Warren Buffett "Only when the tide goes out do you discover who's been swimming naked."
It's easy to make money when everything is going up, and no one will blame you for losing money on Apple or Nvidia investments. But think about it for a minute, how hard and almost unachievable it is to grow a 2 trillion market cap company to 4 trillion! It seems like tech companies have entered a casino mode in the past year or so. And although earnings seem good so far, they must come back to earth to justify the pricing.
How do I protect the portfolio? First of all, I am almost entirely uninvested in tech companies. As a matter of fact, $PLUS.L (PLUS 500 LTD) is probably making a killing in fees and profits these days, while $WISE.L (Wise Ltd) increasing its customer base, deposits, and interest income. The rest of the portfolio is based on commodities. The demand for oil is actually rising, and met coal producers released relatively good earnings despite the low-season demand and pricing in Asia.
The situation in the Middle East seems to be getting worse, not better, unfortunately. These are good news for the shipping industry ($MPCC.OL (MPC Container Ships ASA) ) and E&P producers not located in the Middle East (Petrobras and geopark both located in South America). Right now, you can think about investing in these companies as hedging for a larger war in the Middle East. I bet that war will not be good for the already overpriced tech companies.
Two other things: like I was saying before, recessions and downturns are like snow in the Canadian winter; you know you will have it, but you can't be sure a year in advance on which day. Second, the portfolio is invested in very high-quality businesses with very high profit margins that are trading, some of them in what I believe to be ridiculously low market caps. All in all, times like this present opportunities (if you are not leveraged) - and as always we are not leveraged.
Can the market and the portfolio continue declining due to recession rumors or an actual recession? Yes, absolutely. But I believe the strength of our holdings will eventually show through, even and probably during times like this.
Thank you for reading! Feel free to ask me anything portfolio-related.... Show More
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