Market Outlook and "10X Small Bets" Portfolio review

Important: this is not investment advice. Consult a licensed financial advisor before making any investment decision.

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It’s time for a portfolio review, which I expect to perform twice a year for my very long-term ”pots”.

Before getting into the details here is my nitty gritty about what is going on:

• Nobody really knows if the US economy will enter a deep recession or a mild one (I’m in the camp of a mild recession / soft landing);

• So equity markets are in “waiting mode”: whoever manages money is very cautious before getting back to equities, also considering that with raising rates you can get 4-5 % risk free returns;

• Tomorrow’s new CPI reading if better than expected could propel a new equity rally or, in case it is worst than expected a new leg down;

• That’s why the market has been moving sideways and may break or be rejected again (see red circles below) at the descending 200 days (40 weeks) moving average:

• Central Banks are trying to get back the economy under control with stable low inflation and stable growth which will take some time;

• That means that we’ll be facing a selective market, one where only high-quality companies will see their market value and stock prices soar, very different from what we have been used to after the COVID crisis, with central banks printing money like never before, on top of huge fiscal stimulus from governments, taking all asset classes to irrational levels.

Portfolio review 10X SMALL BETS POT (paid Subscribers only)

First, let’s see where we are:

Performance

• Since inception in May 5th 2021: -13% (-9.4% vs. SP500)

• Since Nov 9th, 2022 (last additions to the pot): +16%

• Number of positions: 13

Although we are still in the red, considering that the Nasdaq lost about 30% in 2022 the performance of this highly speculative POT has been not bad after all.

In hindsight, adding a Stop Loss at 35% would have saved some money. I am not changing the logic of the POTS (buy and hold forever). Here is what I am doing instead: after I start a position, I am adding (buying more of the same position) only if the stock and the business keep performing well. If not, I’ll leave the position alone.

I expect that a few of the names may go to zero BUT at the same time, some of the positions will 10X or more, for a healthy return overall.

Here is a picture of the key numbers for each position: