Outlook for August 2019

Summer doldrums are here, but no loss of excitement in the markets. The Fed has followed through in its most telegraphed move ever to cut interest rate. A cut of 25bps was almost a certainty as the Jul 31st decision date came close.

However, it seems like Chairman Powell may have shown his hand a bit more than expected. Trump has been calling for further cuts and announced more tariffs on Chinese goods. This increased the bond market’s pricing odds of another cut in Aug/Sep. While the stock market is cheering on, history has shown that rate cuts are seldom bullish for the economy and markets. It remains to be seen how things play out in the coming weeks/months.

Outlook for August 2019

On a personal investment front, I intend to remain focused on high-quality companies & high-conviction investment ideas. Over the past few months, I have made a pivot to change my focus from the macro to micro. I do not intend to completely ignore macro, but plan on reducing the impact it has on my investment decisions.

I have also decided to reduce my total number of holdings and follow a more concentrated investment model. Instead of investing in, say my 15th best idea, I want to continue adding and building my position in high conviction ideas even if it means paying a bit of a premium on the share price. Look forward to some portfolio changes in the coming days/weeks.

As I revamp my portfolio, I am also paying closer attention to position sizing. I intend to structure my portfolio so that I have enough weightage on appropriate securities (there was a bit of an imbalance in the past) going forward. You can track my recent buys and sales here.

As of July 31, 2019 our portfolio is diversified as shown below.

Looking for investment ideas? Check out this Top Investment Picks for 2019, where 30+ investors present their top pick and a reason to invest in those securities.

I have also started putting together a series of posts for Investment Ideas, where I explore different ways of looking at companies and finding inspiration for further research.

What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Are there any stocks that you believe is a strong conviction buy here? Share with a comment below.

Full Disclosure: Our full list of holdings is available here.

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