Thread by @saxena_puru

1)Portfolio Dec-end -

Long - $ADYEY $DLO $GLBE $LILM $LSPD $MELI $MQ $S $SE $SOFI $TOST $TWLO $TLT

Short - $ARKK, Russell 2000 futures #RTY_F

Return since 1 Sept '16 -

Portfolio +672.73% (46.76%pa)
$ACWI +80.02% (11.66%pa)
$SPX +119.60% (15.90%pa)

Contd...

2) YTD return (2021)-

Portfolio +21.81%
$ACWI +16.80%
$SPX +26.89%

Biggest positions -

1) $TLT 2) $SE 3) $MELI 4) $MQ 5) $SOFI

Contd....

3) Commentary -

December was a brutal month for growth stocks as the previous month's selling continued before a relief rally briefly reversed the downtrend.

At the beginning of the month, I sold out of all stocks and around mid-month, positioned my portfolio for the post-QE..

4)...contraction. Unfortunately (for me), high growth stocks put in a low just after mid-month and we had a sharp relief rally.

This hurt my short positions in $ARKK and #NQ_F and since my buy stops were hit, I covered the latter at a loss.

During the month, I also bought...

5)...shares of $TLT and the recent weakness in long-term US Treasuries also hurt my portfolio's performance in the second half of December.

Approximately 10 days ago, I started scaling into my preferred stocks and thus far, have re-invested ~45% of my capital in these...

6)...companies. However, since my trend following indicators recently flashed a short-term downtrend, my long exposure is currently hedged via a corresponding $ARKK short.

A few days ago, I also went short Russell 2000 futures #RTY_F , so my portfolio is now net short stocks..

7) $TLT is my biggest long position at the moment (approximately 50% of a/c equity), whereas I'm net short stocks (~40% of a/c equity).

Given that the Fed is draining liquidity and the global liquidity conditions are also tightening rapidly, am of the view that risk assets...

8)...are likely to come under pressure during Q1/Q2 '22.

China's credit tightening has already baked in a global economic deceleration and with the Fed now ending QE abruptly, near-term risks remain elevated.

If my assessment is correct, global stocks will probably take a...

9)...hit during Q1 or early Q2 '22 and if history is any guide, the major US indices will decline by ~18-20% from their ATHs. Since the Russell 2000 Index is high-beta, is is likely to decline 28-30% from its ATH.

When it comes to investing, monetary policy trumps everything...

10)...else and changes in liquidity become evident in the economy and financial markets with a lag.

The financial markets have already begun to discount tighter monetary conditions and I believe that the indices will crack over the following weeks.

A number of the leading...

11)...economic indicators are suggesting that the global economy will slow down sharply in H1 '22 and global PMIs will come down to around the 50 level by Q2' 22.

In this scenario, stocks will come under pressure, crypto will deflate, junk bonds should get hit, inflation...

12)...will roll over, commodities will deflate and long-term UST yields may decline, perhaps significantly.

Given this view, I've positioned my portfolio to benefit from the looming post-QE contraction.

Hope this is useful.

THE END.

This time is usually *not* different -

USTs likely to outperform stocks during H1 2022....

This is why I'm long USTs via $TLT -

The credit impulse leads global manufacturing cycle -

PMIs ⏬ = Stocks ↘️ and US Treasuries ↗️

Been this way for 30 years!

Following my month-end portfolio summary, a number of you asked why I'm long US Treasuries and short stocks?

In order to provide some perspective, I've posted the above charts which clearly show the impact of the credit impulse (cycle) on economic activity and various assets.