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Blood in the Streets

April 17, 2024
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Wiko Steyn
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Wiko Steyn

Core Fund Update 12

 

The Federal Reserve came out with a clear message last week, you can shove your pivot up your Jackson Hole. Hedge funds, central banks, wealth managers, economists, policymakers and even many retail investors were clinging to every word of Jerome Powel during this year's Jackson Hole economic symposium. Unfortunately, the Fed pivot was nowhere to be seen and the key theme was still inflation reduction via demand destruction. 

Our view is that the economy is still too strong to expect the Fed to start cutting interest rates soon. Until we see significant signs of a slowing job market and a meaningful recession the Fed will stay the course. This might happen early next year when the economy starts digesting the latest rounds of interest rate hikes and quantitive tightening. We expect volatility to extend into the end of this year and even early next year before we get more clarity about the market direction.  The good news is bad news, and bad news is good news narrative might also continue during this period.

 

Today is Warren Buffet's 92nd birthday and as always we thought a few quotes might be applicable. We see many comparisons between today's market and that of 2008. Buffet wrote an article during that dreadful financial market which is very relevant today. The article was titled Buy American, I am in which he opened with the sentence 

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So, I've been buying American stocks.


Had you purchased a simple S&P 500 ETF on the very same day Buffett did, you would be up handsomely on your position, even after the recent sell-off. Most investors will always claim a buy low, sell high mantra and proudly boast about their long-term investor badge, but the reality is quite different. Investing requires an amount of courage, composure and most importantly patience to witness your conviction come to fruition decades later. Buffet went on to say:

Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over

 

We remind our readers that we choose to invest in individual stocks because of a burning passion. If that does not describe you, we advise our readers to heed Buffet's advice and stick with index funds since 83% of actively managed funds perform worse than the S&P500 index.

 

Portfolio Update Summary

We are adding to three wide-moat stocks in our Core Fund since the market has put them on sale again.  

  • Buy $250 ADBE at $372.46
  • Buy $250 CRM at $158.81
  • Buy $250 MSFT at $262.02
     

 

Disclosure

This article is not financial advice and is based on the author's opinion. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk, and a financial product's past performance does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. The $20K in the Core Fund is not real money and only a demonstration of a typical portfolio. This is an actively managed portfolio, where we will buy and sell positions as we deem fit without any regard for taxation. Remember, all selling of stocks triggers a tax event in most countries and it is the investors personal responsibility to always remain tax compliant.


 


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