Outlook for February 2020

It’s earnings season and the investing world gets weirder by the day. In this bizzaro world largest companies in the world have their stock gap up 8% (Amazon) or gaps down 8% (Facebook) after earnings release. A move of this type was the domain of microcaps, not a $900B/$600B company. Regardless, the expensive market keeps getting more expensive and the pocket of opportunities keeps shrinking — atleast in the US market.

On the central bank front, the bond market is all but pricing in two rate cuts by the Fed. Liquidity still continues to flood the market which is evident as the money sloshes around in the system.

On this side of the border, the Bank of Canada is also starting to turn dovish in what appears to be an end of the rate hike cycle & future rate cuts expected.

Outlook for February 2020

My portfolio continues to chug along performing pretty well, but work is never complete on portfolio management. The two major themes that I am following lately are (i) a smaller number of positions, i.e., holding a more concentrated portfolio and (ii) raising the quality of my holdings — in my hunt for performance, some low quality names made their way into my portfolio, so I want to get rid of those and acquire stronger companies that can compound my capital over the long haul.

Even though I continue losing some of the weaker names, I am not done yet. I look forward to drop a few of these names in the coming months.

I am also currently fully invested with my current cash position less than 5%. This is the first time my cash position has dwindled to such a low amount since 2015-2016.

Portfolio as of Feb 1 2020 is as shown below:

Portfolio Transparency

One other major change going forward is that I intend to share my position sizing in percentage terms of my holdings. I have been considering it for a while, but shied away from disclosing too much information online. I believe that sharing this can be valuable both for myself as a feedback mechanism and others who are looking for such information.

Without further ado, following is the position sizing in our combined family portfolio as of Feb 1 2020.

Looking for investment ideas? Check out this Top Investment Picks for 2020, where 30+ investors present their top pick and a reason to invest in those securities.

What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.

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

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