August 2020: Eat tech to help out your returns

In the UK, August was ‘Eat Out To Help Out’ month.

A whizzy gimmick by the government gave us 50% off at restaurants/cafes/pubs on Mondays-Wednesdays. This proved a big hit, with restaurants that have never before opened on a Monday doing a roaring trade. Allegedly 40% of covers were people who hadn’t eaten out since lockdown; if they keep eating out, then the scheme should definitely prove a success.

The UK was jostled off its place on the Covid naughty step in August. Most other European countries saw Covid-19 cases per person rise dramatically, with a bunch of hitherto golden children now scoring worse than the UK. Put simply, the UK has not deteroriated as fast as other places – Ireland, France, the Netherlands are all now officially ‘less safe’ than the UK. Even Greece, largely a collection of sunny disconnected islands, threatens to overtake the UK.

Have BoJo’s “world beating” policy measures finally given the UK its place in the sun? Or, whisper it quietly, has the UK’s travel quarantine policy proved surprisingly appropriate for the summer months – at deterring travel to/from virus hotspots. Are UK workers just too scared to return to the office? Or is the UK’s service-driven economy proving more capable of operating from home than the more traditional workplaces in Italy / Germany / etc? Time will tell.

Meanwhile, I didn’t use the tube or a bus once – though I did use Uber a bit. I don’t think I went into the West End, London’s historic centre, at all. I got around a bit though, finding myself in some enjoyably off-the-beaten track spots.

Deserted spot, North
Deserted spot, West
Angelic?
Famous park, East
Park I’d never heard of, East

The USA’s at it again

The dollar continued its fall, dropping over 2% against sterling in August. We’re still a long way from where we were before That Referendum, and I can’t benefit from the stronger pound by actually visiting the place, but it’s still making a noticeable difference to our portfolios.

Equities everywhere advanced. Tech stocks were the conspicuous outperformers, with Tesla (up almost 60% in the month!) and Apple (up 22%) making the headlines. I’m not clever enough to have either Tesla or Apple in my portfolio, directly at least. My biggest tech holdings are Amazon and Google – which rose only 11% and 12% respectively. But having two of your biggest holdings rise by double digits is never a bad thing. And plenty of my smaller tech holdings rose even more – e.g. ADBE (+17%), DOCU (+19%), BABA (+13%) and so forth.

I am not as long on tech as some (I’m wondering about you, TI) but my 46% USA weighting plus my tech active portfolio have helped ensure that I am now ahead of where I started the year, covid-19 or no covid-19. Anybody whose idea of index investing is to focus on the FTSE-100 won’t be as fortunate – the FTSE-100 ended August about 20% lower than it started the year.

Market and currency movements, August 2020

Ignoring currency movements, markets rose by 3.3% in the month. Currency movements pulled my weighted market average down to 2.2%. My portfolio delivered 4.2%, about 2% better than the average of my markets, thanks to (I think) my tech exposure. The years 2014, 2016 and 2017 did not have a single month as good as a +4.2% month – it is tempting to be sanguine but we need to remember how extraordinary these times are.

I have been continually nibbling away at Fixed Income, trying to eliminate my underweight position. The rise in equities and fall in bonds has left me running to stand still. My deltas from target look very similar to the previous month’s deltas, despite quite a bit of Buy activity. This rebalancing should stand me in good stead – especially if equity markets’ next move is down….

Deltas from target allocation, August 2020

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