$48,560.37 | The Rotation is Real

Hey guys,

Coming back at you after a week of market ups and downs. It seems the rapid rise in bond yields in anticipation of stimulus and rising interest rates is causing the market to continue its shift into more value oriented stocks.

I have a good portion of my Growth + High Yield slice invested in financials, so I’m well positioned to take advantage of this rotation, even though my Moonshot Growth slice might take a hit. Hey, that’s what a diversified portfolio is for, huh!? check out my all-time returns to date.

The all-time returns of my portfolio highlight the huge run in growth stocks, but check out the returns for the last month below. My Growth + High Yield slice (heavy in financials) and my stable yield slices have had the best returns. Cyclical companies and companies that are more conservative comprise those slices.

As interest rates rise, debt becomes more expensive. Growth companies use debt to finance their expansion into markets, and if debt becomes more expensive then that affects their ability to scale quickly. It can be done, but it’s like walking slightly uphill as opposed to walking on flat ground. You can run a mile, but your time will likely be slower.

Institutional investors are worried about the hill getting steeper, and so some of this bearishness is coming out in a flock to safer stocks. Personally, I think this means the place to be is in companies with attractive price to earnings ratios, so you don’t have to overspend for anticipated earnings.

As part of my Growth + High Yield portion of my portfolio, I selected stocks that had both stock price appreciation and dividend potential. I went heavy on financials and pharma companies, and the rapid increase in the 10 year bond yields have meant that banks and financial stocks will get more value for their cash reserves. For pharma companies, the rising interest rates and inflation risk make companies with a good PE ratio, high growth prospects and a good dividend harder to come by. There are a few good players in the space, but I hold Novartis (NVS), Pfizer (PFE), and Johnson & Johnson (JNJ).

Take a look at my best performing portfolio slice, my Growth + High Yield slice here: https://m1.finance/db5elsZEoP_S

If you’d like to check out my portfolio, take a look here: https://m1.finance/awNd6cXLSiWt

Please note, I am not a financial advisor and this content is for entertainment purposes only. I hope you enjoyed. What companies are you bullish on?

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