Genevieve Beat 2/3 of Hedge Funds in 2023

1. Genevieve’s Corner

GENEVIEVE BEAT 2/3 OF HEDGE FUNDS IN 2023

Hi Everyone! 👋

Bumpy start to 2024! But no fear…. 

Much of the selling was in the “Magnificent 7” because investors were "tax gain harvesting" the BIG gains from 2023 

Let’s recap the week: 

- JPMorgan stock hits new record high 

- Walgreens cuts dividend 47%, ending a 48-year streak of consecutive dividend increases 

- Barclay’s downgrades Apple to “underweight” 

- U.S unemployment rate stays flat at 3.7% in December 

- U.S. adds 216,000 jobs in December. BUT: 10 of the last 11 months have seen downward revisions in jobs numbers (according to ZeroHedge) 

- U.S national debt hits new record high +$34 trillion 

- Janet Yellen says the US has achieved a soft landing 

- Harvard president Claudine Gay resigns 

- Probability of rate cut in March drops to 68% from 90% in December 

- The U.S. Bond Market has now been in a drawdown for 41 months, by far the longest bond bear market in history 

- Mark Zuckerberg sold nearly half a billion dollars of Meta shares in the final two months of 2023 

- FED minutes released: officials in December saw rate cuts likely, but path highly uncertain 

- Bitcoin hits new 1-year high of +$45k 

- According to Bloomberg analysts, Bitcoin Spot ETF is “basically done” and ready to launch. It could be as soon as next week! 

- Jim Cramer says Bitcoin can’t be killed 

- Canada's economy is in BIG trouble: Q3 GDP contracted at -4.4%, NOT -2.4% as previously reported (according to National Bank) 

- Google plans to reorganize ad sales department with 30k people, including layoffs 

- Americans are increasingly tapping their retirement savings to cover housing and medical bills amid higher cost-of-living pressures 

- Used Car prices in the US are at their lowest levels in 30 months, down 11% from the peak in July 2022 

- U.S ISM Service Index (now near contraction) misses estimates in December with 3-standard deviation DOWNSIDE surprise 

-Global container shipping rates skyrocket +173% as carriers divert trade from the Red Sea 

Exciting news for GRIT premium subscribers! Last year, my portfolio delivered impressive results with a solid +17.51% return….

I outperformed over 2/3 of the top hedge funds, including Citadel Multistrat and Bridgewater Pure Alpha Fund II. I won't deny it – it feels great! Notably, this return was achieved with a strategic investment (at times representing greater than +20% of my portfolio) in a high-yield cash ETF, minimizing market risk.

HEDGE FUNDS:

But remember, past performance is NO guarantee of future performance. Always consult your financial advisor before making ANY investment decisions.

Now, the moment you've been waiting for: Genevieve’s Top 10 Predictions for 2024 Part 2! 

Last week, I made bold forecasts on Bitcoin, interest rates, and volatility. This week, expect insights on China, commodity prices, unemployment, and more, along with ten potential black swan events!

🎯 GENEVIEVE’S TAKE: Top 10 Predictions for 2024… Upgrade to VIP to read!

Tune in next week when I make some big portfolio changes!

Genevieve Roch-Decter

2. Matt Allen’s Corner

INVESTING WITH ETFS

Our subscribers have requested we cover some basic investing terms, and we thought ETFs would be good for this week! 💡

You must remember that ETFs are very important for an investor who does not want to invest in individual stocks.

For example, ARK Invest is a famous ETF focusing on Disruptive Technology. ETFs are a good way to get exposure in different sectors.

Exchange-traded funds (ETFs) have revolutionized the investment landscape, offering investors a convenient and cost-effective way to access diversified portfolios across various asset classes.

While ETFs provide numerous advantages, it is important to consider their potential drawbacks before incorporating them into your investment strategy.

Today, we will explore the pros and cons of investing in ETFs, helping you understand the benefits and limits of ETFs. 💪

Pros of Investing in ETFs:

1. Diversification: One of the key advantages of ETFs is their ability to provide instant diversification. Investing in a single ETF exposes you to a basket of securities, which can help mitigate risk compared to investing in individual stocks or bonds.

2. Cost Efficiency: ETFs generally have lower expense ratios than traditional mutual funds. This cost advantage is primarily due to their passive management style, which seeks to replicate the performance of an underlying index rather than actively selecting securities. Lower expenses can contribute to higher long-term returns.

3. Liquidity and Flexibility: ETFs trade on stock exchanges throughout the trading day, allowing investors to buy and sell shares at market prices. This liquidity and flexibility provide easy access, enabling investors to adjust their positions quickly as market conditions change.

4. Transparency: ETFs offer transparency regarding their holdings, as they are required to disclose their portfolio compositions daily. This transparency empowers investors to make informed decisions and understand the underlying assets they are investing in.

5. Tax Efficiency: Due to their unique structure, ETFs often have built-in mechanisms that can help minimize capital gains distributions. Authorized Participants (APs) create and redeem ETF shares in exchange for a basket of securities, which can help reduce taxable events for individual investors.

Cons of Investing in ETFs:

1. Tracking Error: While ETFs aim to replicate the performance of an underlying index, they may not perfectly mirror the index due to tracking errors. Factors such as management fees, transaction costs, and timing discrepancies can contribute to deviations from the index's returns.

2. Lack of Active Management: ETFs are passively managed, which means they aim to match the performance of an index rather than outperform it. This approach may limit the potential for generating alpha or taking advantage of market inefficiencies that active fund managers can exploit.

3. Overemphasis on Popular Indices: Many ETFs are designed to track widely followed indices, such as the S&P 500 or NASDAQ-100. As a result, investors may have a disproportionate exposure to large-cap stocks or specific sectors, potentially missing out on opportunities in less popular market segments.

4. Market Volatility Impact: ETFs can experience heightened volatility during market stress, as their share prices are influenced by supply and demand dynamics. This volatility may lead to wider bid-ask spreads and potential deviations from the net asset value (NAV).

5. Limited Customization: While ETFs offer diversification, they may not provide the same level of customization as individually constructed portfolios. Investors with specific preferences or constraints may find it challenging to tailor their holdings precisely to their needs.

Investing in ETFs comes with a range of benefits and limitations. On the positive side, ETFs offer diversification, cost efficiency, liquidity, transparency, and tax advantages. Still, it is important to consider potential drawbacks, including tracking errors, lack of active management, overemphasis on popular indices, impact of market volatility, and limited customization.

🎯 GRIT TAKE:

As an investor, it is crucial to… upgrade to VIP to read the full GRIT TAKE.

Cheers,

Matt Allen

3. Comin’ Up

EARNINGS AND ECONOMIC DATA

💰 Earnings:

Monday: Jefferies Financial Group

Tuesday: Albertsons Companies

Wednesday: KB Home

Thursday: Taiwan Semiconductor

Friday: United Health, JP Morgan Chase, Bank of Americ, Wells Fargo

📈 Major Economic Events:

Monday: N/A

Tuesday: Trade deficit

Wednesday: NY Fed President Speaks

Thursday: CPI

Friday: Big Banks earnings

The author of this newsletter owns ETF’s (exchange traded funds) that may hold ownership interests in the companies discussed in this newsletter as of the published date of this newsletter.