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

responsibleinvestor892405851

Oct 29

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).