And every month the investment marmot greets from Switzerland - or in other words: Here again my 5 cents on the current situation on the stock market and in my sample portfolio.
As always, here is the link to the original blog post:
https://www.valueinvestments.ch/vermoegensverwaltung-value-und-momentum-juli-2023
And here for you directly the whole content - except the tabular overview:
News and developments on the stock market worldwide
The trend in inflation concerns has continued towards easing. Despite slight interest rate hikes by central banks at the end of July, the market has developed positively. The main reason for this is that inflation is returning to the levels seen in early 2022. As a result, the pressure to raise interest rates further is decreasing. As a result, the cost of loans should not rise too much further. This in turn is good for liquidity in the market.
Nevertheless, a certain concern is evident in the form of an inverse yield curve: This means nothing other than that you currently have to pay more interest on debt with a short maturity than on debt with a longer maturity. This seems somehow paradoxical, because we pay less interest for a fixed-rate mortgage with a two-year term than for a mortgage with a ten-year term. The reason for this is that market participants expect interest rates to fall again in the future. In the past, this often happened because of a recession - in other words, central banks tried to counteract a recession with lower interest rates. Today, it could be because central banks have raised interest rates sharply due to high inflation and could lower them again when the easing in inflation becomes apparent.
Often, an inverted yield curve has been a harbinger of recessions. This is because a recession often leads central banks to cut interest rates to provide more liquidity in the market. This happened several times in the past in the wake of the financial crisis and the subsequent sovereign debt crisis. In the current case, central banks have had to raise interest rates sharply and quickly to get a grip on inflation, which has suddenly galloped away. As inflation falls, it is only logical to assume that interest rates will no longer have to be raised too much and should even fall back below the current level in the long term.
No one can predict how it will really end - even though many keep trying in vain. When investing, one should concentrate on the facts of the present: This is especially true for the analysis of individual companies and their business models.
Performance Value & Momentum worldwide
The return since the start has increased again to 58%. This means an annual return of 14.1% per year. Compared to June 2023, the return has increased slightly by 1.7%.
Asset management - sales and purchases in the portfolio
This month, the hard coal producer Lubelski Wegiel Bogdanka $LWB (-0,81%) and the French company Esso $ES (-0,94%) were sold. Both companies have lost their momentum: In the case of Lubelski, this has even fallen sharply into negative territory. Much more serious, however, is the fact that both companies no longer meet the strict quality criteria that I set for companies in order to keep them in the portfolio.
As replacements, KB Home $KBH (-0,9%) from the USA and Avance Gas Holding $AGAS from Norway were found as replacements. While KB Home is active in the real estate sector for owner-occupied homes, Avance Gas Holding has a fleet of tankers. The capacity of these huge gas tankers is between 100,000 and 200,000 cubic meters and they have a length of 250-300 meters. There is still a high demand for liquefied gas, and since it no longer reaches Europe from Russia via pipelines, alternative transport capacities are needed. Companies like Avance Gas Holding offer just that.
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