In the wake of the stock market rebound, we have reduced our equity exposure, first in the United States and then in Europe ; our asset management model is not yet seller of emerging markets (debt / equity) but we have early signals of profit-taking, which may occur in March.
After partial hedge of our equity investments, our global stock market exposure is now 22% (to be compared to a neutral weight of 35%, according to our model).
Valuations of companies seem fairly priced, with limited upside potential from the current levels, considering the 2019 earnings per share estimates : EPS were revised from + 12% to + 4/5% in the United States. At this stage, we remain convinced that the economical cycle is at a turning point with a lagging car industry and a slowdown of the US real estate market, among others.
Finally, we have protected our USD denominated assets (50%), as we are bearish on the greenback within the coming monthes (please see our Quarterly Letter) ; we keep our gold investment stake unchanged (5% of the portfolios).
Ample liquidity and low interest rates have been the main factors supporting the stock market rally. Nevertheless our core strategy is unchanged : we are very cautious, given the lower growth prospects and potential new bubbles that may burst (credit) ; our goal is to create value over the long term without speculative bets.