PORTFOLIO TRACKER
PORTFOLIO TRACKER
JOHN O’DONOGHUE
People can be very odd: especially in large groups. As far as I can work out, this equity rally, which has now been running for 9 weeks (and counting …..), is largely based on news that “it is not as bad as expected”. Thus we see the ‘stress tests’ on 19 major US Banks conclude that 10 of them are still in need of additional capitalisation (to the tune of $75 billion) to be able to withstand the expected upcoming downturn in the markets. Market reaction? The Dow advances nearly 2% in a day, and the S&P 2.5%. AIG, who last week stated that their 1st Quarter 2009 operating loss was $4.35 billion, saw their share price gain 3% on the next day. In the context of their Q4 2008 loss of $62 billion, the largest in US Corporate history, I suppose this was a brilliant result of course. Still, it does seem strange to me that the markets have been so buoyant on the grounds of news being less bad rather than anywhere near good. The scale of the rally has been impressive since early March: the S&P 500 has gained over 27%, the Nasdaq nearly 29%, the good old FTSE 16%, and all of them eclipsed by the Hang Seng with +40%. The year – to – date figures are less remarkable, but still in positive territory.
As a result of all this activity our medium risk portfolio has had a bumper month, and has actually put on it’s second largest monthly growth ever since inception back in September 2003: +7.3%, a gain of just over $29,000! This is not really surprising in the circumstances, there have been four double digit percentage gains on our holdings over the month, with the HSBC Brazil fund out front with +22%. Our recent purchases have contributed very well to the total as well: with our Genentech holding having disappeared as a result of a takeover from Roche in late April (we made a profit of $1,650/ 16% after 6 months), we spent part of the cash account on an ‘out of the box’ Energy stock: please welcome CGG Veritas to the portfolio. This French company is a world leader in prospecting data analysis in Oil and Gas, and software and hardware provision to all competitors in the same field. I have been watching this company for over a year, and believe this is now a good time to buy. We did so on the 29th April, and growth has been +20% in the last two weeks. At risk of suffering ‘Hubris is followed by Nemesis’ I would point readers also to the multiple holdings in the negative on the spreadsheet displayed. Investing is not a ‘forward march’ to profits, there are bad times, often very bad times, as well as good times. Be warned, please. Investing can be really good, but also can go the other way pretty quickly!
That said, another issue, not to do with portfolios: I have recently read articles by financial advisors emphasising the need for investors to seek advice only from regulated advisory companies, and I wholeheartedly agree with this. Most companies that deal with expatriates in Cyprus operate under the Insurance Law, and are regulated by the Insurance Companies Control Service, or Superintendent of Insurance. A few are registered with, and regulated by the Cyprus Securities & Exchange Commission. Have a look at the ICCS webpage under www.mof.gov.cy/mof/mof.nsf/DMLicsa_en/DMLicsa_en?OpenDocument .
John O’Donoghue is a Consultant with Caratfin Insurance Advisers Ltd. Tel: 22 464190. e-mail: [email protected] and [email protected], www.caratfin.com. Member of CIFSA. The Company is regulated by the Superintendent of Insurance under License no. F.O.S.7
