Quarterly Report (2021)
I quarter (2021), a quarter of correction and consolidation
Dear Copier and Followers,
we began the first quarter of the 2021, with a long and relatively frustrating period of consolidation and correction, we recorded a 5.9% decline, which in my opinion is a good opportunity to increase the copy amount because I expect this to be the bottom quarter for our Portfolio for the year 2021.
The stock component of our PortFolio are on prevalence composed by technology assets.
Even though this assets class is predicted to under perform cyclical and industrial assets, I like to trade their higher volatility.
On this regard this is actually the best period to trade them with a high turn over and take advantage of a VXN above 25 on a regular basis.
We have stored a significant amount of cash, about 30% of the portfolio that will be used if a good opportunity will occur and to quickly rotate capitals in and out of assets.
What went down?
All of what could be defined as hedge assets:
TLT, its correctioncontinued and actually accelerated to a record speed due to the very high expectation for economic growth and a strong inflation that should manifest itself during the coming quarters.
A decline of nearly 16% is extremely rare for a low volatility asset such as TLT. The decline is not likely to have reached the bottom but its speed should dramatically slow down, especially if, as often is the case, the market will be disappointed from the "actual growth" that will happen.
This period in my opinion represents a once in a life time opportunity to buy TLT because from this bottom, I predict that the asset will resume its grind to higher values and will never be as low as it is likely to be during the next 12 months.
GOLD was the second asset that continued to literally collapse, falling from a price slightly below 2000$ to a very strong support for the gold prices which is represented from the value of 1670$.
A collapse of 15%.
This type of corrections are not strange for the gold prices, especially when assets such as treasuries enter a sharp re-pricing period such as during this last semester. In addition the first quarter of the year is seasonally negative for gold prices. But gold is the supreme edge against inflation (at least historically) and if inflation is coming the gold prices will shoot up.
As the gold prices continue their correction we increased our asset purchase of gold miners such as GDXJ, JNUG and Barric Gold, which I believe are the best way to gain exposure to the large gains that an infrastructure package as big as the one that president Biden wants to pass and the inflation shoot up that everyone is expecting.
STOCKS did not actually go down, but all in all, I would define their behavior and "going nowhere".
What's next?
If the gold prices can hold the support of 1670$ for some more weeks and the so much feared inflation is actually beginning to show up in our economic calendar, we might be at the beginning of a new bull run of the gold that might reach as high as 2000$ or even move above such prices in a not distant future.
THE TIME TO BUY IS NOW!
TLT should stabilize and probably just slowly continue to grind lower for a while giving a great buy opportunity that is in my opinion a once in a generation opportunity.
Stocks should do well, unless the treasury prices run up too quickly. The near zero interest rates are here to stay for a long time in my opinion and will further feed the so called "stock bobble".
So I am expecting good results for the next quarter with gold related assets to outperform stocks for a few months.
I thank my Copiers and Followers for the confidence and I wish you a great time moving forward.
Daniele
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The
graphs and prices shown in this analysis were taken using as a source
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Disclaimer
The reader is solely responsible for his/her investment choices
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