Kim Bolton's Top Picks: April 19, 2022
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Top picks from Kim Bolton, president and portfolio manager of Black Swan Dexteritas
Kim Bolton, president and portfolio manager of Black Swan Dexteritas
FOCUS: Technology stocks
MARKET OUTLOOK:
There has been no shortage of market volatility in 2022. The 200-day moving average is typically considered a major trendline for the S&P 500, with breaks above considered bullish while moves below suggest a bearish outlook. If that’s the case, what are we to make of the fact that the S&P 500 has crossed above its 200-DMA more than five times this year and crossed below it six times?
You can’t really fault investors for the indecision with the uncertainty out there concerning the economy and the geo-political situation, but the impact of the U.S. Federal Reserve on the markets right now ranks just as high. Everyone knows that the Fed is going to hike rates considerably in the next several months, the only question is by how much. All of these uncertainties create a state of limbo whereby we are starting to see business decisions get put on hold. Your BSD team has managed to outperform the broad market equity indices by adopting a ‘sell the rallies’ strategy.
We have been very defensive in both the BSD Fund and our separately managed accounts. What I mean by defensive is the long stock portfolios are neutralized by short equity indice positions; the unrealized losses in the stock portfolios are offset by unrealized gains on the short equity indice positions. The upside in the stock portfolios is increasing, and when the geopolitical and inflationary uncertainties ease together with economic growth confidence, then it will be time to book the unrealized gains on the short equity indice positions and let the stock portfolio appreciate.
