I seek to correspond with serious investors that strive to construct portfolios that outperform their respective benchmarks on a risk adjusted basis. The components of a portfolio should be drawn from components of its respective benchmark.
… what?
What do you mean?
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I just changed the topic to Beat the Benchmark. That is my goal. Could you be a bit more specific about your question?
Benchmarks beat me for the first 18 years of my investing career. For the following 27 years I beat almost every benchmark, almost every year. My portfolio is global.
It is invested in 30 countries (13 currencies).
Switzerland 21.38% (I live in Switzerland)
UK 8.75%
Germany 7.16%
Hong Kong 6.66%
France 5.79%
Norway 5.01%
South Africa 4.82%
Japan 4.59%
USA 4.05%
etc…
I am exposed to approximately 40 sectors:
Commodities 14.01%
Financial Services 10.78%
Medical 10.45%
Vehicles 7.48%
Telecommunications 4.84%
Crypto 4.44%
Energy 3.93%
Semiconductors 3.88%
Nutrition 3.76%
Chemicals 3.52%
Real Estate 2.71%
Cement 2.65%
Postal Services 2.61%
Machinery 2.52%
Computing 2.43%
Fertilizer 2.04%
Lumber 1.57%
Packaging 1.33%
etc.
Performance so far this year is -1.5%, which is ahead of some global benchmarks (like WEI) by about 6%.
What is your question?
Thanks for your response trickyt57. I appreciate the extent of your response. You are obviously a very serious and highly experienced investor. My questions are:
How do you manage such a complex portfolio?
Do you share portfolios at Sharesight?
Can you be more specific about why you think you have been so successful?
Do you have specific Benchmarks for any of your portfolios?
Do you calculate Sharp Ratios, Sortino Ratios, Martin Ratios, Information Ratios, Alphas and Betas for any of your portfolios?
I live in the US (Alabama), and my investments are almost entirely US securities. I’m currently retired from NASA after a very long career in space and rockets. My approach to investing is highly analytical, and I have extensive experience with applied linear statistical models that employ domestic macroeconomic factors. I run several tracking portfolios, and I manage two ROTH Accounts and one taxable account. These accounts are currently +1.7%, +2.6%, and -1.3% year to date. I also analyze bonds, currencies, and commodities relative to US macroeconomic factors; and invest accordingly. But I don’t intend to initially address those areas at Sharesight because applicable benchmarks become more complicated. I plan to initially maintain only one of my strategies as a portfolio at Sharesight. That portfolio contains seven of the 11 GICS Sector ETFs plus a growth or value ETF. I am currently not very familiar with Sharesight methodology, and I don’t know if I am entering investments correctly. The Benchmark will be the average of monthly returns of the 11 GICS Sectors equally balanced. One could also use the S&P500 as the Benchmark, but it has become concentrated in only a half dozen stocks.
“You are obviously a very serious and highly experienced investor.”
YES
How do you manage such a complex portfolio?
ALL SWISS BANKS HAVE BEEN DOING THIS FOR 60+ YEARS. IT’S DEAD EASY IN ANY SWISS BANK. BUT BE AWARE THAT AS AN AMERICAN YOU WOULD NEED MANY MILLIONS, AND THERE IS TONS OF PAPERWORK TO ENSURE YOU ARE TAX COMPLIANT
Do you share portfolios at Sharesight?
NO, BUT I CAN SHARE AS MANY NAMES AS YOU WANT. HERE IS WHAT I BOUGHT IN THE LAST 24 HOURS:
GBTC - WHY? BECAUSE THE NAV IS 35% ABOVE SHARE PRICE, AND THEY FILED TO CONVERT TO AN ETF. IF THEY GET APPROVAL, NOT ONLY IS IT GOOD FOR THE BITCOIN PRICE, BUT ANY DISCOUNT TO NAV WILL VANISH (TRADES OTC - USA)
TETRAGON FINANCIAL GROUP LIMITED - WHY? BECAUSE THE SHARE PRICE IS AROUND $10 AND THE END OF FEB NAV WAS $28.90. THE QUARTERLY DIVIDEND IS $0.108 WITHOUT TAX DEDUCTION, WHICH GIVES AN ANNUAL YIELD OF OVER 4% (TRADES IN AMSTERDAM)
TRIGANO - WHY? GREAT FUNDAMENTALS AND GROWTH, BIG ORDER BACKLOG TO 2023, BENEFITTING FROM EUROPEANS DOING MORE MOBILE HOME AND CAMPING HOLIDAYS. 51% SHAREHOLDER RETIRED FROM COMPANY IN 2021, MEANS A TAKE-OVER OFFER IS A POSSIBILITY. (TRADES IN PARIS)
INTERFOR - WHY? LOW P/E HIGH YIELD, HIGH GROWTH. THIS FORESTRY COMPANY SHOULD BENEFIT FROM A RESURGENCE IN HOME BUILDING AFTER COVID LOCKDOWNS. AN ACTIVIST SHAREHOLDER HOLDS A STAKE. (TRADES IN TORONTO)
Can you be more specific about why you think you have been so successful?
THERE IS NO RULE. WHAT WORKS ONE YEAR DOES NOT WORK THE NEXT. YOU CAN’T WRITE A COMPUTER ALGORITHM TO BEAT THE MARKET. OVER THE LAST 50 YEARS I HAVE READ ALL OF THE GREATEST INVESTING BOOKS. ALL OF THE TECHNIQUES DESCRIBED WORK SOME OF THE TIME. SOME OF THE TIME THEY DON’T. YOU HAVE TO KNOW WHEN.
AS A GENERAL RULE WHEN PEOPLE BECOME POSITIVE ABOUT A STOCK THEY EVENTUALLY BECOME OVER-OPTIMISTIC, AND VICE VERSA. YOU NEED TO ENTER EARLY AND EXIT EARLY. CROWD MOMENTUM IS SOMETIMES GREAT FOR MAKING MONEY, BUT SOMETIMES THE BULLS CHANGE DIRECTION BEFORE YOU EXPECT IT.
NEVER LOVE A STOCK. IF YOU DO, SELL IT. THERE’S ALWAYS A BETTER STOCK THAN THE GREAT STOCK YOU ARE SELLING. YOU JUST NEED TO FIND IT.
Do you have specific Benchmarks for any of your portfolios?
I AIM TO BEAT EVERY BENCHMARK. I COMPARE TO TWO - THE ISHARES MSCI WORLD EQUITY INDEX ETF, AND A BLENDED MIX OF ABOUT 10 ETFS FROM AROUND THE WORLD.
Do you calculate Sharp Ratios, Sortino Ratios, Martin Ratios, Information Ratios, Alphas and Betas for any of your portfolios?
NO - YOU ONLY NEED TO DO THAT IF IT’S NOT YOUR OWN MONEY, AND SOMEONE ELSE WANTS TO KNOW. IF YOU USE SUCH THINGS IT WILL REMOVE SOME OF YOUR FREEDOM TO INVEST AS YOU WILL INSTEAD CONCENTRATE ON FOLLOWING RULES TO IMPROVE THE RATIOS.
I live in the US (Alabama), and my investments are almost entirely US securities.
YOU ARE MISSING HALF THE WORLD
I’m currently retired from NASA after a very long career in space and rockets. My approach to investing is highly analytical, and I have extensive experience with applied linear statistical models that employ domestic macroeconomic factors.
GREAT. THAT WILL GIVE YOU A HEAD START - SOME OF THE TIME. DEVELOP SOME MORE TECHNIQUES SO YOU DON’T FALL INTO A “STYLE-BIAS” TRAP.
I run several tracking portfolios, and I manage two ROTH Accounts and one taxable account. These accounts are currently +1.7%, +2.6%, and -1.3% year to date.
GOOD PERFORMANCE. A TYPICAL PROFESSIONAL INVESTMENT MANAGER IS LOSING MORE THAN 5% YTD. I AM NOW UP 3.9%.
I also analyze bonds, currencies, and commodities relative to US macroeconomic factors; and invest accordingly.
EXCELLENT TO DIVERSIFY ACROSS ASSET CLASSES. BUT BE AWARE THAT CHOOSING INVESTMENTS ACCORDING TO MACROECONOMIC FACTORS IS ONLY LEVEL 1 INVESTING. MANY INVESTORS INVEST BASED ON THE SAME. YOU NEED TO GO DEEPER. ASK WHY THE MACROECONOMIC FACTORS ARE DOING WHAT THEY ARE DOING, AND WHY MIGHT THE CURRENT FORECASTS TURN OUT TO BE WRONG. OFTEN ECONOMISTS GET IT WRONG. YOU WON’T FIND A RICH ECONOMIST.
But I don’t intend to initially address those areas at Sharesight because applicable benchmarks become more complicated. I plan to initially maintain only one of my strategies as a portfolio at Sharesight. That portfolio contains seven of the 11 GICS Sector ETFs plus a growth or value ETF. I am currently not very familiar with Sharesight methodology, and I don’t know if I am entering investments correctly. The Benchmark will be the average of monthly returns of the 11 GICS Sectors equally balanced.
11 ETS - IT’S A PERFECT BENCHMARK FOR YOU.
One could also use the S&P500 as the Benchmark, but it has become concentrated in only a half dozen stocks.
AGREED. THE PERFORMANCE OF THE TOP 6 IS NOT REPRESENTATIVE OF THE OTHER 492.
ONE LAST COMMENT: YOU CAN HAVE AN EDGE IF YOU LEARN TO MAXIMISE THE UTILITY OF THE FREE OR PAID TOOLS. YOU CAN DO EVEN BETTER IF YOU VISIT EACH COMPANY WEBSITE TO SEE WHAT THEY SAID - WHICH MAYBE WASN’T COVERED IN THE NEWS REPORTS. AS AN EXAMPLE, THE ONLY PLACE I FOUND ABOUT THE RETIREMENT OF THE 51% SHAREHOLDER OF TRIGANO WAS IN THEIR ANNUAL REPORT. THE ANALYSTS NEVER MENTIONED IT.
I have a dormant ROTH at Interactive Brokers. I think I can trade on about all major foreign exchanges there, but it is something I have never done. I will need to look into that.
I have owned some GBTC for a while. I can easily find the other three stocks and symbols on Yahoo Finance, but I am not currently set up to trade them.
I notice URTH has consistently underperformed both SPY and RSP for more than a decade. Who knows about the future? URTH has performed much more like a US value index such as IVE. But it has even underperformed that particularly in the last few months.
I have also read many investing books since I started around 1965. I am attracted more to textbooks (Elton Gruber, Jack Francis, Robert Hagen, etc.), financial journal articles and papers (Richard Brignoli, Jacobs and Levy, Merton, etc.). I have several loose-leaf binders filled with excerpts from books, articles and papers.
Time series analysis of various investments such as ARIMA suggest that investments oscillate between some form of momentum and mean reversion. However, Jacobs and Levy found short term return reversal to be persistent over long periods of time.
Humans are notoriously subject to self-delusion. I calculate performance ratios, Alphas and Betas for my own benefit trying to avoid that trap. The last person I want to fool is myself.
I think asset allocation based on macroeconomic factors is most important, but I do also currently hold at least 118 individual stocks.
“Portfolio Visualizer” provides an incredible array of free tools.
It would probably take too much effort for you, but I encourage you to set up a tracking portfolio at Sharesight for observation by other Sharesight users. I would certainly request an invitation.
My effort at beating an index of S&P 500 stocks can be accessed by providing me with a valid email address.
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I think I can trade on about all major foreign exchanges there, but it is something I have never done. I will need to look into that.
Yes, you really should find a way to get yourself sorted so that you can trade on exchanges outside the USA. But make sure that interactive brokers can provide you with the information you need for US Tax reporting (Tax Pack for US investors and associated documents). Even though the USA is a large country, wealthy investors should not limit themselves to only domestic investing.
I have owned some GBTC for a while.
Few people understand the reason why it is trading at a 35% discount. The explanation is quite long, but in simple terms there are "forced" sellers out there in the form of hedge funds and some other institutions. Two years ago GBTC was trading at a +30% premium while the bitcoin futures were at a 15% per quarter contango. Hedge funds could obtain newly issued GBTC at NAV and immediately go short the BTC future. They had to hold the GBTC for 6 months. It seemed like the most perfect arbitrage, ever, with a huge "guaranteed" profit.
Guess what happened as the BTC price rose from $8000 on the way to $69k? Answer: Margin calls on the futures that the hedge funds shorted. As their risk managers became angry with the cash drain, they were forced to close the short side of the trade, leaving a long-only GBTC position. Hedge funds are supposed to hedge. Now the long GBTC price is falling, and there is no hedge in place. They have no choice. Once the six month holding period is up, they bail. This drove the GBTC from a premium to a discount. Soon the unwinding will stop and the discount will narrow.
I notice URTH has consistently underperformed both SPY and RSP for more than a decade. Who knows about the future? URTH has performed much more like a US value index such as IVE. But it has even underperformed that particularly in the last few months.
Yes, World Equities have underperformed the USA. If you strip out the top 6 US stocks the picture will look different. At the moment US stocks are relatively expensive compared to the non-US markets. As you point out, the past will not tell you the future.
Time series analysis of various investments such as ARIMA suggest that investments oscillate between some form of momentum and mean reversion. However, Jacobs and Levy found short term return reversal to be persistent over long periods of time.
I spent 5 years trying to prove that chart patterns work. Reversion to the mean was one of the obvious tests. After five years I could find no evidence that any chart pattern told the future more than one-third of the time. The exact opposite happened one-third of the time. The other one-third of the time, nothing happened. "Reversion to the Mean" in stocks is a myth, just as much as momentum investing is a myth. Both work some of the time, and one is obviously the opposite of the other.
Humans are notoriously subject to self-delusion. I calculate performance ratios, Alphas and Betas for my own benefit trying to avoid that trap. The last person I want to fool is myself.
Yes, humans are deluded. They brag about winners and forget losers. Monitoring performance ratios is useful to check that you are not suffering from this kind of amnesia.
I think asset allocation based on macroeconomic factors is most important, but I do also currently hold at least 118 individual stocks.
As of yesterday, I held 122 stocks. But 3 of them, (Russia related stocks), are worth very little, so I would call it 119 stocks.
“Portfolio Visualizer” provides an incredible array of free tools.
At first sight Portfolio Visualizer looks fantastic. But I suspect that it cannot handle international stocks quoted on non-US markets? My favourite tool for finding international Equities is "Market Screener". It's ÂŁ10 a month for the App on the iPad and ÂŁ49 for a more powerful version on the Mac/PC broswer. It's not that good though for looking at portfolios, but excellent for finding stocks.
It would probably take too much effort for you, but I encourage you to set up a tracking portfolio at Sharesight for observation by other Sharesight users. I would certainly request an invitation.
This could be fun for me too, but entering 120+ stocks again would be too much work. It's a pity that Sharesight doesn't allow us to make quick copies of portfolios for modifying, (amounts and equally weighting etc). Perhaps I will do one with 20 stocks, - but pulling out 20 from my beautiful portfolio would be a tough choice.
My effort at beating an index of S&P 500 stocks can be accessed by providing me with a valid email address.
I will see if I can DM this to you in this app. otherwise I will drop it here.
Looks like I can’t find a way to DM you. I don’t currently have a “throw-away” email address, that I could publish here, and my actual email easily identifies me. I don’t want to get in the sights of spammers and scammers!
Many US companies are international, and many companies listed primarily on foreign exchanges are traded as ADRs or GDRs on US exchanges. I found a list of 452 ADRs some of which are private foreign companies that trade only on US exchanges. I have owned many foreign companies traded on US exchanges. Do you know how many of your holdings may be traded on US exchanges? What are your thoughts on mining companies RIO, BHP, and Vale, and innovative technology Lillium and Arrival? Energy Vault is not foreign, but its first and only current installation is in Switzerland. Do the innovative tech companies have much of a chance? What are your thoughts on Brookfield Renewable, Green Power Co., BCE Inc., and Aptiv PLC? With one small exception (Master Limited Partnerships) ROTH Accounts pay no taxes, ever.
That is an interesting discussion on the GBTC discount. I hold GBTC, coin miners and other cryptocurrency related companies to gain some exposure to cryptocurrencies. I also hold some carbon credits, KRBN. I have no idea which way either is going. I consider both what I refer to as Brignoli candidates (Robert J. Brignoli "Toward a Unified Theory of Investing). I am always concerned about contango with investments based on futures. I have seen some ETFs run to near zero over time. I’ve never really understood why some ETFs suffer from contango (UNG,VXX) and others (UUP,DBA) don’t. It could be the sizes of the markets or something I guess.
Your findings on technical analysis are interesting, but not surprising. I started my investing career in the mid-sixties with Edwards and Magee, Fifth Edition. I practically memorized the book.
I understand your reluctance to publish your email address. I have the same reservations. I chatted with Sharesight about this, and was told there is no current way to provide “public” access to portfolios. The site may become more interesting if tracking portfolios could be made available to users. I understand the original purpose of Sharesight was to keep records for tax purposes. Brokers in the US are required by law to provide all tax information to the government and account holder. So people in the US shouldn’t really have any need for that Sharesight service. Also, as previously mentioned, ROTH accounts pay no taxes; and require no records be kept. My commissions are zero, and bid-to-ask spreads are sometimes only a penny. This is probably true only if I am trading on major US exchanges.
Many US companies are international, and many companies listed primarily on foreign exchanges are traded as ADRs or GDRs on US exchanges. I found a list of 452 ADRs some of which are private foreign companies that trade only on US exchanges. I have owned many foreign companies traded on US exchanges. Do you know how many of your holdings may be traded o.n US exchanges?
Agreed, you have plenty of ways to own foreign stocks through the ADRs. I doubt they all have good volume. I guess that perhaps 10% of my holdings have ADRs. In general I prefer to buy domestically rather than the ADR.
What are your thoughts on mining companies RIO, BHP, and Vale,
I own all three. BHP will shortly spin off Woodside Petroleum in Australia to existing shareholders. I like the catalyst. Vale is a beneficiary of iron ore prices which are up 20% this year. RTZ (now Rio) was the second stock I ever bought in 1975. I’ve been in and out a few times, but probably would have been better off holding for the last 46 years. All three are beneficiaries of rising commodity prices, but are likely to see their profits hit by problems in getting product to the buyers. The global ports are clogged. When this supply problem resolves they should command much higher p/e ratios. Other miners I like are: Nickel Mines Ltd in Australia, and Glencore plc (Nickel prices are up 58% this year). Sociedad Quimica y Minera de Chile ADR, because there is a global shortage of fertilizer which will start really hitting us next winter and spring. Pilbara Minerals Limited in Australia, because Lithium prices are up 127% this year (bad news for EV manufacturers).
Lillium and Arrival
Lilium NV: and Arrival: both are worthless.
Energy Vault is not foreign, but its first and only current installation is in Switzerland. Do the innovative tech companies have much of a chance?
Energy Vault looks good, but it is still very early stage. No sales yet. It’s too speculative for any serious portfolio, but a good one for high risk portfolios. Yes it has a great chance.
What are your thoughts on Brookfield Renewable, Green Power Co., BCE Inc., and Aptiv PLC? With one small exception (Master Limited Partnerships) ROTH Accounts pay no taxes, ever.
BEPC has never made a profit, so I tend not to buy such things without spending loads of extra time to be sure of future prospects. BCE is OK. It’s a bit dull, and more of a bond substitute with its 5% yield. I think it is easy to find faster growth, lower p/e and better dividend in the telecom/internet sector. I guess Americans are banned from owning China Mobile, which looks a better choice? Otherwise, Vodafone in the UK is being pushed into asset disposals by an activist shareholder. Its share price is well below book value. Aptiv plc is very over-priced. There are loads of better deals in the automotive parts sector. I own Aisin Corporaton (7259 in Japan) shares.
I have seen some ETFs run to near zero over time. I’ve never really understood why some ETFs suffer from contango (UNG,VXX) and others (UUP,DBA) don’t. It could be the sizes of the markets or something I guess.
Any ETF investing in commodity futures is likely a bad investment. Contango means they are constantly rolling cheaper spot into more expensive 3 month futures. It rarely goes into backwardation, so you will lose most of the time. It’s better to buy the commodity producer, as they can sell the higher priced 3 month future.
I started my investing career in the mid-sixties with Edwards and Magee, Fifth Edition. I practically memorized the book.
I have that book. It must be a much later edition. My wife started reading it. I told her she is wasting her time. Still everyone wants to believe that they can see something in the charts, that nobody else sees.
I understand your reluctance to publish your email address. I have the same reservations. I chatted with Sharesight about this, and was told there is no current way to provide “public” access to portfolios. The site may become more interesting if tracking portfolios could be made available to users. I understand the original purpose of Sharesight was to keep records for tax purposes. Brokers in the US are required by law to provide all tax information to the government and account holder. So people in the US shouldn’t really have any need for that Sharesight service. Also, as previously mentioned, ROTH accounts pay no taxes; and require no records be kept. My commissions are zero, and bid-to-ask spreads are sometimes only a penny. This is probably true only if I am trading on major US exchanges.
All my financial institutions provide tax information. I avoid American based brokers because they do not format tax information for foreign investors, as if the only applicable tax in the world was American tax. Of course Swiss Banks format and report tax information for all major jurisdictions, including the USA. Commissions in Swiss Banks are high, but at least they don’t cheat you out of that penny spread the way all US brokers do. They also reclaim the withholding tax where permitted under the DTC between your country, and the paying country. Thus I do not need sharesight for tax reporting. The main use for me is monitoring dividends for cashflow purposes, and measuring performance against one benchmark (I want to add several benchmarks, but I think it means duplicating the portfolio. - Too much work. I think Sharesight is weak in that area, but so far I have not found another non manual way of doing it.
I started my Sharesight tracking (fictitious) portfolio Friday 11Mar22 by adding eight new holdings. I wanted to purchase $10K of each of eight sectors, but I assume I am limited to purchasing full shares. My desire is to keep track of percent monthly total returns over time to compare with the benchmark. I think I must make every effort not to change the total amount invested when ETFs are traded. I will be limited in doing this by the prices of the full shares. Do you have any guidance about using Sharesight to obtain accurate monthly percentage total returns?
Sharesight shows the value of my portfolio as $79,127 on 12Mar22. I presume that is based on the NYSE closing values on that date. It shows the value at $84,321 31Mar22. At the end of April I can begin recording my percent monthly returns. I have been accumulating data on a similar portfolio for 29 months as of the end of March. On the average, my portfolio has beat my best benchmark by 4.07% annualized. My Alpha is 5.37% annualized, and my Beta is 0.93. The S&P 500 has provided average annual total returns of about 10% over many decades. A 40% increase in total returns with no increase in risk would be very attractive! I can start reporting monthly results for the Sharesight Portfolio here in a few days. I would appreciate anything you would like to report on your holdings, buys and sells, especially for your ADRs. Also, any end-of-month to end of month total return information you would like to share for you portfolio and benchmark.
Preliminary values are in for the month of April. Sharesight Portfolio (SP500+Alpha) April Total Return was -5.90%. Preliminary Total Return for SP500 was -8.78%. Total Return difference was 2.88% in favor of Sharesight Portfolio. Final values for SP500 and Benchmark Portfolios are expected to be posted in about a week when April total returns are available from Schwab.
Are you able to post a table of your monthly returns on the two portfolios - ETFS and direct equities, next to the benchmarks that you use?
Beating the benchmark by 4% annually will compound into a lot over the next decades.
I will try to do the same.
My direct equity strategy primarily involves purchasing highly defensive stocks and rebalancing frequently. I do not have historical data for that strategy. I am posting the data for the ETF strategy similar to the one I am running in the Sharesight portfolio.
Month Benchmark Portfolio
11 2.510909 3.423750
12 2.813636 3.166000
1 -0.907273 -0.446667
2 -8.777273 -9.245714
3 -14.390909 -12.845000
4 12.981818 13.405000
5 4.496364 4.378571
6 0.607273 1.837500
7 5.040000 6.020000
8 4.626364 4.590000
9 -3.188182 -1.670000
10 -1.802727 -2.870000
11 11.647273 7.470000
12 3.016364 2.922000
1 -0.873636 -0.846667
2 4.098182 10.418000
3 5.835455 5.614286
4 4.768182 4.521429
5 1.614545 2.318571
6 0.864545 0.887143
7 1.518182 0.514286
8 2.331818 2.048571
9 -3.878182 -2.931429
10 6.679091 7.127143
11 -2.007273 -2.704286
12 5.922727 5.908571
1 -3.108182 -1.707143
2 -1.990909 -0.981429
3 4.812727 4.607143
The data did not copy and paste well. Let me know if you cannot work with this. I will try something else.
Lew, I charted your performance compared to mine. My benchmark is clearly different from yours. Mine has very little US exposure, in line with the bias towards Swiss shares, and my lower exposure to US shares. I am thus measuring my performance in Swiss Francs whereas you are measuring in USD. My benchmark is a collection of around 10 non-US Equity ETFs.
Below are two charts. The first shows your benchmark and your performance in USD compared to my benchmark and my performance for the same period.
It seems that over the last year, your portfolio is out-performing mine. Also recently, I do not seem to be beating the benchmark. I am not worried about that. I usually beat the benchmark almost every year, and I have no doubt the portfolio will be performing very well again in the coming years.
Below the first chart is a second chart showing the performance on my largest portfolio since inception in 2016. It is clearly much more volatile than its benchmark. Since inception it is well ahead of the benchmark. Both benchmark and performance are in Swiss Francs.
Thank you for expending the time, effort and knowledge to create these charts. You bring up another interesting issue: currency values. The Franc (FXF) has performed poorly against the dollar in recent months. TokyoGio has also expressed concern about the Yen (FXY). I am fortunate to have been domiciled in the dollar, and I have also had my upper limit positions in the dollar (UUP, USDU). The dollar may be becoming technically over-extended. I may reduce my positions there some.
April 2022 results for Sharesight Portfolio (SP500+Alpha)
Portfolio holdings for April: XLE, VTV, XLI, XLU, XLV, XLP, XLY, XLC
Portfolio return: -5.9%
Benchmark return: -6.39
SP500 return: -8.78%
Portfolio return-Benchmark return = 0.49%
News 6 May 2022:
“China Orders Government, State Firms to Dump Foreign PCs”
This should boost the sales of Lenovo. Lenovo is the world’s largest PC maker, and is based in China. 21.4% of their sales are in China.
Lenovo’s share price is barely changed after the news today.
Price now is HKD 7.81, up 1.69% on the day.
P/e ratio is around 7x and the yield is around 4%. Results and accounts are reported in USD.
Lenovo are quoted in Hong Kong, but you can also buy ADR’s.
Thank you. It looks like Lenovo is traded only on the Pink Sheets in the US. There was talk about delisting all Chinese shares on US markets a while back, and I decided to just divest myself of Chinese holdings. There seems to be bad blood between China and the US, Australia and Japan lately. Do you have any thoughts on that, and how it might affect investments? I noticed Charlie Munger has very high opinions of some Chinese Stocks relative to American Stocks.
I am only vaguely aware of what is going on between China and USA. I thought the situation was that the USA wanted Chinese companies with US listings to turn over audit information to the SEC. Apparently that would be illegal under Chinese law. So I think the SEC has given them 2 years to comply, and from the Chinese end there are moves to change the law to at least partially comply. The threat is that their listing will be cancelled.
I didn’t know that this rule applies to ADRs with the main quote in Hong Kong.
The bigger risk is one of US sanctions against Lenovo in the same way as there are sanctions against Huawei. 32% of Lenovo’s sales are in the Americas. That probably explains the low price /earnings ratio of around 6x.
If you are in the USA, I think it is best to avoid companies with Chinese connections until the situation is clearer.
I am currently leery of making new investments anyway. About the middle of each month, I make predictions for returns of 28 ETFs for the following calendar month. Values for the May predictions were positive for only two of the 28 ETFs, XLE and UUP. A similar situation also existed last January. This has caused me to raise cash, and I am not inclined to commit resources to risk assets until my predictions for equities, bonds, gold or agricultural commodities improve. I am fully aware that such predictions should be taken with a high degree of skepticism, and also a high degree of diversification should be maintained. My models do not directly include events such as pandemics and wars.