by Tom Konrad, Ph.D., CFA
The coronavirus pandemic no longer has the United States by its financial center throat, the New York City area, but is instead is now gnawing ravenously at its arms and legs. In June, the stock market seems to be just starting to get a clue that this is also a bad thing, leading to a month of volatility and general consolidation.
Europe, in a display of relative competence, has been much more effective than the US at getting the pandemic beast under control, and so investors looking for safe havens might do well to look there. In my 10 Clean Energy Stocks for 2020 model portfolio, the European stocks Veolia (VEOEF/VEOEY), Red Electrica (RDEIF/REDIY), and Valeo (VLEEF/VLEEY) have all been outperforming the portfolio as a whole, and I expect them to continue to do so.
I continue to expect the this period of consolidation to end in a significant market decline, possibly testing the March market lows. This virus is not done with us and the willful blindness of Trump and the Republican politicians who unquestioningly follow his lead are ensuring that it will get much worse before it gets better. As more states shift from re-opening to re-closing, the economic damage will continue to mount, and eventually investors will take notice.
I continue to reduce my stock market exposure by taking gains and selling covered calls.
In this hiatus between earnings seasons, news for individual stocks has been minimal, but the model portfolio has continued to recover with small gains in almost every position.
Performance for the portfolio as a whole, my real-money managed strategy GGEIP, and their benchmarks are shown below:
Final Thoughts
Most years, the 10 Clean Energy Stocks model portfolio has tracked my real money managed portfolio fairly closely, and both have outperformed both benchmarks for the last five years.
2020 is of course unique in many ways, but it bothers me that the model portfolio is underperforming so badly. This is largely due to my long term policy of minimizing trading in the 10 Clean Energy Stocks strategy. I adopted this policy because I want the model portfolio to be something that the average investor can replicate without having to pay too much attention to their portfolio.
Most years, the lack of trading has not cost much. With the rapid stock market gyrations this year, it has. I hope my notes about my shorter term market outlook in these monthly updates have allowed many of you to beat the model portfolio as well.
No comments:
Post a Comment