Another big day for our portfolio as the $SPX500 reaches ATH. $AAPL , $JPM and $POLY.L reaches ATH. The top gainers today are $PE and $CXO with oil prices rising by more than 1.7%. $GME also gains about 1.5% today.
On Saturday, Berkshire Hathaway $BRK.B had its earnings. I've made an analysis of these earnings which is now available on my partnership:https://ishfaaqpeerally.teachable.com/courses/ishfaaq-investment-research-partnership/lectures/12409238
My STOCK PORTFOLIO had a MASSIVE DAY - What Really Happened? 🚀
Last Friday, I had the best day so far this year in the stock market. So what? There are good days and bad days for everyone. If we study what happened on that day, it teaches us a great lesson for a long-term investment perspective.
In a report published last year by Fidelity Investments, if you had invested $10 000 in 1980 in the S&P 500 $SPX500 , you would have over $700 000 by the end of 2018. But if you had missed the five best days during that period, you would have had only $458 000. How can we ensure then that we have such great days?
My portfolio gained around 2.7% last Friday while the S&P 500 gained around 1%. Here are some of the stocks that contributed the most:
1. Skyworks Solutions $SWKS gaining nearly 8%
2. GameStop $GME gained 7.35%
3. Apple $AAPL gained 2.84%
4. The two oil companies $OIL Parsley Energy $PE and Concho Resources $CXO gained respectively 3.7% and 2.7%
5. Allergan $AGN gained 1.24%
What happened to all these stocks? The market itself did great last Friday for three main reasons:
1. The Federal Reserve System lowered interest rates
2. Great Jobs numbers for October
3. Easing trade tensions
Why then, my portfolio was able to beat the market by such as a huge margin? The stocks in my portfolio were not reacting solely to these news but had a massive day for different reasons.
1. Skyworks Solutions, one of the suppliers of Apple had a great day because Apple said in their conference call that sales of the iPhone 11 was higher than expected. Another good news for Skyworks Solutions were the easing trade tensions between China and the US since Skyworks Solutions derive around 10% of their revenues from Huawei. Also, the top 3 Chinese networks China Mobile $CHL , China Telecom $0728.HK and China Unicom $0762.HK all launched 5G in China on that day.
2. GameStop stock had a bad week after gaining more than 40% last month. There was a correction and sooner or later big investors were going to buy the dip since many hedge funds right now are buying this stock. What really triggered the surge was Nintendo $NTDOY announcing higher sales of their Nintendo Switch Lite console.
3. The two oil stocks did great because $Oil prices were higher. ExxonMobil $XOM and Chevron $CVX announced lower productions to stimulate prices. The oil rig counts in the US was also down. These two reasons mean that there will be a lower supply of oil in the market and hence higher prices. Easing trade tensions also contributed to the gain in oil prices since China buys oil from the US.
All these good news will mean $GOLD prices will go lower. It went down but the gold miner in my portfolio, Polymetal International $POLY.L gained 0.5%. It is because it is a Russian $RSX company and the Russian stock market did well because of rising oil prices. Two stocks in my portfolio went down. Travelers Companies $TRV which owns over $60 billion in bonds because bond prices went down. Diageo $DGE.L went down because Brexit didn't happen and the British Pound was up $GBPUSD
Why my portfolio gained so much on a single day? The stocks in my portfolio have low correlation with each other. Coincidentally, many factors were in my favor last Friday. This is how true diversification works. You need a few companies bought at a great price in your portfolio and these companies should have very little correlation with each other. This is how you take opportunities of the best days of the stock market.
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