Kim Bolton, president and portfolio manager of Black Swan Dexteritas
Focus: Technology stocks

MARKET OUTLOOK

The 2019 global stock market rally continued through March, albeit at a slower pace. The “reasons” are the same as they’ve been since late December and include a mix of fundamentals (accommodative monetary policy, subdued inflation, green shoots of improved growth out of China, a better-than-feared earnings season, reduced trade tensions) and investors' fear of missing out (market participants traumatized by November and December resulted in enormous de-risking into January, which meant very low positioning levels, while sentiment is still more skeptical and cautious rather than euphoric). The technical structure of the markets are not as constructive for a continuation of the equity market advancement; the majority of the broad market indexes and particularly the technology sub-sectors, are exhibiting extreme overbought conditions. Finally, in terms of capital flows, the bulls will temporarily be losing a significant buyer of stocks, as the market is set to lose the support of some buyback action in the first two weeks of April with 80 per cent of the S&P 500 in a so-called blackout period ahead of first-quarter earnings, which starts in a couple of weeks.

The softening global growth fundamentals are troubling, a number of technical indicators are flashing warning signs and dwindling capital flows indicate cautious investor sentiment. The risk/reward stock market probabilities are skewed: the stock market’s upside, in the best case scenario, could be another 5 per cent, but the downside risk is easily 10 to 15 per cent. We have taken profit on half of our equity portfolio and the remaining long-biased stock portfolio is hedged 36 per cent. If the market’s fundamental, technical and capital flow foundations suffer a material change, we will adjust our underweight stock portfolio and our short derivatives hedge.

UPDATE

Sold Xilinx at $112.50  and Ericsson at $9.20 due to achieving price target.

TOP PICKS

SPLUNK (SPLK .O)

INFINEON (IFNNY.PK)

ARISTA NETWORKS (ANET.N)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
SPLK Y Y Y
IFNNY Y Y Y
ANET Y Y Y

 

PAST PICKS: AUG. 29, 2018

WORKDAY (WDAY.O)

  • Then: $153.78
  • Now: $194.78
  • Return: 27%
  • Total return: 27%

ALPHABET (GOOG.O)

  • Then: $1,249.30
  • Now: $1,209.76
  • Return: -3%
  • Total return: -3%

FANUC CORP (FANUY.PK)

  • Then: $19.99
  • Now: $18.61
  • Return: -7%
  • Total return: -4%

Total return average: 7%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
WDAY N N N
GOOG Y Y Y
FANUY Y Y Y

 

FUND PROFILE

BSD Global Tech Fund
Performance as of: Mar.ch 31, 2019

  • 1 month: -0.9% fund, 0.6% index
  • 3 months 7.8% fund, 11.6% index
  • 3 years: 7.8% fund, 6.4% index

INDEX: TSX Composite.
Returns are net of fees, distributions and annualized.

TOP 5 WEIGHTINGS AND HOLDINGS

  1. Cisco Systems: 8.0%
  2. Visa: 6.8%
  3. Equinix: 5.6%
  4. Google: 5.6%
  5. Amazon: 5.5%

WEBSITE: bsdmi.com