CPI (May 2023)
UK Trade Balance
FOMC Interest rate decision
ECB Interest rate decision
US Retail Sales and Inventories
EU CPI (May 2023)
That’s all for today.. In this week Friday’s post, I will track the CPI data, economic forecasts and the interest rate decisions by the FOMC and ECB. Thank you for your time! See you in the next post!
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