Monthly Outlook: October 2022  We’ve avoided a lot of the market decline this year by avoiding stocks. That sounds simple or obvious, perhaps, but it’s a big decision that most money managers won’t make. Our iFolios strategy is a trend-following strategy with rules-based signals that tell us when to buy for growth and when to sell for protection. Following our signals, we have been massively underweighted stocks for the past six months. As a result, we’re beating market benchmarks by 10% or more, YTD. As we sit in protection mode, our managed portfolios are moving sideways as the markets, and buy-and-hold portfolios, gyrate lower. Federal Reserve Chairman, Jay Powell, looked right into the camera after their most recent Board meeting on September 21st and told us that the Fed will use its tools to act as a brake on the economy and quell inflation. At least, that’s what we thought [...]

Monthly Outlook: September 2022  The two-month bear market rally came to an end in mid-August. It was nice while it lasted and gave the “buy & hold” crowd some hope. But the Federal Reserve Board (the Fed) poured cold water on the market by clarifying their commitment to fight inflation through tighter monetary policies. We’ll discuss the Fed and their plan later in this Outlook. But first, let’s review the markets. The U.S. stock market is down 16.2%, YTD, and the international stock market is down 19.8%, YTD. Bonds aren’t helping, either, with losses of 10.8%, YTD. Critically, nearly every market is below its 200-day moving average trendline, implying continued downtrends and the need for protection, for now. We’re doing that and our clients’ portfolios are beating the market benchmarks by a solid margin. The irony is that the economy remains strong, even if it is weakening a bit. But [...]

Monthly Outlook: August 2022  Markets enjoyed a solid bear market bounce in July. U.S. stocks rallied 9.2%, international stocks were up 3.4%, and even bonds rose 2.4%. This was the third rally of 5% or more since the market downtrend started in January 2022. The other rallies proved to be short-lived, and we expect this one to be, too, unfortunately. Even with the July bounce, markets remain downtrending with U.S. stocks down 14.0%, international stocks down 14.6%, and bonds down 8.2%, YTD. For investors that haven’t reduced their risk and trimmed stocks, we’d recommend selling this rally. The July rally was a bit odd considering the weak economic news that was released. GDP for the second quarter fell -0.9%, following a -1.6% decline in the first quarter. Although two consecutive quarters of declining GDP is only a shorthand estimate of recession and doesn’t confirm one, it is a good clue [...]

Monthly Outlook: July 2022  Our iFolios growth portfolios beat their market benchmarks by 4% to 5% in June. We did that by not losing (much). Since January, when nearly every market turned from uptrend to downtrend, we’ve been selling and raising a lot of cash. We simply followed the trends and invested accordingly. We didn’t guess or predict, and we didn’t fight our signals. As we start the second half of 2022, the trends remain firmly downtrending and so we remain resolutely in protection mode. Markets have been remarkably weak this year, so far. The S&P500 is down 19.9%, the NASDAQ is down 29.3%, and international stocks are down 18.8%. Even bonds have lost 10.3%, and that includes interest. Cash, paying next to nothing, is a far better temporary holding than nearly any other market. With markets down so much, many investors are tempted to believe that we’re somewhere near [...]

Monthly Outlook: June 2022  What a long, strange trip it’s been this year, already. The peak for the S&P500 was on the first trading day of the year, January 3rd, and it’s down 12.8%, YTD. As unsettling as that is, it doesn’t tell you how we got here. The daily volatility has been remarkable – in both directions. We’ve seen 11 days where the market dropped over 2% (and several over 3%). But we’ve also seen 11 days where the market gained over 2%. If you’ve sensed the U.S. markets have been wild this year, you’re not imagining it. Other markets have been weak, also. International stocks are down 11.0%, and Bonds are down 8.8%. The only positive market is Commodities, with a YTD gain of 38.7% (thanks mostly to oil, which is up 52.9%). The semi-good news is that we’re beating market benchmarks easily, this year, and with a [...]

Monthly Outlook: May 2022  Markets are off to one of their worst starts in decades. There’s just no way to say that pleasantly. YTD, the S&P500 is down 12.9%, the NASDAQ (last two years’ favorite) is down 21.1%, and international stock markets are down 12.7%. Even Bonds are down 9.5% this year. The important thing, to us, is that the trend of nearly every market has rolled over to downtrend (below their 200-day moving average trend line), thereby triggering our sell signals. There are a couple of sub-sector niche markets that are doing ok, mostly commodities, but do you really want a portfolio of just oil and soybeans? The good news is that we’ve already sold a lot of holdings and are sitting in protection mode with ample Cash. We’re holding just 20% of our stock market targets, counting both long and offsetting hedge positions, so we’re clearly focusing on [...]