Sign, Sign, Everywhere A Sign. But Investors Disregard

Portfolio Positioning Update

We agree with Doug’s point on instability. When reviewing the market’s more extreme positioning on so many different levels, such is why we have continued to position more defensively over the past couple of weeks. 

Therefore, it is at these points in the market, where investing seems like a “can’t lose” opportunity, that “risk” tends to present itself in the most unruly of fashions. It is also at these points where investors get lured away from their investment disciplines to “take on a little more risk.”  However, it is there that investors find out they have taken on much more risk than they realize. 

Such is why, over the last couple of weeks, we have provided you with investing rules and guidelines. These are the same rules and discipline that we use in our practice.

Do they always work? Absolutely not. However, more often than not, those rules keep you from losing large amounts of capital. 

For now, we are carrying higher levels of cash than usual after reducing our bond duration and size and took profits in some of our more egregiously overbought equity positions. Therefore, with better positioning and lower beta, we can wait for the next opportunity to add to our equity risk.

Lastly, we are watching the U.S. Dollar very closely. It is now extremely oversold with a large net-short position. Such is a prime setup for a rather sharp reversal, which would lead to lower prices in commodities, stocks, emerging markets, international6 markets, and bitcoin.

But that is a story for later.

We just launched an all-new dashboard with tons of market data and stock and ETF specific analysis to generate real-time trading ideas. (Screen Shots)

 

 

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Model performance is a two-asset model of stocks and bonds relative to the weighting changes made each week in the newsletter. Such is strictly for informational and educational purposes only, and one should not rely on it for any reason. Past performance is not a guarantee of future results. Use at your own risk and peril.  

 

 

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