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

MARKET OUTLOOK

This is the first year in a long time where we don’t have a firmly established trend as a guide. We expect more volatile markets in 2019, similar to 2018, as the bullish thesis battles the bearish thesis. It’s imperative to understand the rationale of both sides of the argument to make a better investment decision. The bullish thesis is supported by three reasons: 1) Big rallies happen off big lows; 2) the Fed has gone dovish; and, 3) the advance-decline line is improving. Keep in mind that this is a very short-term analysis.

The bear case is more grounded in longer-term price dynamics (that is, weekly and monthly compared to daily), which suggests the current rally remains a reflexive rally within the confines of a more bearish backdrop. This bearish thesis is supported by three reasons: 1) the current market rally, while strong in the short term, is happening with declining volume, suggesting more of a short-covering rally rather than a conviction to a secular bull market; 2) given the deterioration in revenues, bottom-line earnings and weaker macroeconomics, the backdrop between today and the end of previous bull markets is consistent; and 3) the bond market is not “buying it.”

The bottom line is that the longer-term dynamics are clearly bearish, but that doesn’t mean the equity markets can’t have bear market rallies. Remember that in 2018, the stock markets rallied twice with gains in excess of 10 per cent and eight times with gains of between 5 and 10 per cent, but still posted a calendar-year decline.

UPDATE:

Sold top pick Nutanix (bought at $48.43 and sold at $41.59) on Jan. 15 due to portfolio rebalancing.

TOP PICKS

MICROSOFT (MSFT.O)

XILINX (XLNX.O)

YASKAWA ELECTRIC (YASKY.PK)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MICROSOFT Y Y Y
XILINX Y Y Y
YASKAWA Y Y Y

 

PAST PICKS: JUNE 1, 2018

DASSAULT SYSTEMES (DASTY.PK)

  • Then: $141.36
  • Now: $124.64
  • Return: -12%
  • Total return: -12%

INFINEON TECHNOLOGIES (IFNNY.PK)

  • Then: $27.65
  • Now: $20.49
  • Return: -26%
  • Total return: -26%

TENCENT (TCEHY.PK)

  • Then: $52.32
  • Now: $42.80
  • Return: -18%
  • Total return: -18%

Total return average: -19%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
DASSAULT Y Y Y
INFINEON Y Y Y
TENCENT Y Y Y

 

FUND PROFILE

Black Swan Dexteritas Global Tech Hedge Fund
Performance as of Jan. 18, 2019

  • 1 month: 5.6% fund, 6.53% index
  • 1 year: -7.9% fund, -4.7% index
  • 3 years: 4.8% fund, 5.8% index

INDEX: S&P 500.
Returns are net of fees, dividends and annualized.

TOP 5 HOLDINGS

  1. iShares PHLX Semiconductor ETF: 5.7%
  2. Krane Shares CSI China Internet ETF: 5.2%
  3. iShares Expanded Tech-Software ETF: 4.4%
  4. First Trust Dow Jones Internet ETF: 4.3%
  5. Cisco Sytems: 4.3%

WEBSITE: blackswandexteritas.com