New Portfolio Snapshot & Allocation

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agri-business, alternative assets, asset allocation, bubbles, cash, diversification, emerging markets, Europe, Event Driven, frontier markets, Ireland, luxury goods, macro investment thesis, mobile, natural resources, Nifty Fifty, portfolio allocation, property, smartphone revolution, UK, US, volatility

Welcome to the dog days of summer…

A good time to pause & take stock of my portfolio. Following on from my recent H1-2017 portfolio performance post, here’s my Top 10 Holdings today:

In fact, the table lists all of my current disclosed holdings. And just to add some overall context, only five of these holdings actually feature in my Total Portfolio Top 10, while Newmark Security doesn’t even make the Top 20 any longer.

I won’t add new commentary here, since I last focused on my big H1-2017 winners & losers, and covered all my disclosed holdings in this January Top Trumps post. Not to mention, the rash of new investment write-ups this year: Alphabet (GOOGL:US), Record (REC:LN) & Applegreen (APGN:ID). But for your reference, I will provide corporate website & Bloomberg links, links to relevant historic posts & write-ups (remember, good investment theses tend to evolve slowly!), plus the latest share price & market cap for each stock:

i) Alphabet (GOOGL:US, or GOOG:US)   (9.5% Portfolio Holding):

‘So Why Not Google It..?’

Share Price:   USD 940.08

Market Cap:   USD 648 Billion

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The Inherent Contradictions of My Portfolio (or Who’s The Greater Fool..?) (Part IV)

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asset allocation, bubbles, bullish, developed markets, don't fight the Fed, emerging markets, frontier markets, macro investment thesis, Nifty Fifty, wall of money

Continued from Part III.

OK, so here’s an end-June snapshot of my current portfolio allocation:

[NB: And here’s my portfolio a year ago (from this post) – the majority of subsequent changes are obviously due to sales/purchases & the share price appreciation/depreciation of (mostly disclosed) holdings. Notably, my minor Hedge & Nat Resources allocations are now eliminated on sales of holdings, while my new US & Undisclosed (a new asset class I’m still working on) allocations reflect undisclosed new holdings. I’ll also highlight my Cash allocation’s pretty minimal, with the priority on Fixed Income (which is how I basically consider my Alternative Asset Opportunities (TLI:LN) holding) & Event-Driven (essentially, my NTR plc holding…noting, in particular, last week’s announcement of a return of capital/wind-down) 🙂 ]

Some big & small changes, obviously – but in the scheme of things, it certainly isn’t a radically different portfolio. But what were you expecting…did you really think I’d turn on a dime & completely transform my portfolio? Um, maybe if I was some hard-charging hedge fundie. But for the average investor, the more rapidly & radically one’s portfolio changes, the more likely it’s the result of poor/faulty decision-making! And I suspect this is even more true of thesis-driven investing – the biggest & most rewarding theses tend to develop/evolve over a long period of time, and likewise so should your portfolio…

Now, let’s consider some potential portfolio allocation implications, in terms of my current macro investment thesis. [Keeping in mind my recent Four Feds commentary]:

Emerging/Frontier Markets:  My underlying emerging/frontier markets thesis hasn’t changed a jot since I wrote this post (& its follow-up). But sentiment remains negative, with investors/commentators focusing on specific country surprises & disappointments, and the narrowing growth gap between developed & emerging/frontier markets. Currency weakness, esp. against the dollar, hasn’t helped either. But emerging/frontier markets are still the world’s growth engine, and will continue to trounce developed markets in terms of absolute growth. And the narrowing growth gap’s mostly due to starkly differing fiscal/monetary policies…investors might well ask themselves which policies are more sustainable? As for currency weakness – yes, it’s a short term hit, but it also improves their terms of trade substantially.

But doubters question whether a new export-led growth surge is even possible, citing lower developed market growth/demand. Which strikes me as a remarkably stupid argument…if you expect lower Western growth, surely it strengthens the case for high growth emerging/frontier markets investment?! Many which now appear to be reaching an inflection point, where domestic middle class/consumer demand’s emerging as a new growth driver, reinforcing or even supplanting existing export-led growth.

The Inherent Contradictions of My Portfolio (or Who’s The Greater Fool..?) (Part III)

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asset allocation, bar-bell strategy, bubbles, bullish, floating world, GARP investing, macro investment thesis, Nifty Fifty, stock picking, wall of money, wall of worry

Continued from (Part I) & (Part II).

For a moment there – yeah, go on, admit it – you really did think I’d lost my mind & mutated into some kind of wild-eyed snorting pawing charging bull!? One who’d sold off his entire portfolio, plus the family silver, and blown his entire wad on a titillating smorgasbord of the past year’s hottest large cap stocks & sectors instead?

But only for a moment, I hope, mes frères?!

OK, I may be a charging (?) bull – yup, my negligible cash holdings don’t lie… And I may well believe the market ultimately loses touch with the real world (& enters the floating world). But c’mon, did you really conclude I’d lost touch with reality?

Er, no… Or should I say, hopefully not..?

Obviously, having some kind of (global) macro investment thesis is essential for all investors. Well, it should be obvious – someone who foolishly pontificates it’s all (& only) about the micro (i.e. stock picking) could be, for example, missing out on a potentially lethal big picture. But an investor who focuses exclusively on the macro is being just as foolish. Because, of course, the micro’s where you’re likely to find the best long term multi-bagger opportunities. Don’t even fight it, macro & micro are both equally important…

[OK, I’ve gotta confess, that’s pretty much a bald-faced lie – any number of studies prove asset allocation (i.e. macro) is the dominant contributor to portfolio returns. But I’ll save you from reading ’em – instead, just ask yourself whether stock picking saved your ass in the last bear market?! Er… But hey, what can you do, at least stock picking keeps me off the mean streets! 😉 ]

And the stronger your investment thesis, the greater the discipline, the conviction, and the ultimate success of your investment portfolio & returns. But an investment thesis, whether it’s macro or micro, is not a winning lottery ticket you simply collect on, it’s not a belief or principle you defend to the death, and it’s certainly not some map that’s etched in stone. It’s about making your own luck, where preparation meets opportunity…so never grow too attached to a pet thesis. Instead, consider it an evolving premise that needs to be constantly challenged & updated. Far better to aggressively ask yourself (& the world) each day why your premise might actually be wrong – rather than devoting all your efforts to constructing some tottering edifice of proof to memorialise what might be, in the end, a long-dead thesis.

I’ve been developing this market bubble thesis for a couple of years now. To date, it stands up well to scrutiny & keeps getting stronger…but I’m also very aware it’s a thesis which will continue to evolve & be tested. And I certainly don’t think we’re anywhere close to bubble territory yet – leaving aside some obvious exceptions, investors aren’t exhibiting any of the usual symptoms: Yes, I’m sure you know ’em…a twisted market/valuation logic, a blatant disregard for risk/leverage, and/or a messianic over-confidence in future growth & returns.