Almost just two months into 2020, we are seeing significant increase in market risk. If you have 5 mins, please read this good article: https://www.barrons.com/articles/a-contrarian-economist-is-warning-of-recession-and-deflation-hes-been-right-before-51582290004. Further risk is exacerbated by impacts from Covid-19. What one may infer is that the major fallout resulting from Covid-19 will be a protracted global supply disruption. In addition to China, can’t imagine seeing both Japan / South Korea experiencing a full outbreak of Covid-19.
I started my global trading portfolio about 3 weeks ago. As of 21 Feb 2020, managed to achieve a humble return of 2.95% (well, really humble lol….).
In these 3 weeks, I started trading in US stocks, then US ETFs and put options. This is my current portfolio:
Long Thesis: My very first “global” stock. I am not a gamer, hence I do not really appreciate this stock. Uptrend remains intact. Target exit at next resistance of $67.90
Long Thesis: A small cap stock. Traditional bread and butter business. Uptrend remains intact but currently in an overbought position.
iShares Gold ETF (IAU)
Long Thesis: Safe haven. Uptrend intact but nevertheless, remains in an overbought position
United States Oil Funds (USO)
Long Thesis: A swing trade play. Currently in range bound. Expect positive rebound from the Covid-19 situation improves.
Put option on MSCI Malaysia Index Fund (EWM)
Short Thesis: See below. Prevailing negative sentiments impacting on Malaysia. Downtrend persists.
Put option on Vanguards Emerging Markets Fund (VWO)
Short Thesis: I believe that there will be 6-12 months lagging impacts resulting from Covid-19 outbreak. Major supply disruptions will impact on emerging economies. Choose VWO – it has yet to reflect the negative impacts / top holdings are in China stocks.
Last but not least, made my first exit. Made net gain of USD34 divesting in 1800-Flowers (FLWS), not much but a good start. Went in about 16+ and sold about 18+. Sold because (i) reached my target return; (ii) in an overbought position.
Short Thesis: Slowest quarterly gdp growth rate coupled with unexpected rate cut. May anticipate another rate cut in March. Covid-19 shall have significant impact on Malaysia (supply chain, tourism, etc). Further, political transition from Tun to AI (do not think it will be a smooth process – need to consider some political risk premium). Foreigners have been selling on Malaysia (monthly net outflow of funds from the equity market). Current PE valuation is not cheap at 19x. Technically, downtrend remains. Expect next support at around 1,503.
Overall strategy – to remain defensive and to invest in dividend yield / REITs (>5% p.a) and are expected to do well as the yield spread widens against MGS.
Closely monitoring this stock (Hup Seng) for possible breakout (if it breaches above $0.94)
Disclaimer: This is not an investment advice or endorsement. Please refer to general disclaimer of this blog.