Mechelany Advisors’ MODEL PORTFOLIO has been running in a fully transparent way since January 1st 2014. Its Purpose is to implement the conclusions of our research analytical process in a portfolio managed using institutional liquidity, diversification, risk management and asset allocation processes. In our TRANSACTION UPDATES we keep our reader informed in real time of the transactions in our MODEL PORTFOLIO
As highlighted many times over the past few weeks, global markets are in a stage of euphoria with many bubbles around while valuation are at extremes never seen in the past, fully discounting the best in terms of earnings and economic growth.
Speculation abounds and is reaching unsustainable levels through call options and cryptocurrencies, the US tech leaders are losing momentum and bond yields have now doubled since their through of March 2020, something that is clearly not taken into consideration by the financial markets.
The probability of a severe correction in the coming two months has risen considerably and time has come for investors to reduce exposure and de-risk their portfolios in our view.
This is what we are doing gradually in our MODEL PORTFOLIO.
In China, we have added Petrochina and increased and averaged down on GuangShen Railways, the main beneficiary of Hong Kong’s further economic integration into China and a strong recovery play form COVID.
High oil prices have triggered a significant BUY signal on Petrochina
In Japan, we reduced our exposure by taking profits on our Japanese Small Cap ETF.
in Commodities, we took 70 % profits and reduced our exposure to Platinum to keep the position towards 5 % of the portfolio.
In the Europe, we took significant profits on AEGON, further reducing our European exposure.
In the USA, where we are the most concerned, we took profits on the second part of our Biotechnology ETF, cut our position on Esperion therapeutics after a wave of downgrades by analysts ahead of their earnings on 23rd February , took our profits tactically on VIATRIS and shorted more Apple shares as the shares are on the verge of a significant technical break down. We also re-instated our short position on the Nasdaq. TESLA is breaking down below 800, a sign that could be giving a lead to the whole market.
Finally, we have added top our US Treasury bond positions by adding 10-year US Government bonds to our portfolio. Bond yields are reaching technical extremes and a sharp reversal is on the cards very soon.
In a nutshell, time has really come to take money off the table.
US, European and Emerging markets are losing momentum while China is in full swing in a vertically accelerating phase.
New Asset Allocation
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