The updated monthly asset allocation table is now available here.
Hold on tight, it's going to be a bumpy ride. This time, almost all the signals are wrong! It's very rare for virtually all assets to be wrong at the same time. None of this bodes well.
Swiss equities are still holding up fairly well, thanks to their defensive virtues. Nevertheless, the trend, which was still very slightly positive last month, is slowing down. Above all, despite the downturn, valuations are still dissuasive. So, avoid.
European equities are in meltdown. The already negative trend is accelerating. On the other hand, valuations are decent. So avoid them for the time being, but they may start to offer some nice opportunities once the market calms down.
In the USA, we started from a very high base, so despite the rather violent fall, the long-term trend is still positive. But the handbrake has undeniably been pulled, especially as valuations remain totally out of touch with reality. Also to be avoided.
Until recently, Canada and Japan were the only regions with a positive outlook, offering fairly decent (Canada) or cheap (Japan) valuations. But here too, the trend has completely reversed. However, as in Europe, once the market has stabilized, we'll be able to unearth many beautiful things.
For emerging countries, no change. This region preceded all others in this market downturn several months ago. Here, too, we now find a multitude of very cheap stocks. There will be plenty to eat and drink once the storm has passed.
No change in Swiss bonds either. They are still on a downward trend and are overpriced. Avoid them.
Gold is undoubtedly the most interesting asset to follow at the moment. Its value relative to equities is attractive, and the downtrend that began a few months ago has clearly stabilized, to the point where we're now quite close to a positive trend. Chances are that this position will be invested in the not-too-distant future.
Real estate, as a permanently invested strategy, is the only clearly open target position.
Alternative strategies remain cash, and will remain so as long as price levels remain high in the USA, which is clearly still the case, despite the recent downturn.
Finally, note that the target cash allocation exploded from 24% to 44%. Fortunately, I had been a little ahead of the movement, thanks to my trailing stop loss strategy 20%. So today I'm at 32%, but there's still a long way to go to reach this new goal.
Discover more from dividendes
Subscribe to get the latest posts sent to your email.
Français 
English 
Italiano 
Deutsch 
Español 
Português
It's not easy to know how the various stock markets will evolve in the near future, in any case it's true that quite a few indicators have turned red. In this context I have already sold a few overvalued stocks in order to keep some profits warm, and my latest purchases are rather defensive than cyclical stocks.
On Friday, I acquired a fairly large position in Sunrise because I find it to be a fairly conservative bet and whose chances far outweigh the potential risks: the business model is not very sensitive to the economic situation, the dividend is very high and we already know that it will be increased by a few % next year, plus the rumors of consolidation in Swiss telecoms add a little touch of fantasy. The goal is rather to resell this position in the short or medium term with a profit of 5 to 10% than to keep this stock in the long term.
Ah ah… I was also eyeing Sunrise recently 🙂
Well, today it seems that the trend is confirmed!
Let the general fear settle in and you will see, in a few weeks/months we will look like children in a toy store 😛
I've already made my Christmas list of the titles I want!
Let's hope Santa Mr Market arrives in time for the holidays!
If I rely solely on the SMI curve (since 1995), we do not discern - yet - a downward trend and even less a crash but rather a brake on the rise. This curve can certainly be misleading if we take into account other criteria.
However, I observe that there is a downward trend in this curve over the last month (the peak in March 2018 was around 9,600 points, while today we are just below 9,000.
That said, even if it is always difficult to wish for a plunge because the consequences can be terrible from various points of view (employment, States with fewer resources because of less tax revenue, social unrest, bankruptcies, drop in pension fund returns, etc.), an investor who has liquidity can selfishly only wish for a violent crash with a rapid decline followed by a rise (a long decline is in my opinion much more difficult to manage, because its start but especially its end are less discernible).
I dare to make a bet based on the history of stock market crashes and their impact on the SMI: in the event of a violent crash, I would see the SMI (currently at just over 9,000 points) fall to more or less 5,500 points, before a gradual rise towards new peaks of 9,500 or even 10,000. But each crash has its own causes and consequences, more or less serious (beyond the question of magnitude). A 1929 scenario would obviously be particularly terrible, but the crashes of 1987, the "Asian and Russian" crash of 1998, the "internet bubble" crash of 2001/2002, the "subprime" crash of 2008, the "sovereign debt" crash of 2011 and that of 2016 did not last too long and did not prevent a more or less rapid rise in the markets.
In any case, I still have the impression of a market artificially boosted by the liquidity injected by the central banks since 2008. I think that we have actually postponed the consequences of the 2008 crash, but that the "evil" is still under the layer of liquidity, which the central banks cannot withdraw abruptly but possibly only in the long term provided that the real economy is doing well. A new bear market would not only prevent the withdrawal of liquidity but would probably require new injections. With so much medication, will we end up killing the patient?
Indeed, the SMI is one of the last markets, along with the US, to remain in a positive trend. But the curve is not very marked and we are well on our way to crossing a bearish threshold fairly quickly. In addition, prices are totally prohibitive in these two markets.
You are right to point out that the massive injection of liquidity since 2008 has cured the symptoms of the patient. Certainly, there have been measures taken, for the banks and for the debts of the States, but we are very far from an ideal situation. In the USA, moreover, with Trump's massive tax cut, the deficit will still increase substantially in the future.
In the meantime, some central banks have to start tightening the screws, because of full employment and inflation. This will obviously create problems in the long term for a lot of people who have taken out debts taking advantage of the exceptionally low rates.
To be continued!
What do you think about the recent fall of U-blox? Fair or exaggerated and therefore an opportunity to get in? What do you think?
The fall is justified, since the market is always right!
And as Jérôme would say: you can't catch a GPS that falls... 😉
You take the dagger out of my mouth!
AGU beware of false bargains. It is very rare to buy at the right time when the price falls.