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hi everyone welcome to today's video so today I'm going to analyze Mr R alio portfolio for you he has made some very specific very important changes in his portfolio that can act as a massive learning for us in case we are invested in the stock market picking up cues from him he can accordingly realign and readjust our portfolio now Mr R Alo is one of my favorite absolute favorite investor in the world the reason is that he is one of the foremost macroeconomics based investor now people often discount the value of macroeconomic investing and let me explain this via an example that why is it that macroeconomic investing is one of the most useful forms of Stock Investing now what happens is that for example let's assume that we are sitting in August right now and we are taking a look at Indian tech stocks right we are analyzing candle patterns we are analyzing charts we are analyzing cupman handles we are analyzing this that bunch of different things that is technical analysis nothing wrong with it and nothing against technical traders who do intraday or short-term trading nothing wrong with it I also do swing trading but here is the reality that if for some reason if sector rotation happens in US tech stocks trust me Indian tech stocks will fall short you can look at whatever RSI you want to look at it will not work out similarly the moment the bond market yields start increasing or start going up there will be massive outflow of money in the stock market and all the stocks be midcap small cap large cap cap they will start going down that is the power of macroeconomics and Mr R alio looks at Major Trends and he makes his Investments so it is extremely important for us to be educated about how to understand macroeconomics and more importantly how to apply that knowledge in the stock market this is very difficult to teach I make my honest effort so please give it a thumbs up will make me super super super happy and I would really appreciate it so with that said on today's video I essentially going to do three things one is that I'm going to take you through Mr Al's core portfolio what he holds right now what are some of the major changes that he has made number two I'm going to cover where is he investing now and more importantly why is he doing that so that is two and third is that I'm going to cover major implications of this and how as retail investors we can pick up certain cues and avoid certain overvalued sectors and which type of sectors we should jump into so without further Ado let me Kickstart the first section where we will just quickly go through Mr ralo's portfolios now if you take a look at 50 Bridgewater Associates holding these are the major Holdings that you can see and you will see some major changes number one change right at the up front you will see that 37% Chang has happened at S&P 500 so S&P 500 is an index fund based out of us and this invests in US stocks and he has cut down his index holding by 37% right which is massive right this has a value of approximately 845 as of now so he would have sold shares worth $600 million a lot of money so we need to understand why this Chang is happening very very important concept for us then again if you take a look at that he has bought a lot of Walmart 45% increase in his holding he has bought PNG around 47% holding has gone up he has bought Coca-Cola again 45% increase Pepsi again 49% increase Costco McDonald's right again 50% increase almost 50% increase so you're seeing that he has cut down his major holding on S&P 500 which is an index fund he's not looking to invest in the entire index as of now and number two he has invested in very specific types of stocks for example Coca-Cola Pepsi and he is taking very big bets very very very big bets he has not just cut down his portfolio by 1% 2% 5% he has cut down his S&P Holdings by almost 40% he has increased his Holdings in certain types of Stocks by up to 50% also which is massive so very important for us to understand these two key changes so let me go step by step now let's first take a look at the chart for S&P 500 by weighted average so the chart must be here so just zoom it out and take a look at it and you will make some key observations so you will see that if you take a look at S&P 500 the S&P 500 has become more and more concentrated with time so back in 2000 companies like Microsoft G Cisco Intel and Walmart were the top five companies which formed S&P 500 by weight right and their total weight was approximately 18% approximately 18% now we are sitting in 2021 the top five companies that are making the S&P 500 are all five tech stocks right so these are five tech stocks and they make up 23% market cap now if Mr R Alo is bringing down his S&P 500 holding in entirety what does this indicate so he believes in the following narrative he simply means that hey right now S&P 500 is overvalued right he it is overvalued why does he think that it is overvalued he thinks it is overvalued simply because of the fact that the top five companies making up the majority of S&P 500 index index is basically a collection of stocks the top five stocks are making 23% of This basket right so which is huge which is insane absolutely insane so he is not betting big on this part of the S&P 500 so he has brought down this holding by 40% because he feels that the tech stocks are slightly overvalued whatever money he's making he is trying to pour that in other type of stocks that's a even if you take a look at this graphical representation I have told this multiple times that in majority of the cases Whenever there is a very very sharp increase like this you must be very wary right you must be absolutely wary and you must look at these individual stocks are these good companies absolutely these are great companies but the problem is that are they overvalued right now in my opinion yes and whenever there is a correction that will happen in the US tech stocks Indian tech stocks will also suffer the same fate please remember this it is very important for you to note that down so which brings us to the second key point in Mr ra Al's strategy how he has changed it so if you take a look at where is he investing the money so he's investing in Walmart he's investing in PNG he's investing in Coca-Cola Pepsi Costco McDonald's companies like these these are stable companies with very strong brand value okay so this is a very very important point if you have watched my inflation video you will understand why Mr R alio is betting big on Brands right now brands that are consumed by everyday Americans right that is the simple philosophy here so here is a very interesting thing that I will show you now if you take a look at a recent news article by Business Insider you will see that companies like Taco Bell McDonald's Duncan are raising prices for their menus and if you scroll through this article this is a very important paragraph that you need to take a look at so according to Gardon hasket analysis the greatest price increase have been 10% at Taco Bell 8% at McDonald's 8% at Duncan now here there are a couple of questions that you need to ask yourself number one why is it that companies like McDonald's are able to increase their price of their menu so easily by 8% inflation in the US is approximately 1 to 2% but McDonald is able to increase its price by 8% right why because McDonald has built a brand brands are very very powerful yesterday I released a video where I mentioned categorically that hey why am I investing in something like voltas World poool Etc because these are Brands why am I not investing in something like umber Enterprise because it's a backend company it's not a brand brand so in a high inflationary environment and this is a key takeaway for you that in a high inflationary environment we are currently in a very high inflationary environment in a high inflationary environment good brands can keep on increasing their prices McDonald has done it for decades now that every decade inflation goes up McDonald increases its prices also and it stays in business business it has been doing that successfully and that is what makes McDonald's one of the biggest biggest fast food chain companies in the world so just to quickly summarize number one according to Mr Reed alio the tech stocks are slightly overvalued right now he's cutting down his Holdings of S&P 500 because of that reason otherwise people do not sell index he has sold his index he has sold 40% of his index he has moved that money into what type of firms that has very high strong brand value why because we are currently sitting in a very High inflationary environment he envisages that this High inflation environment is going to continue going ahead in the future and if he's holding good brands they will control the power of pricing they will continue to increase the price and Mr Rio is going to make money in the process that is the reason why he has increased his holding in everyday American companies like Pepsi Costco McDonald's Etc now this brings us to the second section that where is it that Mr R alio is now investing more of his money and what are some of the the key points that I observe so first thing that you will notice is that he has started taking more positions in Vanguard ftsc emerging markets Emerging Markets would be markets like India he has started investing more money in Alibaba group holding limited he's making China based Investments also and he's making a lot of International Investment so let me just quickly take you through that if you take a look at is China large cap if you take a look at msci China he's investing a lot of money outside the US now so it's important for us to understand that as investor now we are retail investors we do not have that big a portfolio like Mr R Dalo but important lesson for us is that if we get an opportunity to invest outside our home country we should diversify because these days there is a lot of sovereign risk that if you are investing money only in China or only in India and if something bad happens in India or China we are not Diversified therefore if you're investing money in stock markets you must identify a way to diversify outside India also I agree that India is very much growing I am heavily invested in India and will continue to be heavily invested in India but at the same time like Mr R Alo follow the diversification principle from a country point of view as well now there are a couple of countries that I will take you through why am I bullish about these countries and why Mr ralu is also very bullish about these countries first is India press the like button I've been talking about India that you know what India has like amazing growth opportunities especially in the stock markets so Mr R alio is also taking similar positions so it's important for us to understand that why are investors so bullish on India right now despite its GDP Contracting massively due to Corona virus so here is a chart for you that shows the forecast of by what percentage the middle class of India will grow so you can see that by 2040 India's middle class will take over China's middle class Indonesia's middle class Vietnamese middle class everyone in pure number terms it would be massive India's middle class would be massive and if India's middle class is massive lot of good things start to happen because people undertake more discretionary expenditure and majority of the companies end up making money if people are undertaking discretionary expenditures many a time people ask me that hey aat can you explain why so much investor money is flowing in India here is the reason why that the India's middle class is growing it will continue to grow it's only a matter of time that India's middle class will be massively big they will start undertaking discretionary expenses and no matter what industry you are looking at there will be massive growth opportunities in those Industries now here was a very interesting article on Financial Times regarding this that nearly 55% of India's population is expected to join the ranks of the middle class in fact because of India's demographies are much younger compared to China and the US India's middle class could be the largest in the world by 2025 itself right so here they are saying that by 2025 itself India's middle class could be the biggest right these are all different forast but all of us can agree that hey India's middle class is growing moving discretionary spending will grow in India and that puts India on very strong growth trajectory that we might witness a massive Bull Run in the Indian market in the next couple of decades itself now if you do the same analysis for China then you will see that Mr R alio is undertaking a lot of positions in China he's doing this for two reasons now here is a chart for you you can see that it has been published by international monetary fund it clearly predicts that by 2030 the Chinese economy will overtake Us's economy so it makes sense to invest in Chinese company if you want please comment I'll make a separate video on Chinese stock market or the US Stock Market if you want me to do more analysis do let me know in the comment box but the bottom line here is that investors especially with the magnitude of Mr ralo's portfolio they need to take exposure in markets that are the most booming and will become the biggest in the world in the very near future China is likely to do that very very soon so he's taking exposure there that's a b the Chinese stock market has come down right because of Chinese government intervention especially in tech stocks so it has come down Mr R Alo has made these changes very very recently so he's taking advantage of buying these undervalued assets as of now in the Chinese market now you would say that okay great you know what man you are talking about R Alo he has like billions and billions of dollars he's investing in China us what do I have to do with this why do I bother if I'm an Indian investor so this section is for you and here are couple of things that you must understand first key thing that you must notice with Mr rid Al's changing strategy is that a he believed that tech stocks are overvalued so if you have invested heavily in Tech in Indian stocks please do a more thorough analysis I'm not saying that it is bad or good I'm not saying any of those things but do your own due diligence as of now that's one second thing is that we are sitting in a very high inflationary environment what indicates that that Mr R Dalo has taken out his money from S&P 500 has put that in massive everyday Brands why because these Brands will grow these Brands will grow in a high inflationary environment we are sitting in a high inflationary environment so if as a retail investor currently you have your money in your FD you are committing a sin right please take out your money out of an FD and invest in any brand okay it will grow third in India Bull Run is going to happen right it will happen it might not happen in the next 5 years but it might happen in next 15 20 years but it will happen right when it happens your money will increase a lot only if you have have invested in businesses right and how do you invest in business via stock markets therefore you should learn about stock market invest with the right Brands invest in midcap small cap stocks also invest in companies that will benefit from the growth of the middle class in India if you making the right bets your money can literally grow a lot we often talk about multi Waggers that hey a tell me like some multi Waggers there is no such thing as multiv Baggers essentially you invest your money at the right time in the right set of companies and they grow up to become multi Baggers and I believe that this is the time for India that if the Indian middle class grows with some push coming from International markets there is a very high likelihood that if you're investing and picking the right bets as of now then if you learn and invest your money in the stock market your money might actually become 4X 5x 6X also in a very quick span of time now what are the risks that you must be worried about if you are an investor in India now in India what happens is that India's debt to GDP ratio is very high it is one of the highest in the world here's an article for you to read now with countries like India or emerging economies if our government's default in terms of paying their debt so we have taken debt the entire world has taken debt but when us is taking on debt the world is okay with it why because they know that us is a very strong economy or China is a very strong economy they are okay with it but if Indian government or Emerging Market governments start taking more and more and more debt they are worried that hey whether these countries can repay their debts so it becomes a slight issue if our debt becomes unmanageable for wide variety of reasons for example if the government is not good if they are not showing fiscal Prudence they are printing more and more currency wide range of bad things can be done right so if such a scenario plays out of course Indian stock market is going to suffer you and I as small retail investors we can't do anything at that stage so keep a track of how Indian government is controlling its debt so very important for you to understand that that the debt needs to be in control if the debt is out of control and it's going ha then please get out of the stock market at that stage final point is that hey AIT can you tell us some of the sectors in which you are bullish for let's say one or two decades I am very bullish on Indian banking stocks I'm very bullish on India's consumer durable good industry stocks I'm very bullish on India's EV sector stocks these are two three major bets I'm making of course there are multiple good stocks outside of these industries as well so please do your due diligence and make your calls but do invest learn about investing I hope you eny enjoyed the video give it a thumbs up and a comment and I will see you the next time
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