Monthly Archives: March 2017

How Most Investors Underperform The Market

In our January commentary we wrote:

Although we have been taking profits on some of our high-flying stocks, we do not intend to try to time the market by selling stocks that we like in the hope of buying them back more cheaply in the future. This is called being ‘cute’. ‘Cuteness’ is the domain of babies and puppies, not investment managers.

We continue to abide by what we wrote.

LINK: Our January Results

However, it seems as if cutting and running is a huge problem for retail investors. Panic induced selling leads to missing returns as markets recover and trade higher.

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Global Earnings Are On The Rise

Day to day market movements tend to distract investors from underlying factors that create powerful long-term trends.

Fundamentally, equities are priced off of anticipated earnings. Investors can get ahead of themselves in anticipating the actual degree of earnings acceleration, but higher earnings are the simplest and most fundamental driver of higher stock prices.

As such, we should not be surprised by the move that is currently going on in global equities:

LINK: Global Earnings

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Shopify (SHOP US) – We Shopped Early And Often…

Since the start of the year Shopify (SHOP:US) shares – one of our largest stock positions – have kept on rocketing upwards.

We commented on this move in this blog two months ago: Shopify Hits New Highs

It is now a “hot” stock and is garnering more and more attention every day.

We bought our first position on December 4th, 2015, and continuously added to our positions since then.

Here is what is has done since our first purchase:

Eventually, our exposure in some of our aggressive accounts reached over a 10% allocation. We cut our positions in half and now ostensibly own our exposure to Shopify for free. This is how you add “alpha” to your investments. Not by under-weighting and over-weighting positions versus their benchmark allocations.

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Global Outlook Improves

As market commentators attempt to deride the “Trump rally”, they are actually missing the broader picture of the multi-faceted economic growth that is going on globally.

Scott Grannis provides some great commentary and charts in the following blog post:
LINK: Global Outlook Improves

Here’s a interesting comparison between US and European stocks and industrial production:

Oh, and by the way, emerging market stocks are doing best of all:

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The Most Expensive SUV in the World

Daimler is coming out with the most expensive SUV in the world.

Here’s more pictures of the newest Daimler’s models: LINK

Release of such extravagant models won’t bring much direct revenue growth. It does make a lot of press and increases brand awareness. For luxury car producers brand awareness is of the most valuable assets and Daimler is doing a great job at promoting itself.

We’ve liked Daimler for quite some time. We took interest in it when price was at its lows and no one cared about Daimler.

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OUR FEBRUARY RESULTS – STILL A GREAT START TO 2017

OUR FEBRUARY RESULTS – STILL A GREAT START TO 2017

Our weighted average return in February was +1.95%, bringing our YTD return to +4.38% (net of all fees).

Many of the themes that we wrote about last month are still very much in play. Biotech continues to deliver and so too do our investments in robotics. Our European investments also had a good month and our bonds continue to deliver steady returns.

The ongoing flow of positive economic data from the US will probably result in further tightening from the US Fed in March. Economic data in Europe is also picking up. Inflation in Germany is at + 2.2%. If this continues, how long can the ECB leave rates at 0%? Whomever answers this question most accurately will make a lot of money. We do not know when rates in Europe will rise, but are aware of the fact that this could be sooner than most people think.

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