The Savvy Yabby Report distributes our institutional grade model portfolios to paying subscribers on a monthly basis. The current list includes these strategies.
Australian 20 Stock Model Portfolio
USA 20 Stock Model Portfolio
International (non-USA) 20 Stock Model Portfolio
Global Best Ideas 25 Stock Model Portfolio
There are no changes for the USA model this month.
Artificial Intelligence continues to dominate headlines even though there is plenty of other stocks that are now doing better. The top performer last month was the US oil giant Exxon XNYS: XOM, while our biggest detractor was Alphabet XNAS: GOOG.
There is much discussion of when this capital expenditure boom on data centers, and chips for Artificial Intelligence peters out. We think higher interest rates will finish off this cycle sometime early in 2027. The wait is for a 6% yield on the 10 year bond.
That seems likely to us as the Trump Administration shows little sign of backing down on the war in the Middle East, or high levels of fiscal outlays on the military.
In our view, Large Language Models (LLM) are terrifically useful in the hands of any intelligent human who can ask a good new question and chase down the truth.
The problem, right now, is that the C-Suite is obsessed with the idea that these tools can replace large numbers of human workers across their business.
I do not think that will lead to the expected outcome.
There certainly will be layoffs, and a near term improvement in the bottom line, but I suspect the error rates in business processes will ultimately go up and not down.
This is because LLM technology is probabilistic by nature.
The models literally guess the most likely answer to any question based on a large array of statistical patterns that have been fitted to the training data.
Plausible reasoning can be very valuable if pursued in a sensible faashion.
However, there are zero logical guarantees to these systems. That fact has not been discussed honestly by the boosters, and so a predictable slump will arrive.
Do not expect the technology to die but expect corporate enthusiasm to wane.
This will not happen in earnest until some very expensive errors come to light.
That process takes time, and so the boom is likely to continue until credit conditions tighten enough to choke it off. I will be doing some pieces on bond investment, as the place to put marginal cash once this cycle tops out.
The updated performance and current portfolio are given below.
