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Capital 19 Global Financial Trading

06 Mar The Pandemic Portfolio

Posted at 12:21h in Investing in US Stocks by
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Since stocks peaked on February 19th, the S&P500 has plunged over 10% even after some big up days in the middle of it.

We decided to try and put together a portfolio of stocks that could be used as a defensive move to enable you to stay invested through this pullback. Timing an exit and then re-entry is almost impossible so it is often better to just stay invested but change which stocks you are invested in.

For, if you can stay invested then you will definitely catch the recovery whenever that happens to be.

The professionals call this portfolio rebalancing.

Let’s take a look at what we could use to rebalance our portfolios.

To weather a global pandemic then the first place to look would be healthcare. We like Regeneron (REGN) and Gilead (GILD) in this space.  Risk averse sectors are gold and energy and we like Newmont (NEM) and Eversource (ES) for this.

Food will always be needed, especially long-life products, so enter Campbell Soup (CPB) and Kroger (KR), both of which could benefit from panic buying of supplies as well as a solid inverse correlation to plunging interest rates.

That leaves two other kinds of stocks. Cleaning products, Clorox (CLX) and financial exchanges as all this volatility in stock prices is generating large revenues for them so add in CME Group (CME) and Intercontinental Exchange (ICE)

Here are the individual results since the high of the S&P500 on February 19th to yesterday March 5th.

Regeneron Pharma         REGN                    +21.80%

Gilead Sciences                 GILD                      +13.04%

Newmont Gold                 NEM                      +12.80%

Eversource                         ES                           +3.33%

Campbell Soup                  CPB                        +11.11%

Kroger                                  KR                           +13.30%

Clorox                                   CLX                         +6.68%

CME Group                         CME                       +6.90%

Intercontinental Ex          ICE                          +2.61%

That is an average gain of 10.21% in a time when the S&P500 has fallen over 10%. Not a bad result at all

But are these stocks just good when there is a global pandemic or can they weather all conditions?

To determine this we ran a test that said, what if we bought these stocks a year ago? How would the portfolio have performed?

The answer is very well, better even than we expected, stronger even than the market as a whole even before the pandemic broke the S&P500

The author does not hold an investment in the company mentioned and has not been renumerated for this report

Disclaimer: Capital 19 Pty Ltd ABN 17 124 264 366 AFSL 441891 (‘Capital 19’) believes the information contained is reliable, however, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. This communication is for general information only and was prepared for multiple distributions and does not take account of the specific investment objectives of individual recipients and it may not be appropriate in all circumstances. Persons relying on this information should do so considering their specific investment objectives and financial situations. Any person considering action based on this communication must seek individual advice relevant to their circumstances and investment objectives. Subject to any liability which cannot be excluded under the relevant laws. Any opinions or forecasts reflect the judgment and assumptions of Capital 19 and its representatives based on information at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future. The investment manager certifies that all the views expressed in this document accurately reflect their views about the companies and securities referred to in this document and that their remuneration is not directly or indirectly related to the views. Capital 19, its directors, representatives, employees or related parties may have an interest in any of the companies and securities in this document and may earn revenue from the sale or purchase of any financial product referred to in this document or any advice. Past performance is not a reliable indicator of future performance. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this document is prohibited without obtaining prior written permission from Capital 19.
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