Deanco Investment “Group” Update – May 2020 (Month 31)
There is no group, it is just me and my money. I’m just a guy with a regular day job who likes keeping close tabs on his investing. Each month I’m sharing my investment portfolio, individual investments, and performance (good or bad). This is my May 2020 update (31 months of tracking it).
In early May stocks were just barely ahead of where they’d been in recent tops since February 2018. I started lightening my equity exposure greatly at that time. I didn’t like the risk/reward then and I really don’t like it now. I just didn’t think that the upside justified the potential downside back then so I moved to different asset classes. At that time, I didn’t even feel particularly bearish on the market. I just felt like things had gotten a bit too rich for my blood. Now, however, I am outright bearish. I don’t see how we get through this COVID situation with valuations as high as they are right now. That said, I haven’t made too many big changes to my portfolio’s allocation since my pretty big rework in 2018 (including this month).
If we do make it through all this with high valuations intact, I don’t think it is due to the economy. Stocks have roared back to near all-time highs during May. The stock market looks like it has unhitched itself from the actual economy. It looks like the support of the Fed with QE and suppressed rates has people investing with no fear and driving stocks back to near highs. I made some minor tweaks during the month just to ensure my allocations remain in line with my targets. I’m currently at my rock bottom allocation to stocks/equities at 60% of my entire portfolio.
So, what is all this about moving money out of the system? The actions of the Fed have valuations pegged and they are playing games with the global monetary system that no one on earth understands. I don’t like it at all and I’ve tilted my portfolio as far towards an ‘antifragile’ portfolio as I know how to implement. I’ve cranked down my exposure to equities/stocks and cranked up allocations to commodities, physical gold, physical silver, short-duration bonds, and Bitcoin. I made these shifts to hedge against the unknowns of all the risk with seemingly unlimited printing of fiat currencies. The system isn’t collapsing but it certainly feels broken. Even if it isn’t broken or going to collapse, I sleep better shifting my allocation the way I have. The one asset I own that seems like it might benefit most from a collapsing fiat monetary system is Bitcoin. The biggest move I made during the month was to up my allocation into Bitcoin. As the month progressed, I sold down some bond, gold and silver exposure and added to Bitcoin. I originally wrote about my decision to purchase Bitcoin here: BITCOIN. The selling down of my gold and silver positions is no indication that I’m not bullish on these positions. To the contrary, I’m very bullish on these positions but they had grown a good bit and I wanted to shift some money around a bit. My Bitcoin allocation went from around 2% of my portfolio up to around 5%. I consider this move a move that moves money out of the current fiat monetary system. I doubt this money will ever reenter it (along with my physical gold and silver). GONE!
Within my equity portfolio, I did a little rebalancing by selling down some of the sectors that had performed well recently. I added to two of my existing individual equity positions because neither had participated in the recent rally. One was Macy’s $M and the other was Alliance Resource Partnership $ARLP. Both of these positions were obliterated during the market’s drawdown. In my opinion, both had been oversold in the process.
Ultimately the only thing I did during the month was to continue to stack up cash. I’ve been in this mode for several months. I’m not even tracking this cash stacking as a part of my overall portfolio tracking here right now. It is still over in my short-term accounts. If things return to normal, I’ll deploy it into my portfolio. If things don’t return to normal and I need some extra cushion I’ll have it. I’ve grown much more cautious in my old age! Fun times!?!
Caution is good with COVID still around. My take on COVID is that all the models that were used to shut down the planet were overly pessimistic. Things didn’t play out nearly as bad as predicted. I think we have been way too slow to undo the self-inflicted damage of shutting down the global economy when things started to look that way. I don’t think we are out of the woods with those decisions. I think the ramifications of this are yet to be seen. I don’t think all-time high valuations are warranted. I also am not positive we are out of the woods with COVID. I suspect it will stick around and create uncertainty into the rest of this year (which isn’t a good thing and potentially could be a devastating thing).
During the month I spent several hours listening to the Berkshire Hathaway shareholder meeting. I wrote about it here: WARREN. Warren spent a good deal of time and energy trying to nail down the impact COVID will have as well. His thoughts have shaped my thoughts. In the end, even super-smart people like him don’t know how all this will play out. So I sure as hell don’t know! Time will tell!
Also during the month, my son and I talked about our thoughts on different investments mid-month which can be found here: NOT WARREN.
For full update download this ^^^ PDF.
My individual positions (and all kind of additional information about each of them) can be found here:
https://deanorolls.com/investing/my-current-portfolio/
I’d love to talk about investing with you. Link up with me on Twitter https://twitter.com/joeydean72
DeanoRolls (@deanoroll5) 