October is shaping up to be one for the bears. This month seems to resemble August 2015 in terms of market movement. The beginning of August was even the start of market turbulence that lasted until the end of 2015.
What both periods have in common? China. A few years ago, the bearish sentiment held the global markets in its claws in wake of a slowing Chinese market and the devaluation of the Chinese RMB. This time China also plays a role, but there are more worries:
- A trade war between China and the US.
- The Italian government not giving in to tight budget demands from Europe giving cause for concern it might affect other EU countries.
- Rate hikes (ripple effect on stocks).
- To a lesser degree, Khashoggi’s murder muddying the waters between the US and Saudi Arabia.
All the above concerns might not be a reason to trigger a global scare, but together they seem to have caused traders to cut their losses and unleash a bear market.
The final result is a portfolio that went from green to red in a matter of days and not even a little.
Even though I post fixed quarterly reviews of my portfolio, in certain cases I believe it’s interesting to provide a quick update when more extreme (positive or negative) movements take place, like now.
At the end of September, my quarterly report showed a portfolio in decent shape. My EUR stocks (both regular and ETF) were in the green double digits and my USD stocks were about to break even.
Fast forward only a few weeks and the picture is very different. The bears already gave me a nice slap. Talk about bad luck.
This is nothing worrying and dare I say, also expected? It’s the name of the game. Some bearish action is not strange when you look at the amazing bull run we’ve had the last 10 years(!). It was bound to happen.
Let us talk about actual dates and numbers. I created my personal portfolio on April 3, 2018. 6 months and 22 days later, I sit at -6.61% for my total investment (excl. dividends).
To give you an idea of what kind of impact the recent market developments have, I’ll share my biggest losers at the moment. Note that all three were, not that long ago, in green:
|ISHARES MSCI KOREA USD ACC (CSKR)||-21.38|
|ISHARES MSCI EM ACC (IEMA)||-18.08|
While painful I believe these last couple of weeks are a welcome change. It puts both my feet on the ground.
Frustrating in the short term, this bearish move is the perfect opportunity to let me look at my portfolio in a different light and reevaluate certain purchases or rebalance what I already bought. It offers better buying opportunities for certain overvalued stocks.
My top 4 of trackers I’m interested in, for completeness I’ve added their YTD as well:
- Core MSCI World UCITS ETF (IWDA | IE00B4L5Y983) — 1,81%
- S&P SmallCap 600 UCITS ETF EUR (IUS3 | IE00B2QWCY14) — 5,26%
- Core MSCI EM IMI UCITS ETF EUR (EMIM | IE00BKM4GZ66) — –2.13%
- NASDAQ Biotech UCITS ETF EUR (SBIO | IE00BQ70R696) — 4.77%
And my 2 favorite stocks I would like to have a (larger) share of:
It remains to be seen whether or not this drop is just the beginning or if we are already on the road to recovery by weeks end.
Do you have anything you fancy which has come into your sights thanks to the recent (minor) correction? Please, by all means, share and let us discuss.