Monthly Asset Allocation

The updated monthly asset allocation table is now available here.

Unbelievable. There is a month and a half I was bitterly observing the mediocre performance of my portfolio in the first half of the year compared to the market and the very next day everything changed. My stocks have only progressed, sometimes very steadily (some having climbed in one day to 15%), while the markets have encountered considerable difficulty during the same period. I am of course still far from catching up with the delay accumulated since the beginning of the year, but I have the feeling that something is happening, a kind of paradigm shift, or rather a return to normality. Let's see what happens.

Même si les actions suisses ont été à la peine ce dernier mois, elles demeurent encore dans une tendance forte, aidées par des mois de très forte croissance. Leur prix demeure encore et toujours très dissuasif. Aux USA, là aussi très chères, elles se sont mieux comportées durant tout le mois, jusqu'à hier soir, où elles ont plongé, malgré la baisse des taux d'intérêt. En effet, Jerome Powell, président de la Fed, a précisé que cette diminution momentanée ne signifiait pas qu'on allait se diriger vers un régime agressif de baisse de taux, mais qu'on était plutôt dans un ajustement de mi-cycle. Autrement dit, c'est un mouvement plutôt temporaire et on risque de repartir dans l'autre sens, ce que les marchés n'ont pas du tout aimé, d'autant qu'ils attendaient un discours beaucoup plus clément. Trump a dû rire de la même couleur que ses cheveux.

European stocks are still quite interesting, with a correct valuation and a slightly positive trend, but losing momentum. They may even move into bearish territory quite quickly depending on their reaction to the American markets. In the English, we are at the same stage as last month, with a valuation similar to European stocks, but with a trend already slightly negative. So let's remain cautious with these two regions.

In Canada we are also in a similar configuration in June, with a fairly marked positive trend, but prices a little high in general, but much less than in their southern neighbors. So there are possibly some opportunities to be found there, but for the moment I have not found anything interesting. It's the same story in Australia.

In Japan, full of nuggets at knockdown prices, we are finally moving back to a positive trend. It was about time. The turnaround has even been quite spectacular on certain stocks, notably small caps oriented towards value investing. Several of my stocks have performed really well, such as Nitto Fuji Flour Milling Co Ltd and Organo Corp (both nearly 10% in one month), as well as Otec Corp (over 15%). I have a significant amount of other titles that I covet so I am looking forward to being able to activate my cash reserves.

In emerging countries, which are also generally experiencing slashed prices, the trend has, however, followed the opposite path and is now moving into negative territory. I have also started to sell off some stocks that were going downhill (Asia Cement China & Build King Holdings), although not without making some gains along the way (23% in 3 months, resp. 10% in 6 months). This compensates for other previous losses in these decidedly very volatile markets.

L'or continue à bien se comporter, malgré la baisse d'hier. Sa tendance positive est bien marquée et sa valorisation par rapport aux actions est intéressante d'un point de vue historique. Vu les incertitudes à venir, cela reste un incontournable en portefeuille. Idem pour l'real estate suisse, qui ne cesse de grimper depuis le début de l'année (+14%).

Au niveau des obligations gouvernementales longues suisses, elles sont encore et toujours à éviter à cause des taux négatifs. Aux USA par contre c'est une autre histoire, puisqu'elles paient des coupons assez corrects et se comportent bien (en particulier hier soir !). Ces obligations longues font vraiment du bien dans un portefeuille actions.

Finally, in terms of target cash reserves, they are falling very slightly to 6%, due to the return to favor of Japanese stocks (but not more because of emerging countries which are following the opposite trend). Medium-term reserves remain invested in USD, which performed well against the CHF in July (+1.74%). My current cash reserves still amounting to 17%, I still have room to reach the target amount of 6% and therefore enough to draw on the Japanese market!

Have a great summer, and don't forget to complete the survey, if you haven't already.