BEHOLD: My New GARP Portfolio Has Been Unveiled

Twice per year I update a portfolio in Exodus, that is designed for longer term investors. Its credo is to find growth at a reasonable price (GARP). Moreover, I take it very seriously and truly put great effort into selecting the 15 stocks that comprise the portfolio.

Excluding dividends, the first half portfolio had a median return of almost 2%. This is a long only portfolio and it will not protect you from the many horrors that are to come. But I’ve built it to have some staying power, populated by somewhat conservative names, but also mixed in with some of a degenerate varietal.

FREE TRIALS have been suspended, indefinitely. So if you want to become privy to my calculator brain, you’ll just have to subscribe.

Good news everyone. The Chinese have done so many awesome things over the past few months, the gurus at Goldman have upped the chances of China being added to the MSCI index from 50 to 70%. There are still some lingering items left on the agenda that might need to be addressed before inclusion, such as onerous repatriation limits, anti-competitive clauses and a sundry of wanton corruption not seen since the days of Sodom and Gomorrah.

Chinese regulators are pressing hard to get their $5.6 trillion house of smoke and mirrors added into the index, likely to get liquid on a fresh group of unsuspecting speculators.

It’s also worth noting that 311 stocks on the Shanghai and Shenzen indexes are still halted since March, representing 10% of the stocks listed there.

On this news, Chinese stocks are soaring this evening, higher by 2.2%. This percent gain might vacillate into the closing minutes of trade, as Chinese regulators pull levers and suspend trading for any companies that get in the way of a good rally.

Not bad for a community organizer.

Barack will be the first President to stay in DC since Woodrow Wilson left office in 1921. The house, owned by former Clinton press secretary, Joe Lockhart, is valued at around $6 million and should fetch a monthly rent of just $22,000.

It’s located in the Kalorama area of DC. The House is quite cozy at 8,200 sq ft, fixed with 9 bedrooms and 8 1/2 bathrooms.

This bloke doesn’t like Japanese stocks. Apparently, the Japanese are very keen on experimentation, always in the lab cooking up new schemes (extra unit 731). In regard to the world of negative rates, the Japanese are innovators, undergoing a most heinous experiment in monetary policy, called ‘Abenomics’.

UBS says it’s horseshit and it’s not working and you’d be better off taking horse kicks to the face than placing liquid assets over there.

It was the best of times and the worst of times. Markets took off like a fucking tunnel digger, early in 2016–ransacking the portfolios of millions. While Peter Thiel was conjuring up revenge plots against fellow homo-hammerer, Gawker’s Denton, world markets peered over into the abyss and said ‘not interested.’

Since mid-February, gains have been bountiful. Providing you were able to navigate the rugged terrains, you made a King’s ransom long commodity related stocks, since $26 WTI. If, however, you kept the same old boring, diversified, long-term portfolio, you likely made less than 3.6%.

Using some broad stroking data points, via Exodus, here were the standout industries.

Downside

Solar -33%
Nuclear -27%
Dept Stores -23%
Biotech -22%
Drugs-Generic -21%
Tankers -20%
Airlines -14%

Upside

Silver +114%
Gold +78%
Industrial Metals +29%
Steel and Iron +21%
Synthetics +20%
Foreign Utilities +19%
Water Utilities +17%
Waste Management +17%
Insurance Brokers +15%

Of the mega-cap stocks, here’s what worked and didn’t.

Downside

AAPL -3.5%
GOOGL -3.5%
MSFT -4.3%
WFC -5%
NVS -3.4%
DIS -4.5%
BAC -11%
TM -18%
INTC -6.7%

Upside

XOM +17%
BRK’a +8%
FB +14%
AMZN +5.4%
T +16%
WMT +17%
PG +4.2%
PFE +9.2%
VX +12%

Anyone else notice something about the data I just posted? Let’s see if we’re working on the same wavelength.

TLT was up 8.5%
PHK (PIMCO High Income Fund) was up 22.5%
AWF (Alliance Global Income Fund) was up 15.5%
PCK (Cali munis) were up 10.5%

Get it? Okay, I’ll make it unforgettably clear.

The median return for all 4,322 stocks in Exodus was 2.04% for the first 6 months of the year. If we filter out companies who did’t pay dividends, the year to date gains skyrocket to 6.1%. When I exclude companies whose market caps were less than $1 billion, gains jump again to 7.55%.

Stocks whose market caps were under $1 billion posted a collective -5.2% return for the first half.

In summary, markets sought out and found yield. That’s the big story. The small story is how we’re in a bull market again and how, eventually, this drive for yield trade is going to unravel.

Show me the evidence.

The Bloomberg rumor mill is reporting that FCX is in discussions to sell some of their North and South American assets, a deal that could fetch as much as $2 billion. The company, bedraggled by debt, has been selling assets all over the world since February. The net result has been of a positive nature, with the share price more than trebling, yields on their bonds plunging, and overall sentiment bullish.

Freeport-McMoRan North American assets include seven open-pit copper mines, Morenci, Bagdad, Sierrita, Safford and Miami in Arizona, and Chino and Tyrone in New Mexico, and two molybdenum mines – Henderson and Climax in Colorado.

Its South American assets include two copper mines in South America – Cerro Verde in Peru and El Abra in Chile

Citic Metals is one of the rumored buyers, for a package deal that would include 20% of all or some of the above assets.

People are shorting the great wall’d nation in size, via well coordinated ETF attacks. God willing, such bets will precede heinous drawdowns that will trap longs, not so different from a burning carnivale house. The last time short interest was this high, Chinese stocks shed $5 trillion in market cap.

Short interest in the CSOP FTSE China A50 ETF climbed to 6.1 percent on May 25, the highest level since April 2015, two months before Chinese equities peaked, and up from 1.3 percent at the end of last month. Bearish bets in the U.S. traded iShares China Large-Cap ETF jumped to a two-year high of 18 percent of shares outstanding on the same day, up from 3 percent a month ago, data compiled by Bloomberg and Markit show.

“Some macro funds are seeking opportunities to short index futures to play the currency movement,” said Wenjie Lu, Shanghai-based strategist at UBS Group AG. “A higher chance of a Fed rate hike means there’s pressure for the yuan to soften.”

Unlike other indices, the Shanghai is vacillating at the lows–off by more than 20% for the year–entrenched and mired in a bear market. There’s blood in the water, as evidenced by the yuan trading at 5 year lows and the large bets against equities.

What the fuck were the creators of this ad thinking?
My head is spinning too much from last night to properly rip this to shreds.

“We express our sincere apologies and sincerely hope that the many internet users and the media will not read too much into this,” Shanghai Leishang Cosmetics, the company that owns the Qiaobi brand, said in a statement at the weekend.

“Everyone can see that we are consistent in equality toward, and mutually respect, all countries, no matter their ethnicity or race. In fact, we are good brothers with African countries,” Hua told a daily news briefing.

Government officials often insist that China enjoys largely harmonious ethnic relations, though tension has led to violence, particularly in its western regions of Tibet and Xinjiang, which have large minority populations.

The Global Times, a popular tabloid known for a nationalistic bent, said in an editorial Western media coverage was “too extreme” and China had no problems with discrimination.
“There have been many evils during the development of the West in this era, and racism is one of them,” the paper said. “China’s social process hasn’t been the same experience, so using the same yardstick to measure China’s performance will lead to results that are inevitably absurd.”

Fed’s Bullard is out tonight talking greasy about rate hikes. But you already knew this. Every single Fed member has indicated that rates are going higher this summer, including Yellen. This is the narrative.

“My sense is that markets are well-prepared for a possible rate increase globally, and that this is not too surprising given our liftoff from December and the policy of the committee which has been to try to normalize rates slowly and gradually over time,” Bullard told a news conference after speaking at an academic conference in Seoul.

“So my ideal is that if all goes well this will come off very smoothly.”

Will this send stocks lower? Of course it will. Don’t be stupid.

With The Donald up in the polls, trouncing over the troll, is the recent surge in stocks a reflection of a Trump win and a return to the greatness inherent in all Americans?

Discuss.