Mechelany Advisors’ Investment Ideas are here to make our readers make profitable investments over different time-horizons. Our value oriented investment management style and research focuses on cheap companies with great and solid businesses to be held as core holdings in portfolios. We provide individual Investment ideas based on our multi-layered screening and valuation process combining structural, top-down macro, sectoral analysis, bottom-up stock selection and valuation analysis. Our Investment Ideas may be included in our Model Portfolio while some may not be included if they do not fit the global risk profile and asset allocation chosen at the time of selection.
Vaccines are staring to have an impact on the spreading of the pandemic and consumers are back in force, pushing economic momentum higher across the globe. The depth of the second dip will probably be shallower than initially expected save for some European countries where the lockdown measures amount to overkilling.
Inflation expectations have risen considerably, particularly in the USA, as commodity prices are flying and labor costs are also increasing sharply.
As a result bond yields have backed-up significantly and we are reaching a stage where US Government bonds are oversold.
As a consequence, we have been increasing gradually the proportion of US Treasuries in our Model Portfolio and today’s latest addition takes our total exposure to 38 % of our assets.
WE EXPECT A SHARP REVERSAL IN BOND YIELDS TO HAPPEN RELATIVELY SOON
THE BEST WAY TO PLAY THIS TRADE IS THE
iSHARES US TREASURY 20 YEAR + ETF ( TLT US ) FOR A TRADE
BUY iShares US Treasury 20+ TLT US @ 143.43
As the above chart shows, the TLT US has now fallen from 180 in March 2020 to 143 and is more oversold than at any time in the past 4 years.
We expect it to retrace back to at least 156 , a 9 % capital gain potential on the trade
MODEL PORTFOLIO Transaction Update 22 Feb 21
On our Model Portfolio today, we have continued to de-risk by taking some profits on our large Chinese Telecom positions after their spectacular run of the past two weeks, bringing our positions back in line with our norm of 2.5 % of the portfolio,
we have also taken some profits on PLATINUM ETF, while increasing marginally our position in GOLD MINERS
we covered our negative cash balances in EUR and Japanese YEN
and increased our position in US 30 Year Treasury bonds
New Asset Allocation
Our allocation to US Treasuries in now 38 % of the portfolio while our long equity exposure is now at 91 % against 86 % short positions.
Commodities are down to 13.37 %, and we are now long 17 % in EUR and 8 % in JPY
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