YWR: Q2 2026 Performance Review
Disclosure: These are not investment recommendations!
I always say YWR readers are some of the smartest investors in the world. I see it from the comments at the end of the posts, the chat dialogue, and coffee meet-ups.
Now we have some data to prove it.
It’s time to review our 1H 2026 performance.
Do you remember the ETF portfolio you picked at the end of 2025?
It’s +21.1% ytd! Great job!
Dirty Div’s is +15.9%.
Cash Dragons is sucking (-20%).
And my overall ‘buy everything’ portfolio which includes Dirty Dividend, Cash Dragons, NASDAQ, S&P 500, Gold, AI and a few other stocks is +5.6% ytd.
Let’s go over each of them.
YWR ETF Portfolio
Energy (XLE) was +19%. Gold Miners (GDX) -12%. China (FXI) -17%. Brazil (EWZ) +9%.
And South Korea (EWY) +108% ytd!!
Bam!! Korea roll’n up on all the memory haters!
So what do we do for 2H 2026?
Do we switch out FXI for KSTR?
I know everyone wants to fade hardware, but it feels super consensus. I’m kind of leaning the other way. I’m not sure. Is the market surprise that ‘Cybertron’ goes on for years, kind or how online vs offline was a 25 year theme?
Or, do we keep everything the same?
Just to be clear, while the other portfolios are real money, the YWR ETF Portfolio is a hypothetical portfolio constructed from the reader survey we conducted in December 2025.
Maybe it should be a real portfolio.
Below is the current allocation.
Let me know what you think.
Dirty Dividends
+15.9% ytd. A nice recovery from -2.6% at the end of March. We kept our cool during the Iran war panic. Just reinvested a few year-end dividends and added a new position in Frontline.
European banks are the biggest trade nobody talks about. They just carry on growing, buying back shares, and paying out dividends while nobody talks about them. That’s how we like it. 2 million Substack posts/week about AI and none about Unicredit, Santander or Barclays. Let’s keep it that way. If anyone asks about European banks send them another AI podcast to listen to.
The performance of European banks means they are now 59% of the portfolio.
If I had to say what looks the interesting right now in Dirty Div’s it’s TotalEnergies at 7x earnings. You get a mix of everything; upstream oil and gas, global LNG trading business, LNG terminal investments, a growing electricity generation portfolio and refining all for 7x earnings plus dividends. In the latest Global Factor Model data everything to do with energy screened well. The market is pricing energy, shipping and refining as if the Iran disruptions are over. So the bet would be that they are not. That there a few more chapters to the story.
Cash Dragons
-20% YTD! Crikey.
Earnings at Alibaba have been terrible. Baidu is starting to inflect, but it got dragged down with the rest of the Hong Kong sell-off. Tencent Q1 earnings were better than expected given all the warnings they made about how much they were going to spend on AI, but it didn’t matter, it was sold down too.
Basically, Hong Kong has turned into a ‘software’ trade, while the Shanghai Star market is Cybertron (‘hardware’). Nobody wants food delivery, online retail, paid search and video games…. Those are ‘human’ trades. ‘Human trades’ are dead money. Everyone wants robot trades; GPU’s, DRAM, contract manufacturing, optical connectors, LIDAR and batteries.
So what do we do?
I’m reducing Alibaba and Baidu. Mostly Alibaba, but it’s also for personal reasons. See the personal announcement below. I’ve seen Tencent manage well through problems before (new video game license freezes, changes to fees on payments). ‘AI’ will probably be the same. So I’ll stick with Pony Ma and his team. Earnings at HK Exchange, Ping An, LVS and SGX have been fine so nothing done there.
Overall Buy Everything Portfolio
My asset allocation can best be described as the ‘buy everything portfolio’. Buy NASDAQ, buy AI, buy gold, buy China, buy banks, buy energy. It’s Project Zimbabwe. We want to be long a diversified portfolio of risk assets.
Mostly we just want to be long everything. It’s the 18 wheeler theory. Even if 1 tire blows, we keep on trucking.
The Cash Dragons slice dragged down 1H performance so the overall performance was only +5.6% ytd.
Public Service Announcement.
I want to disclose something because it’s important to know where people have skin in the game and where they are just talking. That’s why we do this review of our actual performance.
At the end of the quarter I had to sell some stocks to buy a property. It meant going over all of my accounts and doing an upside/downside analysis of how to raise money while minimising capital gains taxes.
I sold completely out of Mercedes Benz, Tesla, Amgen, Vinci and Alibaba. I reduced Glencore and Baidu substantially, and sold 15% of SK Hynix. The sales to Alibaba and Baidu reduced a lot the size of the Cash Dragons portfolio.
Regards,
Erik
For the ETF portfolio, I would cut EWY down to 25%; it’s been an epic run. And I would add to China and structure it in three 7-8% buckets of: FXI, KSTR, and ASHR (to get A shares exposure). I would reduce EWY (downside is likely worse if Lula wins) and add silver via SLV or PSLV. If gold is gonna work then silver will really work. And finally, how about some biotech via XBI. Maybe just maybe, healthcare is the real AI winner.
An alternative I chose instead of the TotalEnergies trade—and one that might also be of interest to others—is very long-term call options on SHELL.AS. While you forgo the dividends, I think this is a very efficient way to deploy your capital. I bought the call option with a strike price of €35 and an expiration date of December 20, 2030, for €6.50, and I have another open order at €5—the company’s natural gas division will be of enormous importance to Europe, there’s a robust buyback program through 2030, and the trading business is considered one of the best, if not the best. The stock is already trading very close to the strike price today—the buyback should do its magic by 2030, and then you’ll still have almost a whole year left… That should work out well, if you believe at all that the energy sector is a worthwhile investment.