Trump is re-elected, what should we do?
Week 45 2024 - Doubler Portfolio overview + transactions
Nothing, except for what we always do.
Whether Trump or Harris is the new president of the United States makes little difference for us. The challenges facing America and Europe remain the same, and the solutions available are limited. The only graceful way for politicians to handle these significant government debts is through sustained higher inflation. So regardless of who holds office, they’ll have to walk a fine line between enough inflation and too much. This goes for Europe as well.
All in on gold, then?
As you might already know, I don’t hold gold in the portfolio. I prefer investments that generate cash rather than those that merely protect against loss of purchasing power. However, it’s essential to consider the types of companies we do hold. We own many capital-intensive businesses, which has both pros and cons.
Companies that frequently need to invest in new, increasingly expensive machinery will face rising costs. If they can’t increase prices quickly enough, inflation will cut into their margins significantly. In contrast, companies that own long-lasting assets, like land, factories, and machinery that require little replacement, actually benefit. For them, debt repayments become relatively cheaper compared to the prices they can charge, similar to a mortgage compared to an indexed wage.
The most important factor is that companies can raise prices easily when needed. After the initial inflation shock, some companies struggled with this, but today most are prepared, and the market accepts it. A good example is Deceuninck’s Turkish subsidiary. Despite extreme inflation there, the company continues to perform well.
No worries about Trump
Although Trump is president again, it doesn’t affect us much as investors. I don’t entirely understand the market euphoria that swept through yesterday. He may be more business-friendly, but that doesn’t mean company values will suddenly surge. While import tariffs could negatively impact our European companies, our selection includes production facilities in the U.S., so the effect remains limited. This is yet another example of how irrationally the stock market can respond to short-term news.
We’d be wise to ignore such news. Only policies with real impact deserve our attention.
A good example of relevant policy is Europe’s push for electric vehicle (EV) production, which has affected Stellantis and is indeed significant for us.
We also need to watch out for signals like those from EV Clinic, a Croatian car specialist and repair shop critical of the “junk” Stellantis produces. EV Clinic is known for its unfiltered opinions.
The complaint is that Stellantis cars are nearly irreparable. Due to a lack of technical information from the manufacturer and suppliers and a shortage of parts, these cars are often impossible to repair correctly. In many cases, costly larger parts must be fully replaced for minor issues, ultimately penalizing the consumer.
I’ve heard similar complaints, not just about Stellantis. The European pressure to get EVs on the market quickly has significantly shortened development time. There’s a lack of experienced engineers, and this all leads to current issues.
That EV Clinic specifically calls out Stellantis might be a tactic to apply pressure. This could push the manufacturer to release more information and encourage suppliers to resolve issues faster.
Interestingly, brands like BMW and BYD are mentioned as examples of better EVs, which is a clear signal.
Articles and updates this week
Last week, we received quarterly reports from Maersk, Semapa, Vicat, and Weyco. For Vicat, it was revenue figures only; you’ll find a brief update at the bottom. The summary for Weyco can also be found in the "Short News" section.
Read the Maersk update: Right, but not acknowledged
Read the Semapa update: Cheap enough for a new bid?
On Tuesday, a brief article was published: Simplicity and Clarity
Doubler Portfolio Overview October 2024
For those not yet familiar with our Doubler Portfolio, read more about it here.
I’ve decided to shift the monthly overview from the end of each month to the beginning of the following month. From now on, I’ll report at the start of the month on the previous month’s performance, as I’m doing now for October 31. This aligns better with common financial reporting practices and makes it easier to compare our results.
At the end of October, we saw a significant dip that was more than offset after Trump’s election—a strange fluctuation in such a short time.
It’s now been six months since the portfolio's launch. By the end of October, we were nearly 56% invested, and we recently completed our first sale: the candy maker Cloetta. When I previously discussed Cloetta and mentioned the sale, the price was above SEK 27. However, according to the rules of the Doubling Portfolio, I use the closing price on the day of the announcement (or the next day if announced late). For Cloetta, I used SEK 26.76 as the sale price.
Including transaction fees of €15 (for both buy and sell), the return on Cloetta stands at 36.15% over five months. This is still strong, though I hope your return is 3-4% higher due to better timing on the sale and especially lower transaction fees. This example shows that I calculate very conservatively to achieve the portfolio’s doubling goal.
There’s already a second sale lined up, where we can realize over 30% profit within five months. This may give the impression that we’re mostly selling our winners while holding or adding to losing positions—the opposite of what’s often advised online.
However, there are companies in our portfolio that were never intended as long-term investments. If they yield sufficient returns within a few months, they help offset the positions that need more time to achieve our target returns.
As of October 31, the portfolio’s return stood at -1.35%, with about half of this loss attributable to transaction fees.
After six months, it’s still too early to make a judgment. Even so, I’d like to end the year on a positive note, so we can start our first full year without a deficit.