Reduce: NUE

Reduce: Nucor Corporation

Just one signal today. This time it is a sell signal for Nucor Corporation (NUE). We reduced our position at an average price per share of USD 44.56. We bought these shares at an average price of USD 39.63 on 11 June 2020 (see our post). This result is a gain of 12.44%. A nice short-term trade for a stock that we've held since 2019.

This is an example of our trading algorithms being able to suggest this kind of short-term trades if the right opportunity arises. In fact, at the they create a buy signal it's not known yet, when a sell signal for the stock will be created. It might as well create yet another buy signal. Also, instead of creating a signal within 5 days, it might be weeks or months until the next signal.

While not all trades suggested by our algorithms result in positive returns, this is a nice example of a successful trade. Overall, our trading algorithms get it right more often than wrong. And that adds some yield above and beyond what the portfolio would return if we were to balance only once per month, quarter or year.

Reduce TROW, OTIS

Two signals today, one for TROW and one for OTIS.

Reduce: T. Rowe Price Group Inc.

Based on our trading systems, we reduced our holdings in T. Rowe Price Group Inc. (TROW) at an average price per share of USD 122.46. With unit costs of USD 74.47 this represents a gain of 64.44%.

We started this position in 2016. TROW is a dividend aristocrat and therefore belongs to a group of companies that - as a group - are a great base investment.

Reduce: Otis Worldwide Corporation

Our trading system created a sell signal for Otis Worldwidw Corporation (OTIS) at USD 57.41. We reduced our position accordingly. With average unit costs of USD 45.35 this means a gain of 26.59%. This is a great result as we started this position only at the beginning of April 2020 when OTIS was spun off from Raytheon Technologies (RTX).

As with TROW, OTIS is a sound base investment as they count as dividend aristocrat, too. The dividend history of RTX (formerly United Technologies, UTX) is considered for determining that status.

Reduce VUG; Increase V

Reduce: Vanguard Growth ETF

Our trading algorithm reduced our position in Vanguard Growth ETF (VUG) at an average share price of USD 194.23. Unit costs were USD 199.53. This is a loss of 2.66%. The algorithm reduced the relative exposure to this particular ETF.

Increase: Visa Inc.

Although only started this week, we added more shares to our position in Visa Inc. (V) at an average share price of USD 192.50.

At times our trading algorithms may choose to start a new position based on specific investment criteria. This is based on a whole range of factors that includes profits, profit growth, liabilities, dividend history, revenue growth and similar more. One factor is also relative performance to other stocks, to ETF's, to indices or our own US portfolio.

Signals for MA, V, NUE, WMT, WBA, KO - Closing ROST Position

After a couple of days without trading signals, today our trading algorithms created seven signals. A further signal was created for ROST, which was unusual, so let's start with that one first.

Close: Ross Stores Inc

Ross Stores Inc (ROST) accounced that they suspended their quarterly dividend for the time being. We don't see this changing any time soon given they reported a quarterly net income of negative USD 306 millions, i.e. a loss. As a consequence ROST no longer meets the requirements to be counted as a dividend aristocrat. This is a bit sad to see since they became a dividend aristocrat only earlier this year.

We started a position in ROST in March. This week we sold all shares to close the position. The average sell price was USD 94.20. With unit costs at USD 75.74 this represents a gain of 24.37%. This is a very good result given the circumstances due to the high volatility in the financial markets caused by the Coronavirus pandemia.

(Image source: Wikipedia)

New: Mastercard Inc A

We started a new position with Mastercard Inc A (MA). MA is a growth stock. We expect their growth story to continue although we anticipate that there will be an impact from the Covid-19 crisis.

Average buy price was USD 292.54.

New: Visa Inc

Another addition to our US portfolio is Visa Inc (V), also a growth. Similar story to Mastercard: we expect it to continue. Here, too, we expect the growth story to continue. The COVID-19 crisis will have an impact, though. Because of lockdowns worldwide both Visa and Mastercard may see reduced revenues. As countries come out of lockdown and as the economy recovers, results of these two financial services stock should improve again as well.

As with Mastercard, we see Visa as a longterm investment. Average buy price was USD 189.37.

Increase: Nucor Corp

We've had our Nucor Corp (NUE) since early 2019. The stock price has come done since then from about USD 57 to below USD 40. We added to our position along the way.

This week our trading algorithms created a buy signal. We added more shares at an average price of USD 39.63.

NUE is a dividend aristocrat and currently has a dividend yield of about 3.9%.

Increase: Walmart Inc.

The trading algorithm also produced a signal for Walmart Inc. (WMT). We've had this position since 2019. During the COVID-19 crisis, the stock performed well. As a retailer WMT was an essential business and was able to keep its shops open. We reduce our position a couple of times in March realizing gains.

We had a sell signal in April as well, this time at USD 126.01. Today they buy signal was at USD 120.02. In essence the trading algorithm reduced the position somewhat and is now increasing it again. In other words: sell high, buy low. In some sense the algorithm treats "high" and "low" alwasy as relative to the overall market.

Increase: Walgreens Boots Alliance Inc.

The next buy signal was for Walgreens Boots Alliance Inc. (WBA). We started this position in 2018. The stock price development has been disappointing as it dropped from about USD 65 to about USD 40.

Along the way, however, we did a few trades. This week's buy signal helps reducing the unit costs. Note that the trading algorithms are designed such that it seizes buying opportunities without exaggerating the exposure to a given company.

This week we added more shares at an average price of about USD 40.86.

Increase: The Coca-Cola Company

The final buy signal today was for The Coca-Cola Company (KO). This is a position we started in 2017. In March and April this year, the position was reduced a couple of times to realize some gains at prices between USD 46.98 and USD 56.85.

Today's signal added shares again at a lower price of about USD 45.56 per share.

Signals for CINF, BEN, CARR, VGT

Today our systems created four signals: three sell signals and one buy signals.

Reduce: Cincinatti Financial Corporation

Based on the sell signal for Cincinatti Financal Corporation (CINF) we reduced our position at an average price per share of USD 71.12. With average unit costs of USD 55.70 this represents a gain of 27.68%, a very good result.

The previous sell signal was on Thursday, 04 June 2020, at a price of USD 64.3017 (see blog post).

We started this position in 2016 and increase and reduced our holding several times since then to make use of good buying and selling opportunities.

Reduce: Franklin Resources

And another sell signal for Franklin Resources (BEN). We already reduced this position somewhat on Friday, 05 June 2020 (see our post), at a price of USD 22.68.

Today we reduced it further at an average price per share of USD 24.2850. With unit costs of about USD 16.46, this means a gain of 47.54%. This is quite satisfactory.

This position was started in 2016. We added and reduced this position several times to seize good opportunities.

Reduce: Carrier Global Corporation

Carrier Global Corporation (CARR) has seen several sell signals recently (see our blog posts here, here and here). We started this position in April 2020 and increased several times in that month. In May our systems started to created sell signals, so we reduce our position several times.

Today we sold at an average price per share of USD 24.2850. With unit costs of USD 13.32 we realized a gain of 82.32%, which is a very satisfactory result.

Add: Vanguard Information Tech ETF

To increase our exposure to the technology sector we started the position in Vanguard Information Tech EFT (VGT) earlier this month. Today we added at an average price of USD 271.96.

Like all other holdings mentioned in this post, we see VGT as a long-term investment, although we may choose to follow our system's signals to increase or decrease respectively.

Disclaimer

Past results have no bearing for future results. Keep in mind that we do not accept any responsibility for your investment decisions. Do your own research and due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

A Busy Day: EMR, XOM, OTIS, LEG, AMCR, VGT, AOS, BEN

Triggered by the positive numbers from the US job market, the US stock markets are up today. The S&P 500 gained 2.62%. The US job market reported 2.5 million new jobs in May, the most jobs added in a single month since 1948. The unemployment rate dropped from 14.7% in April to 13.3% in May. Analysts expected an unemployment rate of up to 18%.

Our systems tend to create more signals when there are larger market moves (up or down) compared to when things remain mostly unchanged. Today was no difference with 8 signals, one buy and 7 sell signals.

Here is the rundown.

Reduce: Emerson Electric

We started our position of Emerson Electric (EMR) in 2016. Since March we reduced our holding slightly at various price point.

Today we sold at an average price of USD 67.17 per share. With unit costs at USD 57.08 this reprsents a gain of 17.68%. Not earth shattering but still a good result.

Reduce: Exxon Mobil

Oil companies have been unders pressure for along time. Exxon Mobil (XOM) is no different. We've held this position since 2018. We increased our position in 2019. Just a few days after the lowpoint at end of March we added even more shares at an average price of USD 37.05.

While the overall position still carries an unrealized loss, our systems have created a couple sell signals in April at USD 39.97 and USD 43.47. Today's sell was at an average price of USD 52.72. Compared to the low point in March this is a gain of 42.29%.

Basically with this holding the play was buying when nobody liked the stock, then slowly sell the shares acquired at the low point as the stock price increases again. Without closing this position our systems help realizing a gain by seizing the opportunity to get additional shares at a steep discount.

XOM is not out the woods yet. The company has postponed the increase of their quarterly dividend, which should have happend in the current quarter. To keep their status as dividend aristocrat they will have to increase their dividend that is payable in the fourth calendar quarter of 2020, and if that increase is just a fraction of a cent.

There are indications that business for oil companies will improve again over the next few months. As the economies around the world start to come out of the coronavirus hibernation, demand for oil is likely to increase again. The oil price has recovered from its ridiculous low of minus USD 40 (!). Output of existing wells is being reduced, e.g. the number of oil rigs in the US is dropping.

As business improves again, the stock prices of oil companies should continue to increase as well. Today XOM advanced by 8.11% and Chevron (CVX) was up by 4.71%. Obviously this is just a single day, so is not indicative by any stretch of imagination. On the other hand, XOM is up by over 40% since its low point in March 2020.

Reduce: Otis Worldwide Corporation

Our position started when Otis Worldwide Corporation (OTIS) was spun off from what is now called Raytheon Technologies (RTX), formerly United Technologies (UTX). We increased our position since then several times. Today was the first time our systems produced a sell signal.

We reduced our position at an average price of USD 58.14. With average unit costs of USD 46.0305 this represents a gain of 26.31%. This is a very good results for two months.

Reduce: Leggett & Platt Inc

And yet another sell signal for Leggett & Platt (LEG). Just a day ago there was a sell signal at USD 35.57 (see our post).

This time the sell signal for LEG was at USD 37.04. With average unit costs of USD 28.52 this represents a gain of 29.87%. This is a very good result.

Reduce: Amcor Plc

Amcor Plc (AMCR) increased in price further, so our systems determined that it is time to reduce again. The previous sell signal was generated only two days ago (see our post).

This time we reduced our position at an average price of USD 10.87. With unit costs of USD 7.40 this is a gain of 46.89%. A very good result, given we started this position in March 2020 only.

Add: Vanguard Information Tech ETF

Another buy signal for Vanguard Information Tech ETF (VGT). We've previously provided more details about the rationale for having this position in our US portfolio (see out post).

Today we increased our position with at an average price of USD 269.65.

Reduce: A.O. Smith Corp

For A.O. Smith Corp (AOS) our systems created a sell signal. We have held this position since July 2019 and added more shortly after.

Today we reduced the position at an average price of USD 52.03. With unit costs of USD 46.34 this represents a gain of 12.28%.

Reduce: Franklin Resources

We started this position in 2016. Performance in terms of stock price was disappointing so far. However, the company continued to increase their dividend each year. Dividend yield is currently at about 4.67%.

In April 2020 our system created a couple of buy signals. We increased our holdings accordingly. Our algorithms took the opportunity to buy near the bottom.

With today's sell signal we reduced our position at an average price of USD 22.68. With average unit costs of USD 16.46 we realized a gain of 37.79%. A quite satisfactory result for just 1.5 months.

Summary

It was a comparably busy day for us. However, we are confident that today's transactions were the right thing to do based on the signals generated by our system.

All of the stocks mentioned in this posts are long-term positions in our portfolio, i.e. a minimum period of 10 years. However, based on recommendations of our algorithms we may choose to increase or decrease any of the positions in the future.

Comparing our portfolio, which is managed by our software, with the S&P 500 index shows that our portfolio is up by 0.20% year-to-date while the S&P 500 index is down -1.14%. In other words, year-to-date our portfolio outperformed the index by 1.34%.

Disclaimer

Past results have no bearing for future results. Keep in mind that we do not accept any responsibility for your investment decisions. Do your own research and due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

Sell signals for AFL, CARR, CINF, LEG

Reduce: Aflac

Several sell signals were created today for positions in our portfolio. The first one being Aflac (AFL). We started this position in 2016, reduced it somewhat in 2019 and then increased it again on a couple of occasions. Based on today's signal we reduced the position at an average price of USD 39.0912. The unit costs were at USD 32.321. This represents a gain of 20.95%. A good result.

AFL being a dividend aristocrats we continue to see the company as a long-term investment. Based on signals from our systems we may or may not increase or decrease our position.

Reduce: Carrier Global Corporation

Yet another sell signal was created for Carrier Global Corporation (CAR). The stock continues to perform quite well relative to the stock market. As a result, our systems are reducing this position. This time we sold at an average price of USD 22.64. With unit costs at 13.566 this represents a gain of 66.89%. This, too, is quite satisfactory result.

CARR is a dividend aristocrat as well. We continue to see it as a long-term investment. As with the other stocks mentioned in this post we may or may not increase or decrease this position in the future.

Reduce: Cincinatti Financial Corporation

The next sell signal was for Cincinatty Financial Corporation (CINF). We've had this position since 2016. Since then there were several sell and buy signals. Most recently there were buy signals at prices of USD 60.82, USD 55.80 and USD 53.9585 in May.

We reduced our position at an average price of USD 64.3017. With average unit costs of USD 55.70 this represents a gain of 15.44%. Given the cirumstances in the last few months this is a good result.

As mentioned above CINF is a long-term investment but we may increase or decrease the position in the future.

Reduce: Leggett & Platt Inc

The final sell signal for today was for Leggett & Platt Inc (LEG). This stock is also quite interesting in terms of the signals over the last couple of months. On 2nd April a buy signal was created at USD 23.95 followed by a sequence of sell signals in the same month, each of them at increasingly higher prices from USD 27.03 up to USD 36.02.

Then on 11 May another buy signal was generated at USD 28.52. Since then there were several sell signals, again with increasing prices from USD 30.31 up to USD 35.57 today.

With unit costs of USD 28.52 today's sell represents a gain of 24.72%. Again, a very good result.

Leggett & Platt Inc is a dividend aristocrat, too. We see it as a long-term investment and will continue to keep this position, reducing or increasing if the right opportunity presents itself.

Disclaimer

Keep in mind that we do not accept any responsibility for your investment decisions. Do your own research and due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

Sell Signal for FRT; Started VGT

Sell: Federal Realty Investment Trust

On 3rd June 2020 our systems created a sell signal for Federal Realty Investment Trust (FRT). We started this position in 2019. In March and May of this year we increased our position after prices dropped and our systems created buy signals at USD 74.78 and then again USD 67.95 respectively.

This week a sell signal was create and we reduced our position slightly at an average price of USD 93.5745 per share. Based on an average price of USD 71.3645 for the buys in March and May, this represents a gain of 31.12%. Here, too, we are quite satisfied with this result.

We continue to have a long position in FRT. While we see this as long-term investment, we may increase or decrease our position based on the signals created by our systems.

Buy: Vanguard Information Tech ETF

Also, on 3rd June 2020, we decided to increase our exposure in the technology sector. We started a position in this sector in May with "SPDR Select Sector Fund - Technology" (XLK). Our post back then already explains some of the reasons for the step back then. With adding the ETF "Vanguard Information Techology" (VGT) to our portfolio we have increased our technology holdings further. The technology sector currently represents about 8% of our US portfolio.

Both, XLK and VGT, have a quite different structure.

XLK has about 86% of assets in technology plus a further 12% in financial services. The remainder being about 2% in industrials. In total XLK consists of about 71 stock holdings.

In contrast VGT has 88% of assets in technology plus a further 10% in financial servicess. The remaining 2% are in industrials. The main difference is that VGT has 316 holdings which reduces the stock specific risks even further.

The past performance of the two ETF's is in the same ballpark. Both funds pay cash distributions typically once per quarter, so both are generating some cash (1% to 2% per year).

We started the VGT position with an average price of USD 267.15.

Disclaimer

Keep in mind that we do not accept any responsibility for your investment decisions. Do your own research and due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

Sell Signals for CARR and AMCR

Carrier Global Corporation

Our systems produced a couple of sell signals for Carrier Global Corporation (CARR) beginning of this week. We started this position early April this year and increased it throughout that month.

Based on the sell signal we reduced our position at an average price of USD 21.685. With a unit price of USD 14.37 this represents a gain of 50.9%, which we think is quite satisfactory.

We continue to keep a position in CARR and intend to take further action based on whether our systems create sell or buy signals.

Amcor Plc

Similarly, our systems created a sell signal for Amcor Plc (AMCR) this week. We started this position early March 2020 and have increased it until end of that month.

Throughout April and May there were several sell signals and we reduced our position to some extent on both occasions. Based on this week's sell signal we reduced our position further at an average share price of USD 10.34. As our unit price is currently about USD 9.24, this represents a gain of USD 11.9%. Again, given we have held this position only since March, this, too, is a quite satisfactory result.

Our systems may create further buy or sell signals for AMCR. At that time we may or may not increase or decrease our position again. As with CARR we continue to hold a long-term position in AMCR.

Disclaimer

Keep in mind, that we do not accept any responsibility for your investment decisions. Do your own due diligence and consult with your financial advisor before making decisions. Any investment vehicle mentioned on this site is used for illustration purposes only and does not constitute investment advice.

Results Optarix US Portfolio May 2020

Resultss of the Optarix US Portfolio for the periods ending 31 May 2020 (USD based, after tax and fees):

Period	Total Return, Annualized
1 year	11.24%
2 years	7.40%
3 years	9.40%

Note: Past results are no guarantee or prediction for future results.

Commentary

Covid-19 continues to impact markets. However, as some countries have started to lift restrictions, it seems that in general the economic impact is moving into the center of the discussion. In the US the rate of unemployment was about 14.7% in May with states such as Nevada reporting up to 28% unemployment. Since the US is heavily relying on consumers, this the high unemployment isn't a good sign.

Equally, the savings rate in the US has increased to about 33% in May. This, too, indicates that people are holding on to their cash. We believe the main factor is probably the high uncertainty about their economic future in light of possibly losing or already having lost their jobs.

We wouldn't be surprised to also see an increase of foreclosures in the real estate market. This in turn would be bad for mortgages and therefore on the banking and finance sector. Already shares of banks appear to be out of favor judging from their stock performance relative to the overall market in May.

The stock market seems to have cooled down in May. The volatility is not as high as it was in March and April. The number of trade signals created by our systems has return to somewhat more normal from their higher levels in February, March and April.

Overall the results for the periods ending 31 May 2020 are quite satisfactory. Our algorithms demonstrated good performance even during times of very high volatility. The mix of positions suggests that it was appropriate for the scenario. Obviously, we will continue to fine-tune those algorithms by considering additional insights we collected over the last few months.

As always, please share your thoughts in the comments. Thank you!

Trading out of boredom?

A Bloomberg article that we found on Yahoo finance caught our attention today and we would like to share a few remarks.

Trading vs Rebalancing

This is not the first time that we've heard about retail investors placing a higher number of buy and sell orders since the coronavirus lockdown started. Most (if not all) of the online brokers serving retail investors have a note on their website along the lines that they are experience a much larger number of customer service requests. In some cases we observed that brokerage websites also showed signs of stress, e.g. some data not updating as quickly as it used to.

So there is some evidence that there are more orders being place, whether that is for stocks or options or other derivatives. We believe that trading, in particular day trading where you start and close a position on the same day, does not fit our investment preferences.

Having said that, we also observed an increase in the number of orders we placed since beginning of the year. All of those orders, however, were to rebalance our portfolio. Based on our data, there were more positions requiring rebalancing due to the significant fluctuation of the stock markets. There were days with declines or increases of 10% and more.

Not all stocks that we own moved to the same degree, though. Throughout the last few months and this is still ongoing to a lesser degree, there is a high uncertainty as to the effect of the coronavirus on particular companies and sectors. Because of this uncertainty, it appears as if "favorites" change within days.

As a result there was an increased need to rebalance our portfolio and keep all positions closer to the target allocation. The upside was that the vast majority of these adjustments resulted in additional gains due to buying at lower prices (the stock was "out of favor") and selling at higher prices (the stock was "in favor"). All of those buy and sell signals were created by our algorithms, so all we had to do was approve the suggested orders.

This kind of "trading" can help to improve the portfolio performance. Our data shows that without those short-term trades the performance would be lower. Still, this is no day trading. There was not a single cases where we started a position then closed it within the same day. Equally there was no case where we traded the same ticker symbol twice on a given day.

Therefore in our view rebalancing helps with performance. However, we are staying away from day trading.

Technology Sector

The Bloomberg article also quotes a co-head of derivatives strategy at a trading firm, referring to "message board trading" when people buy or sell based on whatever they read at a given point in time. He mentioned Apple Inc (AAPL), Stitch Fix Inc (SFIX) and TripAdvisor Inc (TRIP) as affected by this type of "trading".

For day traders it may make sense to look at individual stocks. However, if you take a longer term view then looking into the technology sector may make sense as long-term position in a portfolio. So instead of trying to make money as an amateur day trader with individual stocks it might make more sense to just buy into a basket of companies and keep that investment for a very long time.

Buying a basket can be achieved with exchange traded funds (ETFs). For the technology sector low-costs funds include SPDR Select Sector Fund - Technology (XLK) or Vanguard Information Tech (VGT). There are others more but these are good starting points for further research. In all cases you should seek independent advice. And before making a decision you should definitely also find out the ETF's portfolio, i.e. which companies do they invest in.

Using an ETF also helps reducs the risk that is associated with a direct investment in an individual stock. If the company you pick gets into trouble then your investment is likely to loose quite a lot. That same stock in an ETF is only one of many, at times hundreds of companies, so the risk that is unique to that company has only a very limited impact on the ETF portfolio and therefore price.

As always, do your own due diligence and seek independent advice before making decisions.

References

Article: "Bored Day Traders Locked at Home Are Now Obsessed With Options": https://finance.yahoo.com/news/bored-day-traders-locked-home-152732093.html

Note that we do not receive any compensation for mentioning any product, e.g. ETFs, in this post.

Rebalancing 21 May 2020

For almost all decisions regarding increasing or decreasing a position in our US portfolio we use a proprietary software. Today, this resulted in the following changes.

We reduced our position in Lowe's (LOW) at a price of about USD 120.79 per share. The average unit costs for the shares was USD 96.45. This represents a capital gain of about 25%. This is a satisfactory result for a position that we started in August 2019 only.

Again, we also reduced our position in Carrier Global Corporation (CARR) at a price of about USD 19.29 per share. The average unit costs for these shares was USD 14.465, so this is a capital gain of a little over 33%. This, too, is a very good result given this position started only on 03 April. The CARR position is quite interesting in that between 03 April 2020 and 28 April 2020 our software suggested increasing this position several times at price up to about USD 16.90. From 30 April our systems started to create several sell signal with prices starting at USD 17.68 and then increasing to USD 19.29 today.

One of the position swe increased today was Technology Select Sector SPDR Fund (XLK). We started this position on 15 May and increased it several times including today. As of today the average unit costs are at about USD 95.70. As always we intend to hold this position for at least 10 years if not longer, although we may increase or decrease over time based on our algorithms.

Hormel Foods Corporation (HRL) was the other position we incresed today at a price of about USD 46.10. This is also an interesting position in that our systems created several sell signals between 19 March 2020 and 02 April 2020 at prices between USD 46.70 and USD 48.50. Today our algorithms changed its mind and send a buy signal.

Reducing CARR; Increasing XLK

Rebalancing

As part of the continuous rebalancing of our US portfolio, today we reduced our position in Carrier Global Corporation. The position was started early on 03 April 2020 when Ratheon and United Technologies (UTX) merged into Ratheon Technologies (RTX) and at the same time spun off Carrier Global Corporation (CARR) and Otis Worldwide Corporation (OTIS). Since this spin-off we added more shares in CARR. Today we sold some CARR shares at USD 18.51. With unit costs at about USD 14.46 this represents a gain of about +28%. An excellent yield for a holding period of about 7 weeks.

With the proceeds we increased our position in SPDR Select Selector Fund - Technology (XLK), which we had started on 15 May 2020. The reason we added XLK to the portfolio was the observation that over the last few years growth stocks and in particular technology stocks outperformed value stocks. Dividend Aristocrats are a very solid base investment and represent value stocks.

We picked the technology sector as by and large the age of internet, cloud, Artificial Intelligence (AI), big data and [insert your favorite technology buzz word here] has barely started. Previous technical revolutions such as the industrial revolution or the Age of Steam had what Carlota Perez calls an "Installation Phase" followed by the turning point. We agree with Perez in that we have most likely have reached that turning point for the Age of Information and Telecommunications. We believe that for the next few decades technology companies should be well positioned to benefit from what we think is a long-term trend. Companies such as Amazon, Google or Microsoft are just the beginning. There are many more to follow.

To spread out the risk and only gradually add technology stocks we decided to utilize an Exchange Trade Fund (ETF) to start this position. At some point we may decide to add more direct investments in technology companies to our portfolio. As of writing we already have positions in Apple (AAPL), Microsoft (MSFT), Atlassian (TEAM), Nvidia (NVDA), Texas Instruments (TXN) and similar more.

Do not assume, though, that we are moving away from dividend aristocrats. Instead we believe that those still represent a very sold core investment. Therefore we continue to own shares in all 66 dividend aristocrats. We simply are "spicing up" the portfolio with some investments in the technology sector where we believe we have a sufficient understanding of the long-term opportunities of the company in terms of benefitting from the Age of Information and Telecommunications.

By mixing in some technology stocks to the dividend aristocrats we expect the performance of our overall portfolio to be between dividend aristocrats alone and the S&P 500. In other words, we expect our specific portfolio structure to perform better than the dividend aristocrats alone.

References

For more information about the work of Carlota Perez in particular her book "Technological Revolutions and Financial Capital" see her web site at http://www.carlotaperez.org/

We do not receive any benefits from any of the source listed in references.

Results Optarix US Portfolio April 2020

Results of the Optarix US Portfolio for the periods ending 30 Apr 2020 (USD based, after tax and fees):

Period	Total Return per year
1 year	-1.48%
2 years	5.24%
3 years	7.92%

Note: Past results are no guarantee or predection for future results.

Commentary

As the uncertainty persists caused by the spread of the corona virus, markets have recoved somewhat from their lows on 23 March 2020. While some comentators thought that we'll see a V-shaped recovery other voices increasingly anticipate a slow and prolonged recovery.

Our view is that much depends on how fast the economies can be opened up again in a safe way. The process would be much helped if virus testing would become comprehensive to detect and contain new outbreaks, if a medication became available to help with the treatment and in particular if clinical trials that have already started would demonstrate effectiveness with little or no side effects in humans. As of today, even the testing is not reliable in some cases as reports of false negatives for some tests show.

Throughout the downturn of the markets from their heights in February, we have kept all positions. In addition we've continued to balance positions. We saw a need for an increased number of rebalancing in the last few months which we believe was caused mainly by two factors. The first factor was the high volatility in the market in general. The other factor was the uncertainty about how well each company would handle the impact of the virus on their business. Underlying all of this was also the influence by the extreme changes in the oil price. The oil future was at some point at a price of minus USD 40.00 which clearly is completely out of whack.

Using rebalancing we benefited both from selling as well as buying opportunities which helped improve our portfolio's performance. It also appeared that more short selling for dividend aristocrats happened because of the high uncertainty. As a result we also benefitted to a very small degree from payments from share lending.

Looking forward we believe the uncertainty will slowly reduce over the next few quarters. We intend to stay invested and also re-invest all cash flows. With shares of high quality companies - and dividend aristocrats as a group are - we are confident that we continue to be well positioned for the long run.

As always you're welcome to leave your comments and thoughts on this below.

Results Optarix US Portfolio Mar 2020

Results of the Optarix US Portfolio for the periods ending 31 Mar 2020 (USD based, after tax and fees):

Period	Total Return per year
1 year	-9.97%
2 years	-0.70%
3 years	4.54%

Note: Past results are no guarantee or predection for future results.

Results Optarix US Portfolio Feb 2020

Results of the Optarix US Portfolio for the periods ending 29 Feb 2020 (USD based, after tax and fees):

Period	Total Return per year
1 year	4.67%
2 years	4.53%
3 years	9.41%

Note: Past results are no guarantee or predection for future results.

Results Optarix US Portfolio Jan 2020

Results of the Optarix US Portfolio for the periods ending 31 Jan 2020 (USD based, after tax and fees):

Period	Total Return per year
1 year	18.86%
2 years	7.46%
3 years	13.87%

Note: Past results are no guarantee or predection for future results.

Increased Texas Instruments (TXN)

We started our position in Texas Instruments (TXN) in October 2019 right after the markets were disappointed in their quaerterly results back then. The share price had just dropped by about 10% at the time, which to us looked more like a "for sale" sign. We had TXN already on our shortlist for new positions, so that drop was a great opportunitiy. We got an average share price of USD 119.

Last week Friday was a weak day at the stock exchange with the major indices decreasing between -0.58% and -0.93%. In this market, TXN was down about 3.1% (though not as good as the -10% last time), so we felt this was a good opportunity to buy more of them. The average share price this time was USD 130.

As we wanted to keep our exposure to the technology sector and since we just reduced our Nvidia (NVDA) position, increasing TXN was a good option in our opinion. We like TXN because of the maturity of it as a company and also because they have delivered increasing dividends since 2004. While they do not qualify as a dividend aristocrat just yet, a track record of 15 yearly increases is quite impressive, too. Also, TXN is mostly active in analog applications which is quite different to chip manufacturers like Intel (INTC) or Advanced Micro Devices (AMD).

Going forward, if there are other opportunities such as weak market or a weak TXN share price, we will consider adding to our position, provided the investment story remains very good.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Reduced Nvidia (NVDA) after gain of 68%

On Wednesday, 23 Jan 2020, we reduced our position in Nvidia (NVDA). The average share price was about USD 252.

In May 2018 we started this position at a price of approximately USD 250. We never try to time the market as based on all the evidence, no investor gets the time right long term. At the time we believe that USD 250 was a good price but we were wrong. Nvidia had pushed a lot of inventory into the channels mostly driven by the bitcoin mining hype at the time. In the subsequent quarters, the company couldn't sell as much product as they had to wait until the inventory in the channel was back to normal. They simply overestimated the demand.

As a result the quarterly results in the subsequent quaerters disappointed the markets and the share price dropped to less than USD 150 in May 2019. We then decided to add to our position at that time.

By reducing our position we are essentially selling some of the shares we bought at USD 150 at a price of USD 252, which is a gain of approximately 68%. In addition we continue to be optimistic for Nvdia but trimmed back the position that grew too big for our taste within the portfolio. We believe that Nvidia's products continue to be well-positioned for graphics and artificial intelligence (AI) applications, both on-site and in the datacenter.

When you get the timing wrong - or more specifically, when the timing turns out to be wrong - then it makes sense to have another look at the company and consder buying more shares if all information and data available point confirm the investmen story. In our experience, if the investment story was good from the beginning buying more at the reduced level can boost the returns.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Rebalancing: Chubb (CB)

On Tuesday, 22 Jan 2020, we increased our position in Chubb (CB). The average share price was USD 154.00.

We continuously review all positions with the assistance of our computer programs. This week we determined that CB had a lesser share in the US portfolio than it should have. Chubb is an S&P 500 dividend aristocrat, which means it has increased its dividend every year for at least 25 years. We are confident that they will continue to do so.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

(The Chubb logo is a registered trademark of Chubb Limited)

Rebalancing: Chevron (CVX)

On Monday this week (13 Jan 2020), we increased our position in Chevron (CVX). The average price per share was USD 116.47.

We regularly review our positions and adjust them based on information available at the time. CVX was cheap relative to our other positions, so we decided to add more of this dividend aristocrat. While we don't see a lot of upside for big oil in general, the dividend yield for CVX is about 4% which is quite attractive by comparison.

We hold positions of companies that do not pay dividends (yet). On the other hand having a stream of cash separately from selling shares at a gain, provides additional options for managing our portfolio.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Rebalancing: Walmart (WMT)

As previously mentioned, we increased our position in Walmart (WMT) on the 06 Jan 2020. The average price was USD 117.40. Orginally, we started this position in September 2019 with an average price of USD 114.73. We continue to be optimistic that WMT will increase it's dividend on a yearly basis, which is the reason we bought the shares in the first place.

Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.

Results Dec 2019: -0.39% Active Return vs S&P 500

US Portfolio Performance

Because Dec 2019 saw a weak market, the yearly returns for the 12 months ending 31 December 2019 are somewhat misleading. Nevertheless, for our US portfolio we now have data for 3 years since we decided to share our experiences with investing in US equities.

We didn't quite achieve the same return for the twelve months ending 31 Dec 2019, falling short by -0.39% compared to the S&P 500. However, a gain of 28.49% is still impressive in our view.

Looking at the performance over two and three years, the results are quite satisfactory, too: +10.59% per year since 31 Dec 2017 and +14.81% per year since 31 Dec 2016. All of these numbers are after taxes and fees. The following table summarizes these results:

	1 year	2 years	3 years
Optarix US	+28.49%	+10.59%	+14.81%
S&P 500	+28.88%	+9.93%	+13.00%
Optarix US Active Return	-0.39%	+0.66%	+1.81%

Values are annualized for periods longer than 1 year.

Here are the updated graphs for both the active return over 1 year periods as well as the information ratio of the Optarix US Portfolio against the S&P 500, both for the time from December 2018 to December 2019.

Please note that past performance is no guarantee for future performance.

In Other Developments

With the killing of an Iranian general in Iraq by a US-american drone, tension in the middle east have increased. Although at the moment it appears that both sides try to dial back their threats and responses, there is no gurantee this conflict is over yet.

Meanwhile the Brexit, the trade wars and the reduced economic outlook for many economies and the world as a whole will keep a lid on markets. We believe it is very unlikely that 2020 will see returns similar to 2019. Later this year, we'll also start seeing the influence of pools and election results in the United States.

At least the Brexit has become a bit clearer. The United Kingdom will leave the US by end of January 2020. Then a transition phase starts that is scheduled to end 31 December 2020. It remains an open question if both sides, the EU and the UK, will be able to negotiate a free trade agreement by then. As this matter evolves, its impact on financial markets may increase again.

Changes in our Portfolio

In December we reduced our position in Microsoft (MSFT). We increased our positions in Franklin Resources (BEN), Federal Real Estate (FRT), Automatic Data Processing (ADP), Wallgreens Boots Alliance (WBA) and Aflac (AFL).

Suggestions for Your Own Portfolio

Generally we suggest an equal weight portfolio. That means that all your positions have roughly they same market value. Obviously this changes over time as some positions go up in value and some may go down. If that happens rebalance by buying/selling to get each position back to their average.

Increase

With this idea in mind, here are some suggestions for companies for your consideration to add to your portfolio. These are all dividend aristocrats. As of writing the look more attractively priced than the average.

1. Cardinal Health (CAH)
2. Franklin Resources (BEN)
3. People's United Financial Inc (PBCT)
4. AT&T Inc (T)
5. Wallgreens Boots Alliance (WBA)

Decrease

Equally, if you have a position of one of the following and that position is above average in your portfolio, we suggest considering reducing them. Relative to all S&P 500 dividend aristocrats they are a bit more ambitously priced at the moment.

1. Becton Dickinson and Company (BDX)
2. The Sherwin-Williams Company (SHW)
3. Abbott Laboratories (ABT)
4. Brown-Forman Class B (BF.B)
5. S&P Global (SPGI)

As always, while we can make suggestions to consider, we cannot accept any responsibility for your investment decisions. We strongly recommend that you do your own due diligence, buy only what you understand, buy only what fits your individual objectives and circumstances, and in particular that you seek professional advice from your investment advisor.

Disclosure

We hold positions in all of the companies mentioned in this post. We also intend to add to our position in CVX in the next 3 trading days. We have no intentions to change any of our other positions.

Today's Rebalancing: Apple (AAPL)

Today we decided to reduce our position in Apple (AAPL) to some degree. Originally we started this position in July 2015 at a price of USD 125.00 per share.

Today we sold shares at a price of USD 299.40 per share. This represents a gain of 139%. This is a quite satisfactory result.

The proceeds are intended to increase other positions in our portfolio next week. At present candidates are Walmart (WMT), Franklin Resources (BEN) or A.O. Smith (AOS). Typically, the final decision is made on the day.


Disclosure: We hold positions in all of the companies mentioned in this post. Do your own due diligence and consult with a financial advisor before making financial decisions. This blog is for inspiration only. All responsibility with decisions you make is yours.