My portfolio return since March 31st and on Year to Date.
It has been a while since I last provided you with the track record of my portfolio. I haven’t made any changes since March 31st when I decided to be more aggressive in my strategy and increase the beta of my portfolio with stocks like Tokyo Electron, TDK or Asahi Glass. It is clear now that it was a great call like we like to say on the trading floor. Since the lows of March 10, the market has been on a bullish mode with a rebound of more than 33% and the Nikkei225 is now up 6,48% on the year.
My portfolio is now outperforming the Nikkei225 by more than 8% (14,54% vs. 6,48%). It is of course really reassuring to see than in both the downside and the upside my portfolio outperformed the benchmark since the beginning of the year. It is hard to call a top to this rally the same way it was hard to call a bottom in February and March, but I am starting to be uncomfortable with some of my stocks’ performances. But let’s just look first at what triggered the rebound of world’s financial markets.
The most important news came from the American banks. Citigroup, Wells Fargo, Bank of America all announced profitable quarter when many analysts doubted it was possible these early in the year. Market participants were so worried about possible bankruptcies from one of the top bank in the US that the announcement came as a great sense of relief and optimism. Of course it was not enough for the rally to be sustainable but so far the earning season happens to be really good with strong earning results across sectors in the US, which has kept the market on the bullish trend. Another positive news, the Bank Stress Test in the US revealed to be less dramatic than many analysts expected. Ten of the biggest US Banks are in need of an additional $75 billion of capital in the coming months.
Overall, it just seemed that the market overreacted on the downside in March as analysts were downgrading stocks from left and right. It was a real blood bath as many companies also came up with very weak expectation for 2009. However, it seemed too cautious as the many economic stimuli around the world had started to be felt at the consumer level. Bernanke said early this week he expects the recession in the US to end before the end of 2009, but he warned market participants that unemployment rate would keep increasing to level higher than the 10% many people fear. All in all the negative news flow seems to be on a stand by for now but I would not call the end of the bear market by any means.
However, one reason the bullish trend could continue is that now markets around the world have positive performances on a year to date. Given that many institutional investors have kept a lot of cash on hand and thought it would be the right call for 2009, they now have to reconsider their cash strategy since it is weighting on their performance. It is therefore probable to see more fresh cash inflow coming into the market in the next couple days or weeks but it won’t change the fundamentals of the market, which are still very weak.
I would advise investors to start taking some of their profits and look at more defensive stocks if they don’t want to build cash. There is maybe another 5-10% of upside but probably more downside, which in the end does not look like a good risk/reward ratio to me.
Have a great weekend.
| Stocks in my portfolio | since March 31st |
| GS Yuasa | 43.81% |
| Mitsui Chemical | 39.83% |
| Softbank | 36.55% |
| Toshiba Corp | 34.20% |
| Nomura Holding | 33.46% |
| Mitsubishi UFJ | 32.32% |
| NEC Corp | 32.22% |
| Mitsui OSK Lines | 28.37% |
| Japan Steel Works | 26.81% |
| Marubeni Corp | 26.42% |
| TDK Corp | 26.05% |
| My portfolio | 21.23% |
| Komatsu | 20.86% |
| My first portfolio Jan 1st | 20.56% |
| Tokyo Electron | 18.68% |
| Hitachi Construction Machinery | 17.75% |
| Advantest | 16.76% |
| Bank Of Yokohama | 15.57% |
| Asahi Glass | 14.21% |
| Nikkei | 12.94% |
| Mitsui & Co | 11.80% |
| Asahi Breweries | 5.96% |
| Shin Etsu Chemical | 5.83% |
| Seven & I Holding | 3.65% |
| NTT Docomo | -5.79% |
| Japan Tobacco | -8.99% |