Reducing beta ahead of a risky earning season
It is still the time to get ride of your risky and high beta stocks. The market is still on its high for the year ahead of the earning season. I know so far the market has been very resilient with some strong result coming from the US especially Intel, Goldman Sachs and JP Morgan. Also Meredith Withney and Noriel Roubini, two very bearish well known economist and analyst, have begun to turn their hat around and see some optimism in the market. It was enough for the market to turn around in the US and obviously in the world. Outside the emerging markets, any other market is driven by the US. It is the sad truth that today we are in a macro-driven market and as of today the US is still the N°1 economy in the world.
So yes, I have decided to be more defensive ahead of the earning season and I am be consistent with my view. I am of course a little surprise by the strong rebound the past few days and the optimism coming out of the markets but for me it is just the last flame of the fire before everything turns black and cold again. As a result, I am going to use the strong rebound of the last few days to reduce my beta.
I am selling mostly my commodity and machinery related stocks. They've had a great run so far since March and they have been the great beneficiary of the Chinese Stimulus Plan. I am still concerned the rest of the world economies are just not yet in a bullish mode and that more negative earning surprises will happen ahead. I contiune to add weight in defensive sector like Utilities, Pharmaceutical, Food and Telecom. I am also trimming my exposure to exporters as the strength of the yen should also drag earnings in the coming months.
However, I am also consistent with my view that Technology stocks and Nuclear plays should outperform the market. I think nuclear will enjoy an enormous boost in Europe and in the US in the coming months. It is not a renewable energy pay per se but it is definitely a way to deal with carbon emission reduction. It requires important investment but at the same time it is an important source of energy while Solar and Wind are less attractive in that view. That is why I keep stocks like Toshiba, MHI, JSW.
Have a great trading day
So yes, I have decided to be more defensive ahead of the earning season and I am be consistent with my view. I am of course a little surprise by the strong rebound the past few days and the optimism coming out of the markets but for me it is just the last flame of the fire before everything turns black and cold again. As a result, I am going to use the strong rebound of the last few days to reduce my beta.
I am selling mostly my commodity and machinery related stocks. They've had a great run so far since March and they have been the great beneficiary of the Chinese Stimulus Plan. I am still concerned the rest of the world economies are just not yet in a bullish mode and that more negative earning surprises will happen ahead. I contiune to add weight in defensive sector like Utilities, Pharmaceutical, Food and Telecom. I am also trimming my exposure to exporters as the strength of the yen should also drag earnings in the coming months.
However, I am also consistent with my view that Technology stocks and Nuclear plays should outperform the market. I think nuclear will enjoy an enormous boost in Europe and in the US in the coming months. It is not a renewable energy pay per se but it is definitely a way to deal with carbon emission reduction. It requires important investment but at the same time it is an important source of energy while Solar and Wind are less attractive in that view. That is why I keep stocks like Toshiba, MHI, JSW.
Have a great trading day
| Ticker Bloom | NAME | SECTEUR | % move |
| 4568 JP | Daiichi Sankyo | Pharmaceutical | 2,00% |
| 9433 JP | KDDI | Telecom | 2,00% |
| 2802 JP | Ajinomoto | Food | 1,00% |
| 2502 JP | Asahi Breweries | Food | 1,00% |
| 9501 JP | Tokyo Electric Power | Utilities | 1,00% |
| 8035 JP | Tokyo Electron | Technology | 1,00% |
| 5201 JP | Asahi Glass | Glass & Ceramics | -1,00% |
| 6674 JP | GS Yuasa | Technology | -1,00% |
| 6305 JP | Hitachi Construction Machinery | Machinery | -1,00% |
| 6301 JP | Komatsu | Machinery | -1,00% |
| 8002 JP | Marubeni Corp | Trading | -1,00% |
| 8031 JP | Mitsui & Co | Trading | -1,00% |
| 9104 JP | Mitsui OSK Lines | Maritime Transport | -1,00% |
| 6502 JP | Toshiba Corp | Technology | -1,00% |