2024 Week 22 Report - Longbridge

Portfolio NAV at the beginning of the year: HKD 2,307,716

Latest portfolio NAV: HKD 3,156,436

YTD return: 36.8%

Hang Seng Index YTD return: 6.06%

S&P 500 YTD return: 10.64%

Nasdaq YTD return: 11.48%

Portfolio

The portfolio's return has dropped significantly this week, from a peak of over 40% to the current 36.8%. The main reason is the decline in the portfolio's major stocks following the broader market. Previously, the portfolio had a lot of cash, but it was all used up by Friday. If the U.S. market drops sharply again next week, I will consider using a small amount of margin and swapping out defensive stocks to buy more aggressive ones.

A detailed review of the portfolio holdings is shared in the Patreon members' area:

Hong Kong Market

The Hong Kong market fell again this week, returning to its previous weak pattern.
Currently, the Hong Kong market is in a downtrend, testing the bottom step by step, and it's hard to say if the bottom has been reached.
Actually, there hasn't been any specific reason or news for the recent decline in the Hong Kong market. It's more about profit-taking by investors.
The Hang Seng Index rose 20% in just a month, with many individual stocks up 50-100%. It's normal and reasonable for investors to take profits at such levels.
The downside is that while a pullback after a sharp rise is normal, the Hong Kong market's adjustment has been quite severe, with little buying support. This makes it hard to judge whether it's just a correction or a trend reversal.
The strategies for these two scenarios are completely different. If it's a correction within an uptrend, the best approach is to buy the dip and enjoy the subsequent rally. On the other hand, if it's a trend reversal, continuously adding positions could leave you holding "crab stocks" (stuck positions) if the market bottoms at 16,000 points, and you might not know how long you'll have to wait.
Right now, I can't tell whether the Hong Kong market is correcting or reversing. My personal approach is to focus on high-quality, fundamentally strong stocks with high dividend yields.
These stocks are protected by high dividend yields, so they are less likely to fall sharply with the market. At the same time, they can benefit from any future market rebound.

U.S./Japan Market

The U.S. market showed significant divergence this week. The Dow, dominated by traditional stocks, was weak and had been declining. However, tech stocks, led by NVDA's strong earnings, drove the market higher, so it wasn't all bad.
But after Friday's PCE data met expectations, hot stocks suddenly plunged, with drops of over 5%. The Nasdaq eventually staged a V-shaped rebound, and individual stock losses narrowed.
Recently, the Nasdaq has shown signs of weakening. After a strong rally this year, it's time for a breather. But this looks more like a correction than a trend reversal.
For now, there's no reason for a trend reversal. The earnings of major tech giants have improved this year, and there's no sign of a future earnings decline. Capital won't withdraw without reason.
So, the focus should be on the timing of U.S. rate cuts and inflation. If CPI keeps rising instead of falling, it could force the Fed to hold off on rate cuts or even resume hikes, which would be dangerous.
But Friday's PCE data was in line with expectations, so a capital exodus seems unlikely now.
My plan is to buy more high-quality U.S. stocks if the market drops sharply again next week.

The above is personal opinion and does not constitute investment advice.

$CG SERVICES(06098.HK) $Sunac China(01918.HK) $SUNAC SERVICES(01516.HK) $NVIDIA(NVDA.US) $Vistra(VST.US) $Vertiv(VRT.US) $Dell Tech(DELL.US)