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June has been a very tough month. Luckily July is going much better, and markets are bouncing quite strongly.
Especially in the last two days markets reacted in a very positive way to the Fed meeting and to Powell press conference: despite a 75 bps rate hike, the stock market increased strongly, even supported by the good results of some tech megacaps.
So far, in July, US equity indices are positive:
As you can see above the bounce has been larger for tech stocks. Despite that, the Nasdaq YTD performance is still highly negative: -23%.
It is very relevant to highlights that even if we are seeing a good bounce, troubles for stocks may not be over. The macro picture is still very uncertain, and the recession risk is rising as several macro data suggest.
Now let’s see how the portfolios are going.
PURE STOCKS PORTFOLIO
This long-only portfolio, exclusively composed of stocks is finally starting to recover.
So far, the July return is close to +7%, slightly higher than the S&P 500, even if the portfolio is still lagging the index since inception.
The current equity rally is a good news, but now the question is: should we buy more or not? I am still a bit skeptical, and I would prefer to maintain the current 5% stake of cash, and to make a switch instead of directly buying a new stock.
Even if the current earnings season is going better than expected, I am still not convinced to buy, considering that the S&P 500 is back above 4,100. This can be a bear market rally, and I prefer to buy when I see good deals.
Let’s see the current portfolio holdings: