Monthly Asset Allocation Review: Market Status and Investment Strategies

The updated monthly asset allocation table is now available here.

C'est le statu quo quasi parfait avec le mois dernier. Les signaux sont tous au rouge, à part sur l'real estate qui est une allocation permanente. La part de cash cible baisse un peu, à 38%, du fait que la tendance sur les actions japonaises est très légèrement moins baissière que le mois dernier (mais elle demeure néanmoins bien orienté négativement).

At the risk of repeating myself, all this does not bode well. So far, American and Swiss stocks are holding up, despite very high valuations. However, the day the US market really crashes (and not just a small correction like we have had twice this year), all stocks on the planet risk going into a tailspin.

I say that this does not bode well, but on the other hand, somewhat selfishly it is true, I am delighted. I have been waiting for this for several months. Since last year I have in fact reoriented my positions towards less exposed and less expensive securities, but still of quality. Since this year I have also significantly increased my proportion of cash. During this time the US market has nevertheless continued to progress, despite prices disconnected from reality.

Conséquence de tout cela, malgré un bon début d'année, je me retrouve avec une performance moins bonne que le S&P 500. Cela me rappelle un phénomène qu'on avait déjà connu à la fin du siècle dernier, juste avant l'explosion de la bulle Internet. Les titres bon marché de qualité faisaient du surplace ou baissaient, tandis que les startups du web, qui n'avaient jamais réalisé de bénéfice, grimpaient jusqu'au firmament. Je me console en me disant que même si je fais moins bien que le S&P 500, je suis tout près du Swiss Performance Index et bien meilleur que la plupart des autres indices européens et mondiaux.

I tell myself that in the event of a crash, it would be the expensive stocks that would suffer the most, and especially for longer. On the contrary, the rare stocks that are currently trading at reasonable prices would certainly cough a little at first, but would quickly take off after the storm. In addition, with a cash share of 44% (even higher than my target allocation), I really have what it takes to go hunting for good deals when the sales time comes.

I'll come back to these aspects when I write my 2018 review in a month. Perhaps things will have already moved by then, even if the holiday season is not usually conducive to major stock market movements.