Performance for the first half of 2019

Due to the holidays, I'm finishing the month of June a little early. The portfolio's performance in CHF amounts to a painful 3.33% during this first half-year. It is therefore completely behind the market (SPI +19.5%, during the same period). It must be said that some indices, such as in Switzerland and the United States, have posted particularly insolent performance. Cumulatively, this represents for the portfolio an annual profitability since launch (03.02.2010) of +9.2% (compared to 8.24% per year for the Swiss Performance Index). There is therefore still a small margin of advance, but this is shrinking more and more, as the indices break record after record.

Ce qui interpelle le plus, c'est l'évolution des titres boursiers outre-Atlantique. Aux USA on a affaire à un joli cas d'école, qui rappelle à plusieurs points de vue la fin des années '90, à quelques différences près. Si on s'arrête en effet sur les "FAANG", soit Facebook, Apple, Amazon, Netflix et Google, on constate que leur cours progresse depuis plusieurs années de façon nettement supérieure au marché. Autrement dit, leur momentum est très clairement favorable, et les investisseurs (ou plutôt devrais-je dire les spéculateurs) qui ont suivi cette stratégie ont été récompensés de la plus belle des manières. Voilà qui démontre l'efficacité d'une approche de ce type... en tout cas sur du court/moyen-terme. On avait assisté au même phénomène avec les valeurs dotcom de la fin du siècle dernier qui avaient laissé littéralement sur place les géants de la "vieille économie".

That being said, if we look more closely at this FAANG group, we see that their price today averages 6.3 times their turnover. Experience shows us that we should already flee when the price exceeds three times sales. So from a technical point of view, because of the momentum, we should buy, but from a fundamental point of view, we should sell. Here too, we are reminded of the fond memories of these tech stocks of the time, some of which happily exceeded 10 times sales. We remember how that ended... Let's note all the same that, as the maxim states, comparison is not reason. Because who says sales, does not necessarily mean profits. This is a big difference compared to the time, since today these five technologies are all making money. So we are dealing with a bubble of course, because of the clearly exaggerated prices, but this bubble is not based only on hot air, unlike last time. It may therefore deflate quite significantly, but not burst.

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Another interesting thing: tech has become so expensive that it now makes up the top 5 US companies, and even the world, in terms of market capitalization. With one exception, we find the same ones mentioned above: Apple, Amazon, Facebook, Google and Microsoft, which replaces Netflix. The average price/sales ratio is barely lower here, at 6.2. In other words, the five companies that weigh the most in global stock indices are valued on average at more than double what is already a sell signal. Not one of these companies is listed at less than three times turnover. NOT ONE.

If you are wondering why you have been treading water for several months now, while stock indices continue to climb, remember who is mainly behind them. So, you can of course opt for the "momentum" approach and buy one of these stocks or any US ETF focused on growth stocks. You may still be lucky for a while. Personally, since 2000, I no longer believe in Santa Claus. When just one of these companies posts a slightly worse result than expected, there will be a lot of people who will get excited. Not only will the stock in question take a hit, but above all it will take all the other technologies with it, and at the same time the entire market since, currently, they are the market.

All this to tell you that it is normal at times to be seen as the class dunce. But as in many things in life, extraordinary results in the short term generally behave like flashes in the pan. When it is over, we quickly find ourselves in the dark and the cold. I therefore remain cautious, despite the ambient enthusiasm, by being invested again and again in significantly cheaper securities, as found in Japan for example. I also remain well anchored in real assets such as real estate and gold. Finally, I keep a sufficient portion of liquidity (25%) to smooth out the hard knocks and especially to buy back when the time is right.

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Currently my portfolio has 38 positions, slightly increasing since the beginning of the year but very significantly decreasing over the last 12 months (there were almost twice as many then).

Portfolio positions:

Allianz SE ALV:FRA
Anglo Asian Mining PLC AAZ:LSE
Asia Cement (China) Holdings Corp 743:HKG
Asseco Poland SA SFB1:FRA
Cantonal Bank of Valais WKBN:SWX
Barratt Developments PLC BDEV:LSE
Bridgestone Corp BGT:MUN
Broadcasting System of Niigata Inc 9408:TYO
Build King Holdings Ltd 240:HKG
Bunka Shutter Co Ltd 5930:TYO
BVZ Holding AG BVZN:SWX
China Telecom Corp Ltd 728:HKG
COGECO Inc CGO:TOR
Delong Holdings Ltd BQO:SES
DMS Inc 9782:TYO
Dynam Japan Holdings Co Ltd 6889:HKG
Ebara Jitsugyo Co Ltd 6328:TYO
EVS Broadcast Equipment SA EVS:BRU
Exco Technologies Ltd XTC:TOR
Fenwal Controls of Japan Ltd 6870:TYO
Highland Gold Mining Ltd HGM:LSE
Honshu Chemical Industry Co Ltd 4115:TYO
Maanshan Iron & Steel Co Ltd 323:HKG
Mitani Corp 8066:TYO
Nitto Fuji Flour Milling Co Ltd 2003:TYO
Organo Corp 6368:TYO
Otec Corp 1736:TYO
Prinx Chengshan (Cayman) Holding Ltd 1809:HKG
Shinko Plantech Co Ltd 6379:TYO
Sumiken Mitsui Road Co Ltd 1776:TYO
Swiss Life Holding AG SLHN:VTX
Toronto-Dominion Bank TD:TOR
UBS ETF (CH) – Gold (CHF) hedged (CHF) A-dis AUCHAH:SWX:CHF
UBS ETF (CH) – SXI Real Estate® (CHF) A-dis SRFCHA:SWX:CHF
UBS Group AG UBSG:VTX
Valiant Holding AG VATN:SWX
Wakachiku Construction Co Ltd 1888:TYO
Weiqiao Textile Co Ltd 2698:HKG


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7 thoughts on “Performance du 1er semestre 2019”

  1. Hello Jerome,
    Thanks for your advice and your site.
    As a Swiss tax resident, how do you make your investments? Via a Brooker (IB or Swissquote or other?), via a bank?
    What about your US ETF investments? Type VTI (Vanguard sml caps) or VOO (Vanguard S&P500) in terms of Taxation? Is it a good strategy to take them directly via Interactive Brookers? Or to go through European/Swiss ETFs such as UCITS?
    Thanks in advance,

    1. Hi Quentin
      Thank you for your comment.
      For the first question: IB and Postfinance. See: https://www.dividendes.ch/forum-2/topic/frais-de-courtage/
      2nd question:
      1) ETFs should not be a core strategy in a portfolio, but rather used to diversify. Contrary to popular belief, ETFs also carry risks of their own (they should be considered as an asset in their own right).
      2) By going directly through IB you do not pay the Swiss anticipated interest, but you will be taxed anyway when you declare. And you have to declare them! (automatic exchange). By going through a European or Swiss ETF for American securities, the US withholding tax will be levied anyway. So in the end it does not change much (same debate as for stocks in their domestic country or listed abroad). Often (but not always) US ETFs are cheaper in terms of commissions, so it can make the decision easier.

      1. Hello, a little tax reminder. In the event of death, the IRS, i.e. the American tax authorities, will relieve you of 50% of your assets in the name of “estate tax”. Probably avoidable if you have an account in Europe and a person who has a power of attorney immediately orders a sale order for securities with isin “US…” whereas with an account in the US the flexibility will be much more limited.. to see in the details for the application of this tax but I understand that everyone goes through the mill, American or foreign, what matters is the asset (American…) This is why for ETFs on American securities it is preferable to use ETFs with an Isin that does not start with US…

      2. One way around this might be to have an account in the name of a company (which doesn't die...) but this already becomes more costly and administratively burdensome I imagine.

      3. Hello, thanks for the reminder. This very US peculiarity had already been raised on the forum at the time. Americans are definitely very voracious when it comes to taxes abroad. Normal, they are the only ones who can afford it...

        This is one of the many reasons that made me significantly reduce the proportion of American securities in my portfolio. The most important one being their valuation.

        That being said, there are some stocks and ETFs that are only available there, so you have to make the best of a bad situation. And don't forget to sell them if you get seriously ill! 🙁

        In any case, I think that a retiree in his old age has an interest in placing as much of his assets as possible in domestic securities.

  2. It's normal that you stay behind the market at the beginning of the year with so much cash in a market that is exploding. On the other hand, if the market turns badly, it will be the opposite phenomenon and you will do better than the indices.

    Have you noticed the poor performance of BCVS in recent weeks? It's rather surprising and I don't really see the cause. In any case, I could soon pay myself a slice of it... if the notary and taxes leave me a little cash 😉

    I wish you a great summer vacation 🙂

    1. As much as I like this stock for historical reasons (it's my first stock and my first mortgage), I have to say that the last financial year has been quite disappointing. I'm thinking mainly of the negative FCF. So this drop doesn't surprise me too much. I'm not going to sell, but I'm not going to buy back either. As with many stocks, by the way.
      Luckily we can invest in aperitifs at the moment!

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