Our weighted average return in May was +0.76%, bringing our year-to-date return to +8.2%.
May marks our 16th consecutive month without an average monthly drawdown of over 1.3%. Moreover, during this timeframe, we have only had two months of negative performance (-0.10% in September 2016 and -1.29% in November 2016). This consistency of performance is not attributable to hedging strategies or active volatility management, but to successful asset allocation and choosing good investments.
For quite some time, we have profited greatly from our overweight in technology stocks such as Amazon, Google, Facebook and Netflix. In May, we took profits on many of these positions. As we were in the process of selling, we were quite aware of the fact that we might be selling too early (see our blog). However, there are times that you simply have to say ‘thank you’ and walk away for a while. For many of these stocks nothing has really changed since we were buying them heavily in December, yet all of a sudden, they are now worth 30% more. Recognizing how sentiment can change and to what degree it can propel a stock is a very important component of active investing. Not letting your imagination get away from itself is just as important. It is nice when everyone agrees with you – but it is times like these that you must apply the highest degree of self-critique and suspicion.
In terms of world affairs and capital markets, we both expected and welcomed Emmanuel Macron’s victory in the French presidential elections. Macron is driven, cosmopolitan, self-assured and capable. It is time for not only France, but for Europe as a whole to encourage these traits within their government bodies and corporate boardrooms. A return of European confidence combined with a good dash of insouciance could have tremendous results. We expect that this trend will continue and have been increasing our European investments.
Trump continues his dour carnival, but, amazingly, the market does not seem to care. Anything positive from Trump at this point would be a welcome surprise – especially US tax reform. Evidently, his dour inadequacy to the demands of his office is already priced in to US stocks. Casual observers might ask, “How can markets be trading at their highs with Trump as president?” Our response is “Imagine how much higher US stocks could trade if he actually did anything positive!”
The UK has elections this week, but we do not expect any decisions there to influence our overall investment strategy.
Please feel free to contact us firstname.lastname@example.org if you would like to hear more about our investment strategies.
On the behalf our portfolio management team, I thank you for your continued trust and support!
FULL DISCLOSURE: Please note that the opinions expressed in this blog should in no way be considered as investment advice or a solicitation to buy or sell securities.