May was a mixed month for investors. The growth stocks continued climbing and reaching all time highs while the value stocks continued suffering (as expected), although we saw a bit of a rotation from growth to value in the last few days of May.
Some secular tailwinds have helped the tech-focused growth stocks — such as SaaS, e-commerce, fintech etc. My focus remains on this area as we adjust to the new normal, looking across the chasm of this pandemic.
On the central bank front, the Fed has reduced the daily liquidity to “just” $5B a day. (Can we expect another taper tantrum?) The Fed indicated that negative rates are not a good tool, but as we have seen elsewhere, it may be out of the Fed’s control. The market always dictates what an appropriate yield is & I will be keeping a close eye on this front.
Outlook for June 2020
I continued deploying a lot of my capital in May as I see plenty of growth opportunities and taking some risk. Some of my stock picks rose 40-50% in one week (!!) after earnings release and good outlook. Although tempted to take profits right away, I believe that the future is brighter for these names, so I have decided to let those investments grow over the coming years.
My portfolio also hit all time highs in May and I still have approx 17% in cash — which gives me enough firepower in case of pullbacks. I am pretty comfortable with that mix right now, although I am considering shedding some of my bond holdings in coming weeks.
Portfolio as of Jun 1 2020:
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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.
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