Key portfolio: situation at 01.04.2023

There was a time when "Swiss Made" products were synonymous with quality. This is still the case in the watchmaking industry. Since the turn of the century, however, companies bearing the Swiss label in their name have been synonymous with mediocrity, greed, corruption, wheeling and dealing, and the list goes on.

Swissair, Union Bank of Switzerland, Credit Suisse... These three Swiss giants have been mired in scandal, wrecked and had to be rescued by the public authorities and/or the SNB. The funny thing is that these three protagonists share a common destiny, since the 2001 takeover of Swissair by Crossair, within the new Swiss airline, under the aegis of the two aforementioned major banks.

It's not the size that counts...

As if they were united forever in this original sin, the latter also ended up collapsing, UBS a few years later, and Crédit Suisse now. "Too Big to Fail" according to the government... I would have simply said "Too Big" (and the UBS takeover isn't going to improve this). Incidentally, it's astonishing that Crédit Suisse has lasted this long, given that it has been embroiled in scandal after scandal for years, despite the reassuring (and sometimes misleading) words of its successive managers. Its chairman, Lehmann (a name that apparently doesn't go down well with finance), said that government aid was out of the question, only to ask the SNB for 50 billion a day later. Even better: more recently, he blamed social networks for sinking his bank. Welcome to the 21st century, Mr Lehmann.

How can these people, whose job it is to manage the money of individuals and companies, look at themselves in the mirror, when they tell one lie after another and don't even know how to manage the accounts of their own establishment? Even Granny knows best how to look after her money by storing it under her mattress. This little world seems to be discovering with horror that government bonds are not without risk, even though one of the first things you learn in economics class is that their value falls when interest rates rise.

For a good laugh, let's take a look at Crédit Suisse's stock market performance compared to a regional Swiss bank like Banque Cantonale du Valais.

Since 2001, on the one hand, you've lost almost your entire stake, while on the other, the value of your invested capital has quadrupled, while maintaining very low volatility, even during the financial crisis of 2008. On the one hand, you have one of the "world leaders" in investment and wealth management, and on the other a small, traditional bank. Look for the mistake...

What's even funnier is that, while US regional banks were in turmoil over the past month, the "small" Banque Cantonale du Valais gained over 1%, while the "giant" Crédit Suisse plunged into the abyss.

The market

One man's misfortune is another man's gain. While most of the world's stock indices were yo-yoing, the long-undervalued Japanese small caps rose sharply in value. Alternative assets also benefited from this period of renewed uncertainty.

The Swiss Performance Index was once again on a roller-coaster ride, even more so than in the previous month. In the end, it posted a one-month performance of 1,24%, making a monstrous comeback from losses of up to -4% during the month.

The portfolio

THE determining portfolio did significantly better, with a gain of 2.3%. Unlike the SPI, it maintained very low volatility (even though it includes almost 80% of equities). The Japanese component of PF clearly contributed to this result, as did alternative assets. The Big Cap US strategy also performed well, with a gain of 4,47% in dollar terms, driven in particular by the comeback of technology stocks.

This gives us a year-to-date performance in CHF of 5% for the PF determinant, with a volatility of only 10% (annualized). That's quite a quarterly performance. It is now virtually on a par with the market, which got off to a flying start in January, with more than 3 performance points ahead of the PF. What's more, PF's volatility is almost half that of the market.

And since we mentioned alternative assets earlier...

Trading Auto Signal

A promise made, a promise kept. Since September, I've been telling you about an asset in the testing phase. Here it is at last!

I've taken out and updated an "old" instrument from my toolbox: the Trading Auto Signal. For those who remember, this was offered to premium members of the site seven years ago, before changes to my data provider at the time prevented me from continuing to make this useful service available.

The Trading Auto Signal aims to obtain a positive performance during bullish, bearish or flat markets. It tracks the S&P 500 and can be used to trade both the up and down sides of that index.

Objectives of Auto Signal Trading

• trade the S&P and generate capital gains, mainly in capital (interesting from a tax point of view in Switzerland)
• cover positions during bear markets
• reduce the volatility of a portfolio
• deliver absolute performance, regardless of market conditions

How to use Trading Auto Signal

Trading Auto Signal is an integral part of the determining portfolio. It is either:

• bullish (long position), by investing in the SPY ETF (from SPDR - SSGA)
• bearish (short position), by short selling SPY or investing in the SH ETF (from Proshares)
• cash, in USD

Most of the time the position is held "overnight", for a few days or weeks. More rarely, the signal takes an "intraday" position, from the opening, to be closed just before the closing.

As with other positions, trades are reported on the portfolio page. The signal changes about twenty times a year. To avoid having to constantly monitor the portfolio, it is possible to sign up for email alerts (at the top of the PF page).

When the signal changes, simply place a market order (at Interactive BrokersYou can also use the MidPrice order to trade at a slightly more favorable price.)

Which broker to use Trading Auto Signal with?

A broker with low brokerage fees is necessary in any case. You also need to have access to the NYSE Arca market, in order to trade SPY, and possibly SH. I recommend Interactive Brokers, which allows you to place an order at a better price, save on transaction and management fees (IB's advantageous rates associated with short selling SPY). In addition, with the American broker's mobile application, available on Android or Apple, it only takes a few seconds to do what's necessary, wherever you are. Charles Schwab is also very suitable. Finally, Degiro can also do the trick, provided you have an "Active" or "Trader" account (both allow short selling, but it is more expensive than with IB or CS).

The difference between Auto Signal Trading and short selling certain PF assets

Auto Signal Trading works on a daily basis. Although positions change only about twenty times a year on average, they can swap several times in the space of a single month. Short selling of certain PF instruments takes place at the monthly closing, as does asset allocation. As the signal is also used to hedge long positions, and in order not to increase the PF's short exposure too much, Auto Signal Trading is prioritized over short-selling equity indices.