Here again an update on the current situation. There have been some changes in the portfolio. A clear table with the current portfolio can be found here:
https://www.valueinvestments.ch/portfolio-vermögensverwaltung
Everything that doesn't need a table I'll post directly here at getquin and hope you enjoy reading:
The weather on the stock market has not really brightened up yet. Paradoxically one can observe that actually positive news lead to further crashes on the stock market: For example, the news that the unemployment figures in the U.S. have reached a low. Fewer unemployed, is supposed to be bad? That sounds almost like Conspiracy theory - but it is not. Fewer unemployed are of course nothing bad, but rather the shortage of labor.
The sober logic behind this is that if there is a shortage on the labor market wages rise sharply. That would actually be good news again - if it weren't for the "little" problem with high inflation: higher wages allow higher prices because people can buy and afford more. The result is that the inflation spiral continues to spin.
And what does that have to do with the stock market?
But why should that be bad for the stock market? The problem is that high inflation calls the national bank into action. National banks are supposed to be responsible for price stability price stability. How do they do that when inflation is high? They raise interest rates. This can ensure that people prefer to save and consumers spend less money. Because not only the interest on savings accounts rises again, but also the interest on debts, such as Lombard loans, consumer loans, leasing and mortgages. In this way, money is withdrawn from the market. This is to ensure that money itself remains valuable due to scarcity and does not constantly continue to lose value, as is the case with inflation.
Prices stabilize when inflation declines. They may even fall if inflation turns into deflation. Exactly the same is true for stocks or other assets. When more money is in circulation, the prices of securities tend to rise. Currently, we are seeing the reverse: Money is being withdrawn from the market, causing prices on the stock market to fall. Energy prices, on the other hand, are rising, but this has nothing to do with monetary policy. monetary policy This has nothing to do with the monetary policy of the national banks, but rather with a shortage of supply in the face of unchanged demand.
In addition, it is not the present but the future that is traded on the stock market. future is traded but the future. This means that the mere expectation of a strong of a sharp rise in interest rates by the by the national banks is enough to drive stock market prices down.
This is exactly what has just happened in the USA: Low unemployment figures indicate a shortage in the labor market, causing wages rise. This increases the demand for goods and services, which in turn causes prices to rise, because these are also a scarce commodity. This increases inflation and threatens price stability. price stability is in danger. The SNB fights this with higher interest rates, which takes money out of the market. This, in turn, is not good for stock market prices.
Asset management - Value & Momentum worldwide
Also in my sample portfolio with the Value und Momentum Strategie this could be observed: The average return per year has risen again to 13.4 % (from +15.3 %). As the price chart above shows: We've been lower, too. But whether this is already the bottom can only be known by a soothsayer - unfortunately I am not one and prefer to stick to the facts of the present. The average return is actually quite good, although it is fair to say that the Recovery after the Corona low has made the biggest contribution. If anything, 2022 has done the opposite, normalizing a phenomenal return of over 30% in some cases. This is also part of investing and provides some Humility.
The air is getting thinner and thinner: At the time of rebalancing in October, only 15 companies were still suitable for investment. Of these, eight are already in the portfolio. So there are 7 companies left, and one of them only has strong momentum because it is being bought out. After this takeover news, the share price went sideways again - so not a valid candidate for an investment either.
Conclusion: The selection was limited to only 6 companies worldwide. I am still waiting for the day when we do not buy a new company - even that would not be the end of the world. In difficult times some cash It is even helpful to hold some cash in difficult times: When the situation improves, you can use it even more.
Rebalancing Value and Momentum
Sold this month was the absolute draught horse in the portfolio: New Hope Corporation with incredible + 142.6 % profit! 131.8 % of this are pure price gains - for investors in Switzerland even tax free. Another 10.8 % are due to the distribution of dividends. Why is such a good company being removed from the portfolio at all? The momentum is intact and the share price has risen sharply. Well, due to the strong increase, the company is no longer valued quite as favorably compared to others. Therefore, it is consistently exchanged for companies that are cheaper to buy and have even more more potential upwards.
The second company that was sold is Myer Holdings. The company is in the retail business and is finding it very difficult to generate profits in the current environment. It is sold with a loss of -10.2%. Without dividends, the loss would even be around -19%.
New a company has found its way into the portfolio, which probably all Swiss know: It is the Implenia AG from the construction sector. The new headquarters Glattpark in Opfikon is less than 100km away from the headquarters of the Estoppey Value Investments AG in Basel. I was myself a little surprisedI was a little surprised myself, because with a universe of around 220 Swiss companies traded on the stock exchange, the choice is not exactly large. In addition, for once it is not a company from the energy sector. But it seems that the company has done its homework in the recent past. True to the motto: Lifere nid lafere! Which is Swiss German and means as much as: Work (deliver) and not mooch! As can be berndeutschen Lexikon can be seen. Implenia's share price in mid-2018 was also once at 80.- Swiss francs and then collapsed to below CHF 20.-. Last year, Implenia managed to turn this trend around, and in a difficult year like 2022. In addition, the crash in the share price has meant that the company is now very favorably valued valuation. The favorable valuation combined with the high momentum is exactly what I like when it comes to investing. I am very curious how Implenia will develop in the coming year.
The second newcomer is Covenant Logistics - a long-established logistics company from the USA. Covenant Logistics specializes in express and shipping solutions as well as warehousing. Particularly in the current environment with supply bottlenecks and high demand, services in the logistics sector in particular are are in great demand. After the slump in logistics due to the Corona pandemic, the company was able to develop very well - precisely because of the pent-up demand of the economy.
Here is the link to the whole blog post:
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