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

MARKET OUTLOOK

Global stock markets suffered from whiplash throughout August as trade headlines and recession angst sent stocks on a wild ride. The S&P 500 posted 11 moves of more than 1 per cent in 22 trading sessions in August. Those moves included three declines of at least 2.6 per cent as well as the index’s worst day of the year on Aug. 5. The CBOE Volatility Index (VIX), widely considered to be the best fear gauge, traded as high as 24.81 that month before pulling back to around 18. The choppy trading action was driven primarily by two factors: an escalation in U.S.-China trade relations and a recession signal flashed by the bond market. As trade tensions are expected to persist and bonds keep pointing toward a recession, the market’s volatile streak is expected to continue into the foreseeable future.

Perhaps its déjà vu, but the next few months could see significant new developments in global macro issues that were supposed to have been resolved months ago. The consensus market thesis is that the U.S. will amicably resolve its trade disputes with China, Europe and other trading partners and that central banks will stay cautious and keep their monetary policies supportive. Further clouding the stock market’s outlook are the unpredictable corporate Q3 earnings reports that will begin to flow out during the third week of October. Corporate earnings were solid in Q1 and Q2, allaying some fears that the trade war would drag down results. But more and more companies with links to China are warning that the next round of tariffs will crimp their business, and many may have to raise prices to consumers and end users. This could start showing up in inflation readings as soon as October, which could make an already divided Federal Reserve even more reluctant to cut interest rates. There could be some nasty downward revisions to Q4 forecasts from many corporations that have already squeezed their supply chains as much as possible to resist price increases.

Taking into account all of these fundamental, technical and capital flow factors, your BSD Team has taken a defensive stance with an overweight short equity derivatives position and an overweight cash position. If the stock market continues to melt up, our portfolio will gain (though not as much as the overall market), but if the stock market comes under pressure, our portfolio’s year-to-date returns will be protected. If the market declines to a significant degree, our portfolio will realize additional gains.

UPDATE

Sold Tableau: Bought at $59.97 and sold at $169.34 due to the company being acquired by Salesforce on June 10.

TOP PICKS

Kim Bolton's Top Picks

Kim Bolton of Black Swan Dexteritas shares his top picks: Shopify, Datadog and CyberArk.

SHOPIFY (SHOP:CT)
DATADOG (DDOG:UW)
CYBERARK SOFTWARE (CYBR:UW)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
SHOP Y Y Y
DDOG Y Y Y
CYBR Y Y Y

 

PAST PICKS: OCT. 31, 2018

Kim Bolton's Past Picks

Kim Bolton of Black Swan Dexteritas reviews his past picks: Amazon, Visa and Ericsson.

AMAZON (AMZN:UW)

  • Then: $1,598.01
  • Now: $1,735.65
  • Return: 9%
  • Total return: 9%

VISA (V:UN)

  • Then: $137.85
  • Now: $174.29
  • Return: 26%
  • Total return: 27%

ERICSSON (ERIC:UW)

  • Then: $8.66
  • Now: $7.92
  • Return: -9%
  • Total return: -7%

Total return average: 10%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
AMZN N N N
V N N N
ERIC N N N

 

FUND PROFILE

Black Swan Dexteritas Global Tech Hedge Fund
Performance as of: Sep. 30, 2019

  • 1 month: -0.13% fund, 1.32% index
  • 1 year: 1.42% fund, 1.69% index
  • 3 years: 8.09% fund, 4.37% index

INDEX: TSX.
Returns are based on reinvested dividends, net of fees and annualized.

TOP HOLDINGS

  1. Alphabet: 5.92%
  2. Amazon: 5.27%
  3. Visa: 4.78%
  4. Infineon technologies: 4.57%
  5. Telefonaktiebolaget Ericsson: 4.49%

WEBSITE: www.bsdmi.com