Early 2024 Outlook and Portfolio Updates
December 25th, 2023 Update
Happy Holidays, everyone.
The driving force behind the S&P 500's recent performance appears to be the expectations surrounding future interest rates. With inflation returning to "normal," the 10-year Treasury yield has been declining, providing a boost to equities.
Will this trend persist? The evolution of inflation figures will be key. I project that we won’t witness significant shifts in the coming months: inflation should continue to cool, albeit at a slower pace, potentially limiting the upward trajectory of stocks.
The Nasdaq has experienced a remarkable rise, climbing for eight consecutive weeks and amassing an impressive +18% gain from its October lows.
Currently, the Greed & Fear Index is in the “Extreme Greed” territory. Below is the “Greed & Fear Index” chart:
While the market may continue its upward trend, adopting a cautious stance and waiting for a pullback seems prudent.
The market is currently breaking out to new highs. This leaves us with two possibilities: either we return to previous levels (indicating a failed breakout) or we climb into a clear, sustained uptrend.
From a sectoral viewpoint, Technology, Real Estate, and Consumer Discretionary are leading, suggesting that the market is optimistic about a soft economic landing and not bracing for a severe recession.
In general terms, the market is not excessively priced, but it's not undervalued either, leaving room for potential growth. The development of this trend remains to be seen.
PORTFOLIOS
Before delving into my momentum portfolios, I’d like to share a story.
At the end of 2022, I crafted a portfolio comprising 10 stocks, inspired by the investment philosophy of Joel Greenblatt, author of “The Little Book that Beats the Market”. How has this portfolio performed? See below.
Remarkably, the portfolio is up 54% YTD, achieved merely through a buy-and-hold strategy. These selections were based on growing profitability, reinvestment of profits, expected revenue growth above 10%, and undervaluation.
Did I invest in these stocks? No, it was purely an experimental endeavor. Is a repeat performance possible? I’ll try again, of course. Stay tuned, as I plan to create a new list of my top 7 stocks (down from 10) by year-end.
Now, let’s turn to my momentum portfolios.
10X SMALL CAP MOMENTUM POT
MoneyLion continues its upward trajectory. I am resisting the urge to sell, instead raising my Stop Loss to accommodate potential corrections, as the stock may still have upward momentum. I exited from MIRM 0.00%↑ following a 20% drop due to FDA disapproval of a new drug. Navigating the Biotech sector is challenging, and I am contemplating reducing my Biotech holdings size by half to mitigate such risks.
Below is the current state of my Portfolio, with updated Stop Losses. The Portfolio has grown by over 60% since its inception.
10X LARGE CAP MOMENTUM POT
This week, I exited DraftKings with a modest profit of 1.8%. Overall, my Portfolio is up 2%.
I am not planning any new purchases this week.
The most interesting stocks from my universe include: CPRX 0.00%↑ SQSP 0.00%↑ VTRU 0.00%↑ EXEL 0.00%↑ and SKYT 0.00%↑
Enjoy your holidays!
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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.