The 2CentView portfolio was up 12% in 2016, which outperformed the S&P500 by 3% but below the FTSE100 which returned 14%.
The objective of the 2CentView system is to outperform the index in rising markets and be at least in line when the major index is flat or falls up to 20%, and outperform if the market corrects more than 20%. The portfolio is benchmarked vs. the SP500 (50%, up 9.5% ) and FTSE100(50%, up 14%), so the outperformed by 0,75% in 2016.
Overall return since 2013, 86% (21.5% annually).
2016 was a volatile and difficult investing year, starting with a sell off in February, triggered by low oil prices and a distressed energy sector. This was followed by Brexit and the election of Donald Trump – both results proving the polls are meaninigless! Many pundits advocating ‘sell all’ following both of these events, but the key was NOT too panic, and look at these events as potential buying opportunities – quality companies will always do well no matter who is in power!
Where it did badly:
2 Core positions were savaged – $FIT (FitBit), $SPWR (SunPower) – both these core positions were down 30% following results, so they traded way through long term stops – 2Centview eventually did exit – the overall pain was not great as 2CentView always sells higher up to reduce the overall cost basis and protect you from the ‘wide arcs’, as the legendary investor Bill Miller says
“Stocks, markets, and money managers’ performance are subject to enantiodromia, the tendency of things to swing to their opposites. Those swings can have wide arcs, and unsustainable trends can sometimes persist beyond the ability of one to endure. That is why most investors are out of stocks at the bottom–they are tired of losing money–and fully invested at the top–they believe their good performance will persist despite their stocks or the market’s being overpriced.”
Trades in $SPD (Sports Direct), $EZJ(EasyJet) [ post Brexit trades],$SKX (Skechers), $VRX (Valeant) were all stopped out.
Where it did well:
Core positions which did well: $MS up 60%, $Z (Zillow group), $ACA (Acacia Mining – gold trade) up 109% were the best performers with other core positions in Apple, FaceBook, Celgene, DLG up between 5 and 15%.
Trades that did well : $LNKD (linked in) – bought by $MSFT, $BOO – boohoo.com (bought after sell off following Trump victory). $DVN – Devon energy doubled.
Also taken a position in AK Steel and IAG following Trump Election (up 30% and 5% respectively).
The portfolio benefited a bit from the rally in the US$, but the currency exposure is broadly hedged using the $PUS contract.
Main lesson learnt from 2016 – DO NOT PANIC – exiting the market was the worst possible thing you could have done in 2016 – but STICK to your stops if the market or an individual position continues on a downward spiral (both $SPWR and $FIT $9 exit stops were hit).
2CentView is that 2017 could be a great opportunity to make 15-20% if Trump delivers on his election promise, tax cuts and infra-structure spending could really boost company earnings. More on the next tweet for themes for 2017.
Happy 2017 from the 2CentView team.