INSERT INTO `wp_posts` VALUES (9266,2,'2021-07-16 15:13:35','2021-07-16 15:13:35','<!-- wp:heading -->\n<h2>Consumer Confidence rebounds, but at what cost?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.&nbsp; This month’s report showed broad strength, with both the Present Situation and Future Expectations components climbing higher.&nbsp; Gains in the Present Situation component were driven by more favorable views of the labor market.&nbsp; In fact, over 54% of consumers view jobs as “plentiful” versus only 11% who see them as “hard to get”, one of the widest differentials on record.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>While this bodes well for consumer spending in the months ahead, it highlights that there is a shortage of labor that could lead to persistent wage inflation.&nbsp; According to the Conference Board’s survey, concerns about inflation are already present as consumers’ inflation expectations have surged to a 10-year high.&nbsp; This will be a key development to watch going forward, as the longer that inflation expectations remain elevated, the greater the risk of inflationary psychology taking hold.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9255,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Consumer-Confidence.jpg\" alt=\"\" class=\"wp-image-9255\"/></figure>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210629confidence-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>.</p>\n<!-- /wp:paragraph -->','Consumer confidence rebounds, but...','Consumer Confidence rebounds, but at what cost?  Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.  ','inherit','closed','closed','','8852-revision-v1','','','2021-07-16 15:13:35','2021-07-16 15:13:35','',8852,'https://ns2020-investech.investech.com/?p=9266',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9267,2,'2021-07-16 15:14:47','2021-07-16 15:14:47','<!-- wp:heading -->\n<h2>Consumer Confidence rebounds, but at what cost?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.&nbsp; This month’s report showed broad strength, with both the Present Situation and Future Expectations components climbing higher.&nbsp; Gains in the Present Situation component were driven by more favorable views of the labor market.&nbsp; In fact, over 54% of consumers view jobs as “plentiful” versus only 11% who see them as “hard to get”, one of the widest differentials on record.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>While this bodes well for consumer spending in the months ahead, it highlights that there is a shortage of labor that could lead to persistent wage inflation.&nbsp; According to the Conference Board’s survey, concerns about inflation are already present as consumers’ inflation expectations have surged to a 10-year high.&nbsp; This will be a key development to watch going forward, as the longer that inflation expectations remain elevated, the greater the risk of inflationary psychology taking hold.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9255,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Consumer-Confidence.jpg\" alt=\"\" class=\"wp-image-9255\"/></figure>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210629confidence-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure>\n<!-- /wp:image -->','Consumer confidence rebounds, but...','Consumer Confidence rebounds, but at what cost?  Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.  ','inherit','closed','closed','','8852-revision-v1','','','2021-07-16 15:14:47','2021-07-16 15:14:47','',8852,'https://ns2020-investech.investech.com/?p=9267',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9268,2,'2021-07-16 15:14:49','2021-07-16 15:14:49','<!-- wp:heading -->\n<h2>Consumer Confidence rebounds, but at what cost?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.&nbsp; This month’s report showed broad strength, with both the Present Situation and Future Expectations components climbing higher.&nbsp; Gains in the Present Situation component were driven by more favorable views of the labor market.&nbsp; In fact, over 54% of consumers view jobs as “plentiful” versus only 11% who see them as “hard to get”, one of the widest differentials on record.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>While this bodes well for consumer spending in the months ahead, it highlights that there is a shortage of labor that could lead to persistent wage inflation.&nbsp; According to the Conference Board’s survey, concerns about inflation are already present as consumers’ inflation expectations have surged to a 10-year high.&nbsp; This will be a key development to watch going forward, as the longer that inflation expectations remain elevated, the greater the risk of inflationary psychology taking hold.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9255,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Consumer-Confidence.jpg\" alt=\"\" class=\"wp-image-9255\"/></figure>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210629confidence-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure>\n<!-- /wp:image -->','Consumer confidence rebounds, but...','Consumer Confidence rebounds, but at what cost?  Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.  ','inherit','closed','closed','','8852-revision-v1','','','2021-07-16 15:14:49','2021-07-16 15:14:49','',8852,'https://ns2020-investech.investech.com/?p=9268',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9301,1,'2021-07-19 01:01:24','2021-07-19 01:01:24','<!-- wp:woocommerce/all-products {\"columns\":3,\"rows\":1,\"alignButtons\":false,\"contentVisibility\":{\"orderBy\":true},\"orderby\":\"date\",\"layoutConfig\":[[\"woocommerce/product-image\"],[\"woocommerce/product-title\"],[\"woocommerce/product-price\"],[\"woocommerce/product-rating\"],[\"woocommerce/product-button\"]]} -->\n<div class=\"wp-block-woocommerce-all-products wc-block-all-products\" data-attributes=\"{&quot;alignButtons&quot;:false,&quot;columns&quot;:3,&quot;contentVisibility&quot;:{&quot;orderBy&quot;:true},&quot;isPreview&quot;:false,&quot;layoutConfig&quot;:[[&quot;woocommerce/product-image&quot;],[&quot;woocommerce/product-title&quot;],[&quot;woocommerce/product-price&quot;],[&quot;woocommerce/product-rating&quot;],[&quot;woocommerce/product-button&quot;]],&quot;orderby&quot;:&quot;date&quot;,&quot;rows&quot;:1}\"><!-- wp:woocommerce/product-image -->\n<div class=\"wp-block-woocommerce-product-image is-loading\"></div>\n<!-- /wp:woocommerce/product-image -->\n\n<!-- wp:woocommerce/product-title -->\n<div class=\"wp-block-woocommerce-product-title is-loading\"></div>\n<!-- /wp:woocommerce/product-title -->\n\n<!-- wp:woocommerce/product-price -->\n<div class=\"wp-block-woocommerce-product-price is-loading\"></div>\n<!-- /wp:woocommerce/product-price -->\n\n<!-- wp:woocommerce/product-rating -->\n<div class=\"wp-block-woocommerce-product-rating is-loading\"></div>\n<!-- /wp:woocommerce/product-rating --></div>\n<!-- /wp:woocommerce/all-products -->\n\n<!-- wp:woocommerce/handpicked-products {\"editMode\":false,\"products\":[1205]} /-->','Shop','','inherit','closed','closed','','370-revision-v1','','','2021-07-19 01:01:24','2021-07-19 01:01:24','',370,'https://ns2020-investech.investech.com/?p=9301',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9303,1,'2021-07-19 16:55:42','2021-07-19 16:55:42','<!-- wp:spacer {\"height\":\"18px\"} -->\n<div style=\"height:18px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:group {\"layout\":{\"type\":\"constrained\",\"contentSize\":\"1200px\"}} -->\n<div class=\"wp-block-group\"><!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:image {\"id\":19417,\"width\":\"248px\",\"height\":\"330px\",\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2023/12/V23I11-768x1024.png\" alt=\"\" class=\"wp-image-19417\" style=\"width:248px;height:330px\"/></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:heading -->\n<h2 class=\"wp-block-heading\">Free Sample of InvesTech Research</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph {\"fontSize\":\"medium\"} -->\n<p class=\"has-medium-font-size\">Thank you for requesting a sample of the <em><strong>InvesTech Research </strong></em>newsletter.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph {\"fontSize\":\"medium\"} -->\n<p class=\"has-medium-font-size\">Select the following button to access your Free Issue today!  We will also send you an email containing a link to this issue.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons {\"layout\":{\"type\":\"flex\",\"justifyContent\":\"center\"}} -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link wp-element-button\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2022/02/V22I02.pdf\">Access Free Issue</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:spacer {\"height\":\"28px\"} -->\n<div style=\"height:28px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div>\n<!-- /wp:group -->\n\n<!-- wp:heading -->\n<h2 class=\"wp-block-heading\" id=\"h-a-track-record-of-success-and-recognition-unlike-any-other\">A <a href=\"https://ns2020-investech.investech.com/track-record/\">Track Record</a> of success and recognition unlike any other…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:nextend/smartslider3 {\"slider\":\"41\"} -->\n<div class=\"wp-block-nextend-smartslider3\">[smartslider3 slider=\"41\"]</div>\n<!-- /wp:nextend/smartslider3 -->\n\n<!-- wp:group {\"layout\":{\"type\":\"constrained\",\"contentSize\":\"1200px\"}} -->\n<div class=\"wp-block-group\"><!-- wp:heading {\"level\":3} -->\n<h3 class=\"wp-block-heading\" id=\"why-subscribe-to-the-investech-research-publications\">Why subscribe to the InvesTech Research publications?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>InvesTech Research is governed by a “Safety-First” investment strategy which is committed to helping you protect and conserve your money against losses and to helping you spot tremendous buying opportunities.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"2px\"} -->\n<div style=\"height:2px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:list {\"className\":\"two-cols is-style-green-checkbox\"} -->\n<ul class=\"two-cols is-style-green-checkbox\"><!-- wp:list-item -->\n<li><strong>We have a proven track record.</strong> For over 40 years, we have successfully navigated a volatile market with our “Safety-First” strategy, providing valuable insights to our subscribers.</li>\n<!-- /wp:list-item -->\n\n<!-- wp:list-item -->\n<li><strong>Over 120 years of data inform our publications.</strong> InvesTech has developed one of the largest private databanks in the industry including technical, monetary, and macroeconomic data. Through this wealth of market information, we\'re able to spot trends and detect patterns that most other advisories miss.</li>\n<!-- /wp:list-item -->\n\n<!-- wp:list-item -->\n<li><strong>Time-proven proprietary indicators and tools.</strong> We are unique in our ability to analyze both the monetary policy of the Federal Reserve as well as the technical health of the stock market, and what it means for your portfolio.</li>\n<!-- /wp:list-item -->\n\n<!-- wp:list-item -->\n<li><strong>InvesTech provides 100% independent, objective analysis.</strong> We sell no investment products. We provide an informed objectivity that you will not get from brokers, mutual fund advisors, and even many investment newsletters.</li>\n<!-- /wp:list-item --></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading -->\n<h2 class=\"wp-block-heading\" id=\"h-a-subscription-to-investech-is-more-than-an-investment-newsletter\">A subscription to InvesTech is more than an investment newsletter…</h2>\n<!-- /wp:heading -->\n\n<!-- wp:nextend/smartslider3 {\"slider\":\"36\"} -->\n<div class=\"wp-block-nextend-smartslider3\">[smartslider3 slider=\"36\"]</div>\n<!-- /wp:nextend/smartslider3 --></div>\n<!-- /wp:group -->\n\n<!-- wp:group {\"className\":\"wall-to-wall neutral-warm pad-2-0\",\"layout\":{\"type\":\"constrained\",\"contentSize\":\"1200px\"}} -->\n<div class=\"wp-block-group wall-to-wall neutral-warm pad-2-0\"><!-- wp:heading -->\n<h2 class=\"wp-block-heading\" id=\"ready-to-subscribe\">Ready to Subscribe?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Subscribe and receive the monthly <em>InvesTech Research</em> newsletter, weekly Market Insights, real-time updates to our proprietary indicators, and immediate access to subscriber\'s only content.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>We provide a no-risk money-back guarantee. You may cancel at any time and receive a 100% refund on the unused portion of your subscription.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:spacer {\"height\":\"18px\"} -->\n<div style=\"height:18px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button {\"className\":\"is-style-high-impact\"} -->\n<div class=\"wp-block-button is-style-high-impact\"><a class=\"wp-block-button__link wp-element-button\" href=\"https://ns2020-investech.investech.com/product/subscriptions/\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns --></div>\n<!-- /wp:group -->','Download Free Sample','','publish','closed','closed','free-sample-21','download-free-sample','','','2023-12-06 14:57:01','2023-12-06 20:57:01','',0,'https://ns2020-investech.investech.com/?page_id=9303',0,'page','',0);
INSERT INTO `wp_posts` VALUES (9304,1,'2021-07-19 16:55:42','2021-07-19 16:55:42','<!-- wp:paragraph -->\n<p>Content About Free Sample</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/04/free-sample.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download Now</a></div>\n<!-- /wp:button --></div>\n<!-- /wp:buttons -->','Download Free Sample','','inherit','closed','closed','','9303-revision-v1','','','2021-07-19 16:55:42','2021-07-19 16:55:42','',9303,'https://ns2020-investech.investech.com/?p=9304',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9310,2,'2021-07-19 22:41:32','2021-07-19 22:41:32','','Tale-Two-Investors','','inherit','closed','closed','','tale-two-investors','','','2021-07-19 22:41:32','2021-07-19 22:41:32','',8783,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9311,2,'2021-07-19 22:42:31','2021-07-19 22:42:31','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":8779,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=8779\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sp500-seasonal-performance.png\" alt=\"S&amp;P 500 Seasonal Performance comparing the May-Oct timeframe to the Nov-Apr timeframe.  \" class=\"wp-image-8779 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8780,\"width\":659,\"height\":371,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/seasonal-sector-rotation.png\" alt=\"seasonal sector rotation 1990-2021 showing leading sectors during November-April months flip to the opposite in the May-October timeframe.\" class=\"wp-image-8780\" width=\"659\" height=\"371\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-19 22:42:31','2021-07-19 22:42:31','',8783,'https://ns2020-investech.investech.com/?p=9311',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9312,2,'2021-07-20 15:38:50','2021-07-20 15:38:50','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">format</a></p>\n<!-- /wp:paragraph -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-20 15:38:50','2021-07-20 15:38:50','',9213,'https://ns2020-investech.investech.com/?p=9312',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9313,2,'2021-07-20 15:39:08','2021-07-20 15:39:08','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">format</a></p>\n<!-- /wp:paragraph -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-20 15:39:08','2021-07-20 15:39:08','',9213,'https://ns2020-investech.investech.com/?p=9313',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9314,2,'2021-07-20 15:42:52','2021-07-20 15:42:52','','ISM-Services-June-2021','','inherit','closed','closed','','ism-services-june-2021-3','','','2021-07-20 15:42:52','2021-07-20 15:42:52','',9213,'https://ns2020-investech.investech.com/wp-content/uploads/2021/07/ISM-Services-June-2021.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9315,2,'2021-07-20 15:44:06','2021-07-20 15:44:06','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">format</a></p>\n<!-- /wp:paragraph -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-20 15:44:06','2021-07-20 15:44:06','',9213,'https://ns2020-investech.investech.com/?p=9315',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9316,2,'2021-07-20 15:46:00','2021-07-20 15:46:00','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-20 15:46:00','2021-07-20 15:46:00','',9213,'https://ns2020-investech.investech.com/?p=9316',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9317,2,'2021-07-20 16:40:23','2021-07-20 16:40:23','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210701-ISMs-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>. </p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-20 16:40:23','2021-07-20 16:40:23','',9120,'https://ns2020-investech.investech.com/?p=9317',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9320,3,'2021-07-20 16:43:01','2021-07-20 16:43:01','','fedbuilding_K82gx9Uk8-unsplash','','inherit','closed','closed','','fedbuilding_k82gx9uk8-unsplash','','','2021-07-20 16:43:01','2021-07-20 16:43:01','',0,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/fedbuilding_K82gx9Uk8-unsplash.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9321,3,'2021-07-20 16:43:50','2021-07-20 16:43:50','','V21I07','','inherit','closed','closed','','v21i07','','','2021-07-20 16:43:50','2021-07-20 16:43:50','',0,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/V21I07.pdf',0,'attachment','application/pdf',0);
INSERT INTO `wp_posts` VALUES (9322,2,'2021-07-20 16:44:25','2021-07-20 16:44:25','','ISM-Mfg-Prices-Paid-June-2021','','inherit','closed','closed','','ism-mfg-prices-paid-june-2021','','','2021-07-20 16:44:25','2021-07-20 16:44:25','',9120,'https://ns2020-investech.investech.com/wp-content/uploads/2021/07/ISM-Mfg-Prices-Paid-June-2021.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9323,2,'2021-07-20 16:45:44','2021-07-20 16:45:44','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210701-ISMs-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>. </p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-20 16:45:44','2021-07-20 16:45:44','',9120,'https://ns2020-investech.investech.com/?p=9323',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9326,3,'2021-07-16 16:49:00','2021-07-16 16:49:00','<!-- wp:heading -->\n<h2>July 16, 2021:  Given the emergence of recent technical divergences...</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We are recommending the following incremental reductions in the Model Fund Portfolio:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li><strong>Decrease the allocation to the Invesco S&amp;P 500 Equal Weight Technology ETF (symbol: RYT) from 15% to 14%.</strong></li><li><strong>Decrease the allocation to the Industrial Select Sector SPDR ETF (symbol: XLI) from 9% to 8%.</strong></li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Future changes will be made depending on how the weight of the evidence develops. The Model Fund Portfolio is now 78% invested, with 22% held in short-term Treasurys or a money market fund.</p>\n<!-- /wp:paragraph -->','Model Fund Portfolio Update: July 16, 2021','','publish','closed','closed','','model-fund-portfolio-update-july-16-2021','','','2021-07-23 21:59:02','2021-07-23 21:59:02','',0,'https://ns2020-investech.investech.com/?post_type=investech-modelfund&#038;p=9326',0,'investech-modelfund','',0);
INSERT INTO `wp_posts` VALUES (9327,2,'2021-07-20 16:50:55','2021-07-20 16:50:55','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210701-ISMs-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>. </p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-20 16:50:55','2021-07-20 16:50:55','',9120,'https://ns2020-investech.investech.com/?p=9327',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9328,2,'2021-07-20 16:51:58','2021-07-20 16:51:58','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210701-ISMs-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a>. </p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-20 16:51:58','2021-07-20 16:51:58','',9120,'https://ns2020-investech.investech.com/?p=9328',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9329,3,'2021-07-20 16:51:59','2021-07-20 16:51:59','<!-- wp:paragraph -->\n<p>July 16, 2021:  Given the emergence of recent technical divergences, we are making the following incremental reductions in the Model Fund Portfolio:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li>Decrease the allocation to the Invesco S&amp;P 500 Equal Weight Technology ETF (symbol: RYT) from 15% to 14%.</li><li>Decrease the allocation to the Industrial Select Sector SPDR ETF (symbol: XLI) from 9% to 8%.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Future changes will be made depending on how the weight of the evidence develops. The Model Fund Portfolio is now 78% invested, with 22% held in short-term Treasurys or a money market fund.</p>\n<!-- /wp:paragraph -->','Model Fund Portfolio Update: July 16, 2021','','inherit','closed','closed','','9326-revision-v1','','','2021-07-20 16:51:59','2021-07-20 16:51:59','',9326,'https://ns2020-investech.investech.com/?p=9329',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9330,3,'2021-07-20 16:52:29','2021-07-20 16:52:29','<!-- wp:heading -->\n<h2>July 16, 2021:  Given the emergence of recent technical divergences, we are making the following incremental reductions in the Model Fund Portfolio:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:list -->\n<ul><li>Decrease the allocation to the Invesco S&amp;P 500 Equal Weight Technology ETF (symbol: RYT) from 15% to 14%.</li><li>Decrease the allocation to the Industrial Select Sector SPDR ETF (symbol: XLI) from 9% to 8%.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Future changes will be made depending on how the weight of the evidence develops. The Model Fund Portfolio is now 78% invested, with 22% held in short-term Treasurys or a money market fund.</p>\n<!-- /wp:paragraph -->','Model Fund Portfolio Update: July 16, 2021','','inherit','closed','closed','','9326-revision-v1','','','2021-07-20 16:52:29','2021-07-20 16:52:29','',9326,'https://ns2020-investech.investech.com/?p=9330',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9331,3,'2021-07-20 16:52:53','2021-07-20 16:52:53','<!-- wp:heading -->\n<h2>July 16, 2021:  Given the emergence of recent technical divergences, we are making the following incremental reductions in the Model Fund Portfolio:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:list -->\n<ul><li><strong>Decrease the allocation to the Invesco S&amp;P 500 Equal Weight Technology ETF (symbol: RYT) from 15% to 14%.</strong></li><li><strong>Decrease the allocation to the Industrial Select Sector SPDR ETF (symbol: XLI) from 9% to 8%.</strong></li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Future changes will be made depending on how the weight of the evidence develops. The Model Fund Portfolio is now 78% invested, with 22% held in short-term Treasurys or a money market fund.</p>\n<!-- /wp:paragraph -->','Model Fund Portfolio Update: July 16, 2021','','inherit','closed','closed','','9326-revision-v1','','','2021-07-20 16:52:53','2021-07-20 16:52:53','',9326,'https://ns2020-investech.investech.com/?p=9331',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9341,2,'2021-07-20 17:02:21','2021-07-20 17:02:21','<!-- wp:paragraph -->\n<p>The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.&nbsp; While the service sector remains strong, inflation continues to be a primary concern.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The “Prices Paid” Index for the service sector remains near the highest level in its history, which is proving to be a challenge for many businesses.&nbsp; The Institute for Supply Management highlighted the issue in this month’s report by stating, “<em>Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”</em>&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9246,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021.jpg\" alt=\"\" class=\"wp-image-9246\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Services-June-2021-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Services remains on solid ground','The ISM Services Index fell to a reading of 60.1% in June, still firmly in expansion territory and just 3.9% below its record high from the month before.  ','inherit','closed','closed','','9213-revision-v1','','','2021-07-20 17:02:21','2021-07-20 17:02:21','',9213,'https://ns2020-investech.investech.com/?p=9341',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9353,2,'2021-07-20 17:25:13','2021-07-20 17:25:13','<!-- wp:block {\"ref\":5238} /-->\n\n<!-- wp:heading -->\n<h2>About Daily Data</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The following data will be updated each business day as it becomes available from our sources.&nbsp; Some entries are preliminary and may not be finalized until the following morning.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":10} -->\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Market Indexes</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A market index is a hypothetical portfolio of investment holdings that represents a segment of the financial market. The calculation of the index value comes from the prices of the underlying holdings. Some indexes have values based on market-cap weighting, revenue-weighting, float-weighting, and fundamental-weighting.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1979,\"route\":\"renderChart\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Breadth/Volume Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Measures market \"breadth\" or participation. Deteriorating breadth is one of the earliest and most reliable of bear market warning flags. Trend is most important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1986,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Leadership Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Negative Leadership Composite: Measures internal leadership for evidence of a new bull market - or the danger of an imminent bear market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1998,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Short-Term &amp; Miscellaneous Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Used to forecast the short-term outlook for the market, which can be useful in improving entry/exit decisions in individual stocks or mutual funds. When at Oversold levels, a rally or upward reversal is very likely within the next few weeks. An Overbought reading indicates the market has climbed too far too fast and is likely to experience a consolidation or correction.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":2004,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>InvesTech\'s Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Indicators developed by InvesTech Research that measure developing risk in various parts of the stock market.  Learn more about <a href=\"https://ns2020-investech.investech.com/investech-indicators/\" target=\"_blank\" rel=\"noreferrer noopener\">InvesTech\'s Indicators and monitor LIVE updates</a> here.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":2013,\"lazy\":-1,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:spacer {\"height\":25} -->\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Historical Data:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>InvesTech Research is unable to provide historical data listings other than what is provided on this page.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:block {\"ref\":5343} /-->','Daily Data','','inherit','closed','closed','','2593-revision-v1','','','2021-07-20 17:25:13','2021-07-20 17:25:13','',2593,'https://ns2020-investech.investech.com/?p=9353',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9359,2,'2021-07-20 17:29:47','2021-07-20 17:29:47','<!-- wp:block {\"ref\":5238} /-->\n\n<!-- wp:heading -->\n<h2>About Daily Data</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The following data will be updated each business day as it becomes available from our sources.&nbsp; Some entries are preliminary and may not be finalized until the following morning.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":10} -->\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Market Indexes</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A market index is a hypothetical portfolio of investment holdings that represents a segment of the financial market. The calculation of the index value comes from the prices of the underlying holdings. Some indexes have values based on market-cap weighting, revenue-weighting, float-weighting, and fundamental-weighting.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1979,\"route\":\"renderChart\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Breadth/Volume Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Measures market \"breadth\" or participation. Deteriorating breadth is one of the earliest and most reliable of bear market warning flags. Trend is most important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1986,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Leadership Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Negative Leadership Composite: Measures internal leadership for evidence of a new bull market - or the danger of an imminent bear market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1998,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Short-Term &amp; Miscellaneous Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Used to forecast the short-term outlook for the market, which can be useful in improving entry/exit decisions in individual stocks or mutual funds. When at Oversold levels, a rally or upward reversal is very likely within the next few weeks. An Overbought reading indicates the market has climbed too far too fast and is likely to experience a consolidation or correction.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":2004,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>InvesTech\'s Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Indicators developed by InvesTech Research that measure developing risk in various parts of the stock market.  Learn more about <a href=\"https://ns2020-investech.investech.com/investech-indicators/\" target=\"_blank\" rel=\"noreferrer noopener\">InvesTech\'s Indicators and monitor LIVE updates</a> here.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":25} -->\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Historical Data:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>InvesTech Research is unable to provide historical data listings other than what is provided on this page.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:block {\"ref\":5343} /-->','Daily Data','','inherit','closed','closed','','2593-revision-v1','','','2021-07-20 17:29:47','2021-07-20 17:29:47','',2593,'https://ns2020-investech.investech.com/?p=9359',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9361,2,'2021-07-20 17:31:10','2021-07-20 17:31:10','<!-- wp:block {\"ref\":5238} /-->\n\n<!-- wp:heading -->\n<h2>About Daily Data</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The following data will be updated each business day as it becomes available from our sources.&nbsp; Some entries are preliminary and may not be finalized until the following morning.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":10} -->\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Market Indexes</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A market index is a hypothetical portfolio of investment holdings that represents a segment of the financial market. The calculation of the index value comes from the prices of the underlying holdings. Some indexes have values based on market-cap weighting, revenue-weighting, float-weighting, and fundamental-weighting.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1979,\"route\":\"renderChart\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Breadth/Volume Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Measures market \"breadth\" or participation. Deteriorating breadth is one of the earliest and most reliable of bear market warning flags. Trend is most important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1986,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Leadership Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Negative Leadership Composite: Measures internal leadership for evidence of a new bull market - or the danger of an imminent bear market.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":1998,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Short-Term &amp; Miscellaneous Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Used to forecast the short-term outlook for the market, which can be useful in improving entry/exit decisions in individual stocks or mutual funds. When at Oversold levels, a rally or upward reversal is very likely within the next few weeks. An Overbought reading indicates the market has climbed too far too fast and is likely to experience a consolidation or correction.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":2004,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>InvesTech\'s Indicators</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Indicators developed by InvesTech Research that measure developing risk in various parts of the stock market.  Learn more about <a href=\"https://ns2020-investech.investech.com/investech-indicators/\" target=\"_blank\" rel=\"noreferrer noopener\">InvesTech\'s Indicators and monitor LIVE updates</a> here.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:visualizer/chart {\"id\":2013,\"lazy\":-1,\"route\":\"chartSelect\"} /-->\n\n<!-- wp:spacer {\"height\":25} -->\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Historical Data:</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>InvesTech Research is unable to provide historical data listings other than what is provided on this page.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:block {\"ref\":5343} /-->','Daily Data','','inherit','closed','closed','','2593-revision-v1','','','2021-07-20 17:31:10','2021-07-20 17:31:10','',2593,'https://ns2020-investech.investech.com/?p=9361',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9362,2,'2021-07-20 17:33:31','2021-07-20 17:33:31','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210701-ISMs-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-20 17:33:31','2021-07-20 17:33:31','',9120,'https://ns2020-investech.investech.com/?p=9362',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9365,2,'2021-07-20 17:36:31','2021-07-20 17:36:31','','Consumer-Confidence','','inherit','closed','closed','','consumer-confidence-2','','','2021-07-20 17:36:31','2021-07-20 17:36:31','',8852,'https://ns2020-investech.investech.com/wp-content/uploads/2021/06/Consumer-Confidence.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9368,2,'2021-07-20 17:40:54','2021-07-20 17:40:54','','20210629confidence-1','','inherit','closed','closed','','20210629confidence-1','','','2021-07-20 17:40:54','2021-07-20 17:40:54','',8852,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210629confidence-1-1.pdf',0,'attachment','application/pdf',0);
INSERT INTO `wp_posts` VALUES (9369,2,'2021-07-20 17:41:30','2021-07-20 17:41:30','<!-- wp:heading -->\n<h2>Consumer Confidence rebounds, but at what cost?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.&nbsp; This month’s report showed broad strength, with both the Present Situation and Future Expectations components climbing higher.&nbsp; Gains in the Present Situation component were driven by more favorable views of the labor market.&nbsp; In fact, over 54% of consumers view jobs as “plentiful” versus only 11% who see them as “hard to get”, one of the widest differentials on record.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>While this bodes well for consumer spending in the months ahead, it highlights that there is a shortage of labor that could lead to persistent wage inflation.&nbsp; According to the Conference Board’s survey, concerns about inflation are already present as consumers’ inflation expectations have surged to a 10-year high.&nbsp; This will be a key development to watch going forward, as the longer that inflation expectations remain elevated, the greater the risk of inflationary psychology taking hold.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9255,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Consumer-Confidence.jpg\" alt=\"\" class=\"wp-image-9255\"/></figure>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210629confidence-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Consumer confidence rebounds, but...','Consumer Confidence rebounds, but at what cost?  Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.  ','inherit','closed','closed','','8852-revision-v1','','','2021-07-20 17:41:30','2021-07-20 17:41:30','',8852,'https://ns2020-investech.investech.com/?p=9369',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9370,2,'2021-07-20 17:41:32','2021-07-20 17:41:32','<!-- wp:heading -->\n<h2>Consumer Confidence rebounds, but at what cost?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.&nbsp; This month’s report showed broad strength, with both the Present Situation and Future Expectations components climbing higher.&nbsp; Gains in the Present Situation component were driven by more favorable views of the labor market.&nbsp; In fact, over 54% of consumers view jobs as “plentiful” versus only 11% who see them as “hard to get”, one of the widest differentials on record.&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>While this bodes well for consumer spending in the months ahead, it highlights that there is a shortage of labor that could lead to persistent wage inflation.&nbsp; According to the Conference Board’s survey, concerns about inflation are already present as consumers’ inflation expectations have surged to a 10-year high.&nbsp; This will be a key development to watch going forward, as the longer that inflation expectations remain elevated, the greater the risk of inflationary psychology taking hold.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":9255,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Consumer-Confidence.jpg\" alt=\"\" class=\"wp-image-9255\"/></figure>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210629confidence-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Consumer confidence rebounds, but...','Consumer Confidence rebounds, but at what cost?  Consumer Confidence from the Conference Board increased for the fifth consecutive month as pandemic woes continued to fade.  ','inherit','closed','closed','','8852-revision-v1','','','2021-07-20 17:41:32','2021-07-20 17:41:32','',8852,'https://ns2020-investech.investech.com/?p=9370',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9371,2,'2021-07-20 17:47:15','2021-07-20 17:47:15','<!-- wp:paragraph -->\n<p>The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6.&nbsp; Out of the 18 manufacturing industries surveyed, all but one reported growth last month.&nbsp; It wasn’t all good news, however, as the Prices Paid Index reflected mounting inflation pressures by surging to the highest level since 1979!&nbsp; The Institute for Supply Management expands on some of the reasons behind soaring prices by stating, “<em>Record-long raw-material lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy.</em>”&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9127,\"width\":650,\"height\":342,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/ISM-Mfg-Prices-Paid-June-2021.jpg\" alt=\"\" class=\"wp-image-9127\" width=\"650\" height=\"342\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210701-ISMs-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','Manufacturing remains red hot','The manufacturing sector stayed soundly in expansion territory in June, as the ISM Manufacturing Index registered a strong reading of 60.6. ','inherit','closed','closed','','9120-revision-v1','','','2021-07-20 17:47:15','2021-07-20 17:47:15','',9120,'https://ns2020-investech.investech.com/?p=9371',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9373,2,'2021-07-20 17:49:07','2021-07-20 17:49:07','','Tale-Two-Investors','','inherit','closed','closed','','tale-two-investors-2','','','2021-07-20 17:49:07','2021-07-20 17:49:07','',8783,'https://ns2020-investech.investech.com/wp-content/uploads/2021/06/Tale-Two-Investors.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9374,2,'2021-07-20 17:50:33','2021-07-20 17:50:33','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":8779,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=8779\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sp500-seasonal-performance.png\" alt=\"S&amp;P 500 Seasonal Performance comparing the May-Oct timeframe to the Nov-Apr timeframe.  \" class=\"wp-image-8779 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8780,\"width\":659,\"height\":371,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/seasonal-sector-rotation.png\" alt=\"seasonal sector rotation 1990-2021 showing leading sectors during November-April months flip to the opposite in the May-October timeframe.\" class=\"wp-image-8780\" width=\"659\" height=\"371\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:50:33','2021-07-20 17:50:33','',8783,'https://ns2020-investech.investech.com/?p=9374',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9375,2,'2021-07-20 17:54:33','2021-07-20 17:54:33','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":8779,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=8779\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sp500-seasonal-performance.png\" alt=\"S&amp;P 500 Seasonal Performance comparing the May-Oct timeframe to the Nov-Apr timeframe.  \" class=\"wp-image-8779 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8780,\"width\":659,\"height\":371,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/seasonal-sector-rotation.png\" alt=\"seasonal sector rotation 1990-2021 showing leading sectors during November-April months flip to the opposite in the May-October timeframe.\" class=\"wp-image-8780\" width=\"659\" height=\"371\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:54:33','2021-07-20 17:54:33','',8783,'https://ns2020-investech.investech.com/?p=9375',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9378,2,'2021-07-20 17:55:34','2021-07-20 17:55:34','','SP500-Seasonal-Performance','','inherit','closed','closed','','sp500-seasonal-performance','','','2021-07-20 17:55:34','2021-07-20 17:55:34','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9379,2,'2021-07-20 17:56:10','2021-07-20 17:56:10','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8780,\"width\":659,\"height\":371,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/seasonal-sector-rotation.png\" alt=\"seasonal sector rotation 1990-2021 showing leading sectors during November-April months flip to the opposite in the May-October timeframe.\" class=\"wp-image-8780\" width=\"659\" height=\"371\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:56:10','2021-07-20 17:56:10','',8783,'https://ns2020-investech.investech.com/?p=9379',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9380,2,'2021-07-20 17:56:12','2021-07-20 17:56:12','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8780,\"width\":659,\"height\":371,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/seasonal-sector-rotation.png\" alt=\"seasonal sector rotation 1990-2021 showing leading sectors during November-April months flip to the opposite in the May-October timeframe.\" class=\"wp-image-8780\" width=\"659\" height=\"371\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:56:12','2021-07-20 17:56:12','',8783,'https://ns2020-investech.investech.com/?p=9380',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9381,2,'2021-07-20 17:58:22','2021-07-20 17:58:22','','Seasonal-Sector-Rotation','','inherit','closed','closed','','seasonal-sector-rotation','','','2021-07-20 17:58:22','2021-07-20 17:58:22','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9382,2,'2021-07-20 17:58:46','2021-07-20 17:58:46','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:58:46','2021-07-20 17:58:46','',8783,'https://ns2020-investech.investech.com/?p=9382',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9383,2,'2021-07-20 17:58:48','2021-07-20 17:58:48','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:58:48','2021-07-20 17:58:48','',8783,'https://ns2020-investech.investech.com/?p=9383',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9384,2,'2021-07-20 17:59:34','2021-07-20 17:59:34','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:59:34','2021-07-20 17:59:34','',8783,'https://ns2020-investech.investech.com/?p=9384',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9385,2,'2021-07-20 17:59:37','2021-07-20 17:59:37','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 17:59:37','2021-07-20 17:59:37','',8783,'https://ns2020-investech.investech.com/?p=9385',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9386,2,'2021-07-20 18:00:16','2021-07-20 18:00:16','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 18:00:16','2021-07-20 18:00:16','',8783,'https://ns2020-investech.investech.com/?p=9386',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9387,2,'2021-07-20 18:06:20','2021-07-20 18:06:20','','Core-PCE','','inherit','closed','closed','','core-pce','','','2021-07-20 18:06:20','2021-07-20 18:06:20','',8813,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9388,2,'2021-07-20 18:06:28','2021-07-20 18:06:28','','Core-PCE','','inherit','closed','closed','','core-pce-2','','','2021-07-20 18:06:28','2021-07-20 18:06:28','',8813,'https://ns2020-investech.investech.com/wp-content/uploads/2021/06/Core-PCE.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9389,2,'2021-07-20 18:07:05','2021-07-20 18:07:05','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8825,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/Core-PCE-2.jpg\" alt=\"Core personal expenditures graph shows highest reading since 1992.  \" class=\"wp-image-8825\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format.</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 18:07:05','2021-07-20 18:07:05','',8813,'https://ns2020-investech.investech.com/?p=9389',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9390,2,'2021-07-20 18:07:51','2021-07-20 18:07:51','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8825,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/Core-PCE-2.jpg\" alt=\"Core personal expenditures graph shows highest reading since 1992.  \" class=\"wp-image-8825\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 18:07:51','2021-07-20 18:07:51','',8813,'https://ns2020-investech.investech.com/?p=9390',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9391,2,'2021-07-20 18:07:53','2021-07-20 18:07:53','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8825,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/Core-PCE-2.jpg\" alt=\"Core personal expenditures graph shows highest reading since 1992.  \" class=\"wp-image-8825\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 18:07:53','2021-07-20 18:07:53','',8813,'https://ns2020-investech.investech.com/?p=9391',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9393,2,'2021-07-20 18:58:46','2021-07-20 18:58:46','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9387,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg\" alt=\"\" class=\"wp-image-9387\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 18:58:46','2021-07-20 18:58:46','',8813,'https://ns2020-investech.investech.com/?p=9393',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9394,2,'2021-07-20 18:58:49','2021-07-20 18:58:49','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9387,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg\" alt=\"\" class=\"wp-image-9387\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 18:58:49','2021-07-20 18:58:49','',8813,'https://ns2020-investech.investech.com/?p=9394',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9395,2,'2021-07-20 18:59:52','2021-07-20 18:59:52','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9387,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg\" alt=\"\" class=\"wp-image-9387\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 18:59:52','2021-07-20 18:59:52','',8813,'https://ns2020-investech.investech.com/?p=9395',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9396,2,'2021-07-20 19:00:16','2021-07-20 19:00:16','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9387,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg\" alt=\"\" class=\"wp-image-9387\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 19:00:16','2021-07-20 19:00:16','',8813,'https://ns2020-investech.investech.com/?p=9396',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9397,3,'2021-07-20 19:01:50','2021-07-20 19:01:50','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 19:01:50','2021-07-20 19:01:50','',8783,'https://ns2020-investech.investech.com/?p=9397',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9398,3,'2021-07-20 19:01:53','2021-07-20 19:01:53','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 19:01:53','2021-07-20 19:01:53','',8783,'https://ns2020-investech.investech.com/?p=9398',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9399,2,'2021-07-20 19:13:10','2021-07-20 19:13:10','<!-- wp:heading -->\n<h2>No relief on the inflation front</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.&nbsp; Core PCE, which is the Federal Reserve’s preferred inflation measure, rose to 3.4% in May – the highest level since 1992.&nbsp; This is well above the Fed’s 2% inflation target for the second straight month, and as a result, Fed officials have started to feel pressure to scale back on their stimulus efforts.&nbsp; While the debate rages on as to the persistence of today’s pricing pressures, as long as the leading inflation gauges are moving higher (see last Friday’s <a href=\"https://ns2020-investech.investech.com/subscriber-library/a-leading-inflation-indicator-points-higher/\" target=\"_blank\" rel=\"noreferrer noopener\">report</a>), any inflationary surprises will likely continue to be to the upside.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9387,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Core-PCE.jpg\" alt=\"\" class=\"wp-image-9387\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":52} -->\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/20210625inflation.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','No relief on the inflation front','Inflation is continuing to heat up according to today’s core Personal Consumption Expenditures (PCE) report.  ','inherit','closed','closed','','8813-revision-v1','','','2021-07-20 19:13:10','2021-07-20 19:13:10','',8813,'https://ns2020-investech.investech.com/?p=9399',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9400,2,'2021-07-20 19:13:34','2021-07-20 19:13:34','<!-- wp:heading -->\n<h2>Special Note for New Subscribers</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>The InvesTech Model Portfolio is designed for individual investors who want to follow our allocation and sector recommendations for the equity/fund portion of their portfolio.</strong>  The following information will assist you in getting started with InvesTech. It involves the decisions that must be made by an investor who wishes to bring their portfolio allocation more into alignment with InvesTech’s strategy:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Determine your invested allocation</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Determine your current invested allocation by totaling the amounts you have invested in equities (individual stocks, stock mutual funds, ETFs, and international stocks/funds). Divide this by your total equity portfolio size. This is your percent invested allocation.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Refer to the InvesTech invested recommendation and allocations</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Refer to the InvesTech “percent” invested recommendation and allocations listed in the Model Fund Portfolio. If you are holding a portfolio that is similar in composition, sector weighting, and percent invested allocation to what we are currently recommending in the Model Fund Portfolio, it is unnecessary to make any changes at this time. Just wait for InvesTech’s next recommendation, generally made on the Friday Financial Hotline, to either add new positions or take profits… and act accordingly with your own holdings.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Adjust your portfolio</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Adjust your portfolio, if necessary. Purchases after our initial recommendations must be made at your discretion; however, if your portfolio mix is dramatically different from our current recommendations and sector weightings, you may wish to consider changes to more closely align the portfolio with our model. For example, check your mutual funds for their weightings in each sector. If the combination of your stocks, ETFs, and mutual funds give your portfolio significantly more or less exposure to a particular sector or category (such as international or small-cap) than we recommend, then you may wish to adjust your holdings to bring them more in line with our recommendations.<br></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>An exception would be if we warn on the Hotline or in the newsletter against new purchases in a particular area. This usually means that we believe sector leadership is changing or most of the profits on a position have already been achieved and new investment would not be advisable. In that case, it is better to wait in the safety of a money market fund for our next recommendation. Depending on market conditions, we may advise bringing your portfolio in line with our recommendations by phasing into the market. Please review the Model Fund Portfolio published in the current issue for more information.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Strategy</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><strong>Remember, InvesTech’s strategy is not a short-term market timing system, but a long-term “risk allocation” strategy based on highly sophisticated indicators.</strong> Our objective is NOT to try to forecast stock movements in advance, but to correctly assess the market environment. When market indicators point to a strong, low-risk buying opportunity, we will recommend an aggressively invested position and growth oriented sectors. Conversely, we will inform you when our indicators show risk has risen to an unacceptable level so that you can take steps to protect your portfolio. This risk-averse strategy will help you to preserve capital in times of market vulnerability so that you will be ready and able to take advantage of the next low-risk buying opportunity when it arrives.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"636cdd20\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-636cdd20\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->','Note for New Subscribers','The InvesTech Model Portfolio is designed for individual investors who want to follow our allocation and sector recommendations for the equity/fund portion of their portfolio.  Bring your portfolio in line with InvesTech\'s with these steps...','inherit','closed','closed','','5858-revision-v1','','','2021-07-20 19:13:34','2021-07-20 19:13:34','',5858,'https://ns2020-investech.investech.com/?p=9400',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9403,2,'2021-07-20 19:17:34','2021-07-20 19:17:34','<!-- wp:heading -->\n<h2>Strategy and Performance</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As an investor in today’s volatile markets, you naturally have questions about our strategy and the historical performance of our Model Portfolio. Over the past 40 years, InvesTech has earned a widely respected reputation for our objective analysis and safety-first investment philosophy. While profits are important, we know that earning profits is only half the picture. Preserving one’s portfolio (and profits) through a severe bear market like 2000-02 or 2007-09 can make the difference between a comfortable retirement or financial disaster.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:paragraph -->\n<p>InvesTech\'s time-proven strategy involves measuring market risk – and taking maximum advantage of those investment opportunities when risk is the lowest. Our objective is to contain losses in a bear market to less than half of the decline of the broad market averages and to capture at least 80% of the upside during bull markets. Historically, we have been successful in achieving this goal which not only outperforms market averages over the long-term, but also significantly reduces volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Hulbert Ranking</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The final issue of the <em>Hulbert Financial Digest,</em> published in February 2016, included the ranking of top mutual fund newsletters and showed that <em>InvesTech Research</em> was #1 in long-term performance –both for risk adjusted and unadjusted performance– with an annualized gain of 8.7% per year… almost double the Wilshire 5000\'s annual return over the same period.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4522,\"width\":768,\"height\":394,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/11/Hulbert-1024x525.png\" alt=\"Clipping from Hulbert Financial Digest ranking InvesTech against other top mutual fund newsletters.\" class=\"wp-image-4522\" width=\"768\" height=\"394\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading -->\n<h2><strong>InvesTech’s Performance (2000 – current)</strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":8240,\"width\":403,\"height\":512,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/performance-806x1024.jpg\" alt=\"\" class=\"wp-image-8240\" width=\"403\" height=\"512\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Back-to-back devastating bear markets in 2000-02 and 2007-09 have left most investors questioning the viability of a buy-and-hold strategy. At InvesTech we do not follow a buy-and-hold investment philosophy. Instead, we adjust equity exposure according to our assessment of market risk. This judgment is made based on InvesTech\'s time-tested proprietary technical indicators, historical analysis, and current economic and political forces.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Our safety-first investment philosophy led investors safely through the bear market of 2000-02. During this period, our defensive holdings and high-cash position protected subscribers from devastating bear market losses and kept our Model Portfolio essentially intact. In the 2007-09 bear market we achieved our objective of limiting losses to less than half the decline of the market averages (graph at right). In April 2009, just weeks after the official bear market low, we once again began increasing our invested allocation in anticipation of a new bull market. Since January 2000, the InvesTech Model Portfolio has gained 464.5%, while the S&amp;P 500 is up only 307.6% (including dividends). During the period January 1, 2000 through March 31, 2021, annualized performance of the InvesTech Model Portfolio was +8.5% compared to the S&amp;P 500 Total Return Index gain of +6.8%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>During the Bubble Years (1996-1999)</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>InvesTech’s technical indicators were among the first to confirm the U.S. stock market had embarked on a dangerous valuation bubble. That placed our safety-first philosophy in direct conflict with the mania on Wall Street. We made a very difficult decision during this period to step aside from the bubble. While we did not track our Model Portfolio performance prior to 2000, <em>Hulbert Financial Digest</em> data showed our total return for 1996 closely approximated that of a money market fund.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In defense of our high-cash position, we do not come across bubbles every day on Wall Street. This one, along with 1929, had been the only two clearly definable bubbles of the century. While we have developed new technical tools that will, hopefully, allow us to take part in and profit from similar situations in the future, we will never abandon the principles of our safety-first philosophy.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Performance Prior to the Bubble (pre-1996)</h2>\n<!-- /wp:heading -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column {\"width\":\"66.66%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:66.66%\"><!-- wp:paragraph -->\n<p>In 1996, InvesTech was recognized as one of only six financial advisory newsletters to have beaten the market on a risk-adjusted basis since inception in the early 1980s. And an October 1995 <em>Forbes </em>article described InvesTech’s long-term portfolio performance as <em>“more or less impervious to declines.”</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The reason is simple: InvesTech has an established reputation for maximizing safety-first profits. But reducing risk from major bear markets can be even more important, as shown in 1987 when InvesTech received widespread recognition from <em>USA Today, The Washington Post,</em> and <em>Los Angeles Times</em> for moving to a 100% cash position just prior to the October Crash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As an experienced investor, you must decide what performance means to you. Someone who is willing to wait 10 years or more to recover after losing two-thirds of their portfolio in a generational bear market, may not agree with our safety-first approach. On the other hand, if you have a deep respect for market risk and the impact that a devastating bear market can have on your portfolio or emotional well-being, then <em>InvesTech Research</em> offers what you are looking for… a risk-averse strategy and the ability to identify and take advantage of the best profit opportunities when they appear.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"width\":\"33.33%\"} -->\n<div class=\"wp-block-column\" style=\"flex-basis:33.33%\"><!-- wp:image {\"id\":5838,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/03/perf-table-533x1024.jpg\" alt=\"\" class=\"wp-image-5838\"/></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:uagb/inline-notice {\"block_id\":\"3aa23c6d\",\"noticeContent\":\"\\u003cp\\u003ePast performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  \\u003ca href=\\u0022https://ns2020-investech.investech.com/terms-of-use/\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003eRead full Disclosures here\\u003c/a\\u003e\\u003ca href=\\u0022http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\\u0022 target=\\u0022_blank\\u0022 rel=\\u0022noreferrer noopener\\u0022\\u003e.\\u003c/a\\u003e\\u003c/p\\u003e\"} -->\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-3aa23c6d\"><h4 class=\"uagb-notice-title\">Important Disclosure Information</h4><div class=\"uagb-notice-text\"><p>Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  <a href=\"https://ns2020-investech.investech.com/terms-of-use/\" target=\"_blank\" rel=\"noreferrer noopener\">Read full Disclosures here</a><a href=\"http://Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended by InvesTech Research) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.\" target=\"_blank\" rel=\"noreferrer noopener\">.</a></p></div></div>\n<!-- /wp:uagb/inline-notice -->\n\n<!-- wp:separator {\"className\":\"is-style-dots\"} -->\n<hr class=\"wp-block-separator is-style-dots\"/>\n<!-- /wp:separator -->\n\n<!-- wp:paragraph -->\n<p>Also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/InvesTech-Performance-Letter.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format</a><a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/InvesTech-Performance-Letter.pdf\">.</a></p>\n<!-- /wp:paragraph -->','Model Fund Portfolio Performance','As an investor in today’s volatile markets, you naturally have questions about our strategy and the historical performance of our Model Portfolio. ','inherit','closed','closed','','5821-revision-v1','','','2021-07-20 19:17:34','2021-07-20 19:17:34','',5821,'https://ns2020-investech.investech.com/?p=9403',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9404,2,'2021-07-20 19:22:03','2021-07-20 19:22:03','<!-- wp:heading -->\n<h2>How to use Seasonality to your advantage</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Historically, the period from November 1 through April 30 has been the best time to be invested in stocks. The S&amp;P 500 during the winter period has gained an average of +7.2% since 1960 and has delivered a positive return 75% of the time. Conversely, the summer period from May 1 through October 31 has seen an average return of just +2.2%. The results are even more stark when this difference in performance is compounded over time…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>A Tale of 2 Seasonal Investors</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The graph below compares the performance of two opposing seasonal investors who start with a $10,000 nest egg in 1960. Investor A invests in an S&amp;P 500 index fund from November 1 through April 30 and moves to cash from May through October. Investor B does the opposite, investing only in the summer months and moving to cash for the winter months:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Tale-Two-Investors.png\" alt=\"\" class=\"wp-image-9310\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The outcomes couldn’t be more strikingly different! Investor A’s portfolio would have compounded to over $1,000,000,<br>whereas Investor B’s investment would only have grown to $41,000. While both investors made money, the fact that<br>Investor A’s portfolio would be worth more than 25 times that of Investor B makes this lesson from history too important<br>to ignore.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:media-text {\"mediaPosition\":\"right\",\"mediaId\":9378,\"mediaLink\":\"https://ns2020-investech.investech.com/?attachment_id=9378\",\"mediaType\":\"image\",\"mediaWidth\":32} -->\n<div class=\"wp-block-media-text alignwide has-media-on-the-right is-stacked-on-mobile\" style=\"grid-template-columns:auto 32%\"><figure class=\"wp-block-media-text__media\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SP500-Seasonal-Performance.png\" alt=\"\" class=\"wp-image-9378 size-full\"/></figure><div class=\"wp-block-media-text__content\"><!-- wp:heading {\"level\":3} -->\n<h3>Seasonal Performance</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The table at right, which lists the gains and losses for each seasonal period of the past 60 years, further illustrates the substantial difference in seasonal performance.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Note that there are more negative (losing) periods over the summer than during the winter (21 periods versus 15). More importantly, there are nearly twice as many double-digit losses in the summer as in the winter, and such supersized declines have typically been associated with major bear markets, including 1974, 2001-02, and 2008. When looking for double-digit gains, they are far more prevalent in the winter (Nov-Apr) than the summer (May-Oct)… by a ratio of 3 to 1! Simply put, the summer months are not the time to be swinging for the fences.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the “Sell in May and Go Away” adage has a very strong historical precedent, abandoning the stock market entirely in May is not a prudent investment strategy. Winters aren’t always winners and summers aren’t always losers – in fact, the majority of summers still see positive gains. Nonetheless, there are ways that investors can use this trend in seasonal performance to their advantage.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Allocation Adjustments</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Perhaps the best way to position for seasonality in the stock market is by adjusting one’s allocation based on overall weight of the evidence in managing risk. For example, if one is in a new bull market with very strong macroeconomic and technical indicators, then it might be prudent to ignore the “Sell in May…” phenomenon. The 2009 period was a perfect example, as confirmation emerged that the 2007-09 bear market had likely ended in March. The market subsequently enjoyed a +18.7% gain during the summer months.<br>Conversely, the May-October intervals in 2001 and 2008 came shortly after long-term bull markets had hit record multi-year highs and were already in retreat. The technical evidence of a bear market was increasing, and a seasoned investor might logically choose to further lighten allocation (i.e., take profits) to weather the seasonally weak summer period in a more defensive stance.</p>\n<!-- /wp:paragraph --></div></div>\n<!-- /wp:media-text -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Sector Seasonality</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Another strategy to take advantage of this seasonality lies in sector weighting. For instance, the table below shows how the ten S&amp;P 500 sectors performed during the winter versus summer. Included are total returns, as well as batting average (i.e., percentage of time the sector beat the S&amp;P 500 Index). As you’ll note, there is a significant change in sector leadership and performance between the two seasonal periods.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><br>The cyclical sectors such as Consumer Discretionary, Materials, and Industrials tend to lead in the winter months (red arrows), and all three sectors have averaged double digit returns during this period since 1990. The summer months show the opposite trend as investors become more defensive. The cyclical sectors move to the bottom of the list and the winter laggards take the lead (green arrows). Health Care, Consumer Staples, and Utilities have been the most resilient sectors in the summer months, while the Technology sector benefits throughout the year, likely because of its stable cash flows.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9381,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Seasonal-Sector-Rotation.png\" alt=\"\" class=\"wp-image-9381\"/><figcaption>Seasonal Sector Rotation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>As a rational strategy, we do not advocate selling all holdings in cyclical sectors when the summer season starts, however there are some incremental steps you might consider in rebalancing your portfolio…</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Focus on the defensives. </strong>Since Consumer Staples and Health Care are the most resilient sectors during the summer, it’s generally a good idea to hold a larger weighting or allocation in these segments heading into May. The average total return (including dividends) for both sectors has exceeded +5% over the summer, and they beat the market about two-thirds of the time. Likewise, the Technology sector also does well. Overweighting these sectors could provide greater protection if the market hits turbulence during this less favorable seasonal period.</li><li><strong>Trim the cyclicals.</strong> Conversely, the Consumer Discretionary, Industrials, and Materials sectors show the biggest negative shift heading into the summer period. With average summer returns of less than +2%, these sectors have lagged the S&amp;P 500 the vast majority of the time. Consequently, early spring may be a good time to consider taking some profits and trimming these cyclical holdings if they’ve appreciated over the preceding six months.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:group {\"backgroundColor\":\"warm-grey\",\"className\":\"wall-to-wall\"} -->\n<div class=\"wp-block-group wall-to-wall has-warm-grey-background-color has-background\"><div class=\"wp-block-group__inner-container\"><!-- wp:spacer {\"height\":53} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Addendum:</h2>\n<!-- /wp:heading -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>How \"Sell in May...\" affects our 2021 Strategy (June 18, 2021)</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>As detailed in the previous report, the “Sell in May…” seasonal phenomenon should not drive investment strategy, but instead be used to augment or benefit current allocation decisions.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In that regard, the most significant influence for our InvesTech Mutual Fund portfolio in 2021 is with respect to maintaining a defensive overall portfolio allocation with a comfortable cash/treasury reserve. We believe recent emergence of extraordinarily strong inflation pressures will override the normal sector seasonality, making the most prudent weighting a mix of both defensive holdings and cyclical sectors that will benefit from increasing prices. With the very high historical valuations and extreme speculative excesses in today’s stock market, a “safety-first” strategy has seldom been more important.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:spacer {\"height\":59} -->\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer --></div></div>\n<!-- /wp:group -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from&nbsp;<em>InvesTech Research</em>&nbsp;– June 18, 2021</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to&nbsp;read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/sell-in-may-truism.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format</a></p>\n<!-- /wp:paragraph -->','\"Sell in May?...\"','Every year sees new debates over the merits of the old Wall Street adage “Sell in May and Go Away.” Unlike many adages on Wall Street, this is more than just a popular saying. It is based on sound statistics that have meaningful investment implications.','inherit','closed','closed','','8783-revision-v1','','','2021-07-20 19:22:03','2021-07-20 19:22:03','',8783,'https://ns2020-investech.investech.com/?p=9404',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9405,2,'2021-07-20 19:24:22','2021-07-20 19:24:22','<!-- wp:heading -->\n<h2>Managing risk in the final stages of a market cycle</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns.  With a safety-first investment strategy, the first line of defense for protecting assets is to selectively take profits off the table and hold the proceeds in cash. Adjusting stock and sector weightings toward more resilient areas of the market can also fortify a portfolio. When bear market warning flags begin to wave, adding a bear fund can further reduce exposure to downside market movements and lower portfolio volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Bear Fund Fundamentals</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A bear fund is a mutual fund or exchange-traded fund (ETF) designed to increase in value as the market drops. Conversely, the fund will lose value when the market rises. The original bear market mutual funds have been around since the mid-1990s, and several bear fund ETFs following the same principles were incepted just over a decade ago, prior to the last bear market. At InvesTech Research, the primary reason for using a bear fund is as an “insurance policy” to offset potential losses in core holdings of the portfolio during market declines. Our recommendation to add a bear fund to the Model Fund Portfolio has raised some questions from our subscribers. The most frequently asked questions –some simple, some more complex– are addressed below.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why use a bear fund instead of selling positions and raising cash?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Increasing cash in the portfolio is an important part of a defensive strategy, but there are several reasons for maintaining select long positions and partially offsetting them with the “insurance policy” of a bear market fund:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Diversification</strong>: Bear fund insurance allows you to hold onto more stocks in a portfolio, thus maintaining greater diversification while counteracting the impact of a stock or sector that doesn’t perform as anticipated.</li><li><strong>Lower portfolio volatility</strong>: Market volatility usually increases as risks rise. A strategy that manages risk is inherently less volatile, and by “neutralizing” a portion of the portfolio, volatility is reduced.</li><li><strong>Dividends</strong>: Dividend payments continue for the positions that are maintained in a portfolio.</li><li><strong>Reduce capital gains tax</strong>: In taxable accounts, selling stocks can create sizeable realized gains. Limiting sales can lessen the tax bite.</li><li><strong>Prepare for the next bull market</strong>: When risks begin to resolve and the time is right to increase market allocation, new additions for the portfolio must be properly vetted prior to purchase. In the meantime, exposure can be quickly increased by removing the bear fund, which “de-neutralizes” a portion of the portfolio to participate in the market recovery without delay.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What do we mean by a “net” long position?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4803,\"sizeSlug\":\"full\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/ModelPortfolioBarChart.png\" alt=\"InvesTech Model Fund Portfolio Allocation to cash, bear fund, and long funds.\" class=\"wp-image-4803\"/><figcaption>InvesTech Model Fund Portfolio Allocation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The “net” long position in the Model Fund Portfolio is currently 65%. Fully one-third of the portfolio is not exposed to the downside effects of the market due to the protective cash and inverse index (short) bear fund. But how does this all add up?</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As illustrated in the chart at right, current holdings include 73% long funds (blue), 8% short bear fund (red), and 19% cash (yellow). The bear fund effectively “neutralizes” or offsets the impact of an equivalent position of long holdings (shaded blue area). In other words, if the long position moves down, the bear fund moves up and the return on that combination should be negligible for the day. Therefore, the net long position, or overall exposure to the equity market, is the 73% long position minus the 8% short position which is equal to a 65% “net” long position.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why is the ProShares Short S&amp;P 500 ETF (SH) a good choice for the Model Fund Portfolio?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We recommended SH for a number of reasons. Our portfolio holdings are based on S&amp;P 500 sectors, so it’s appropriate to select an inverse index fund correlated to this broad market Index. ProShares Short S&amp;P 500 was incepted in 2006 and has a solid track record through the last bear market. It is the largest and most liquid inverse S&amp;P 500 fund, currently holding over $1.6B in assets. We also like some of the advantages ETFs have over mutual funds such as lower expense ratios and the ability to trade throughout the day.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, this fund is passively managed to inversely correlate to the Index’s daily returns. Actively managed funds typically focus on profiting from shorting individual stocks, frequently use resource holdings, and may concentrate on attempts to time the market. Performance can vary depending on the manager’s ability to pick the right stocks to short. Thus, for a safety-first strategy, a more predictable passive fund is the best choice for our purposes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Can you provide a list of bear fund alternatives?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We’ve assembled a list of some of the larger funds that have longer track records, including both ETFs and mutual funds. Before purchasing any on the list below, you should perform your own due diligence to determine the suitability for your portfolio. Reasons for providing these additional choices include:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Some retirement accounts are limited to mutual fund investments only.</li><li>When using a passively managed fund, it’s best to choose one based on an index that most closely matches your portfolio holdings.</li><li>If you are willing to accept the added risk that comes with an actively managed fund, you may want to consider one of the total return alternatives.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4801,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bear_market_funds2.png\" alt=\"alternatives to bear market funds\" class=\"wp-image-4801\"/><figcaption><strong>Bear Market Alternatives</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>If a passive bear fund offsets the market on a daily basis, what happens over a longer period of time?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Due to the compounding of daily returns, performance over periods longer than one day will likely differ from the inverse of the target index. To demonstrate, let’s look at an exaggerated example of how compounding affects returns.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4802,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/SH_SP500_07_10.png\" alt=\"S&amp;P 500 and SH after the stock market peak in October 2007\" class=\"wp-image-4802\"/><figcaption>S&amp;P 500 and SH after the stock market peak in October 2007</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Assume that both ProShares Short S&amp;P 500 (SH) and the S&amp;P 500 start with a value of $100. On Day 1, the S&amp;P 500 loses 10% causing SH to gain 10%. The S&amp;P 500, therefore, ends Day 1 with a price of $90, while SH has grown to $110. If on Day 2 the S&amp;P 500 loses 10% again, its price drops to $81 and SH increases to $121. While achieving perfect correlation on a daily basis, after two days the S&amp;P 500 is down 19% and SH is up 21%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If the stock market continues to decline after purchasing a bear fund, gains can be much more than you might expect due to progressively larger dollar changes based on the increasing value of the investment. On the other hand, if the stock market rises persistently after a bear fund is purchased, the daily percentage changes result in progressively smaller dollar changes as the value of the investment decreases. Hence, investors lose less than they might expect when the fund’s return over the course of the rally is calculated.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This point is illustrated in the graphs at right, which show the S&amp;P 500 and SH after the stock market peak in October 2007. Clearly, bear funds can serve as valuable “insurance” in a declining market, even if the position is held past the market bottom. <strong>One important note:</strong> bear fund performance in trendless, volatile markets is less predictable than in markets persistently trending up or down. In fact, due to compounding effects, an inverse index fund may even decline as the market remains flat.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why don’t you use a leveraged bear fund?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A leveraged bear fund is designed to go up two or three times as much as its benchmark goes down on a daily basis. “More” might sound better to the average investor; however, trying to time bear markets or corrections rarely works, and one can easily get burned with leveraged funds if the market doesn\'t move as anticipated and the compounding effect is magnified. With this in mind, we’d avoid the leveraged bear market funds due to the increased volatility and risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Summary: A Safety-first Approach</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bear market funds should be used to neutralize portfolio risk and help you sleep at night – not as a tool for speculative short-term trading. With a safety-first investment strategy, an inverse index fund can serve as an effective, low cost insurance offering an efficient way to offset rising market risk and reduce portfolio volatility. When considering a bear fund, the following guidelines should be helpful:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Use bear funds as an insurance to offset a portion of your portfolio investments.</li><li>Stay with the passively managed bear funds that inversely correlate with the broader indexes.</li><li>Choose the larger more liquid funds with longer track records.</li><li>Gradually implement a bear fund position as a bear market becomes more likely.</li><li>Do not use leveraged funds.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>If bear funds are not an option for your portfolio, the alternative is to reduce your long positions to reach the target “net” allocation and hold the balance in cash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em>  - February 12, 2016</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/BearFund.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format</a>.&nbsp;</p>\n<!-- /wp:paragraph -->','The \"Bare Necessities\" About Bear Funds','Why use a bear fund instead of selling positions and raising cash?Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns. \n','inherit','closed','closed','','2457-revision-v1','','','2021-07-20 19:24:22','2021-07-20 19:24:22','',2457,'https://ns2020-investech.investech.com/?p=9405',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9406,2,'2021-07-20 19:24:43','2021-07-20 19:24:43','<!-- wp:heading -->\n<h2>Managing risk in the final stages of a market cycle</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns.  With a safety-first investment strategy, the first line of defense for protecting assets is to selectively take profits off the table and hold the proceeds in cash. Adjusting stock and sector weightings toward more resilient areas of the market can also fortify a portfolio. When bear market warning flags begin to wave, adding a bear fund can further reduce exposure to downside market movements and lower portfolio volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Bear Fund Fundamentals</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A bear fund is a mutual fund or exchange-traded fund (ETF) designed to increase in value as the market drops. Conversely, the fund will lose value when the market rises. The original bear market mutual funds have been around since the mid-1990s, and several bear fund ETFs following the same principles were incepted just over a decade ago, prior to the last bear market. At InvesTech Research, the primary reason for using a bear fund is as an “insurance policy” to offset potential losses in core holdings of the portfolio during market declines. Our recommendation to add a bear fund to the Model Fund Portfolio has raised some questions from our subscribers. The most frequently asked questions –some simple, some more complex– are addressed below.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why use a bear fund instead of selling positions and raising cash?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Increasing cash in the portfolio is an important part of a defensive strategy, but there are several reasons for maintaining select long positions and partially offsetting them with the “insurance policy” of a bear market fund:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Diversification</strong>: Bear fund insurance allows you to hold onto more stocks in a portfolio, thus maintaining greater diversification while counteracting the impact of a stock or sector that doesn’t perform as anticipated.</li><li><strong>Lower portfolio volatility</strong>: Market volatility usually increases as risks rise. A strategy that manages risk is inherently less volatile, and by “neutralizing” a portion of the portfolio, volatility is reduced.</li><li><strong>Dividends</strong>: Dividend payments continue for the positions that are maintained in a portfolio.</li><li><strong>Reduce capital gains tax</strong>: In taxable accounts, selling stocks can create sizeable realized gains. Limiting sales can lessen the tax bite.</li><li><strong>Prepare for the next bull market</strong>: When risks begin to resolve and the time is right to increase market allocation, new additions for the portfolio must be properly vetted prior to purchase. In the meantime, exposure can be quickly increased by removing the bear fund, which “de-neutralizes” a portion of the portfolio to participate in the market recovery without delay.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What do we mean by a “net” long position?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4803,\"sizeSlug\":\"full\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-full\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/ModelPortfolioBarChart.png\" alt=\"InvesTech Model Fund Portfolio Allocation to cash, bear fund, and long funds.\" class=\"wp-image-4803\"/><figcaption>InvesTech Model Fund Portfolio Allocation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The “net” long position in the Model Fund Portfolio is currently 65%. Fully one-third of the portfolio is not exposed to the downside effects of the market due to the protective cash and inverse index (short) bear fund. But how does this all add up?</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As illustrated in the chart at right, current holdings include 73% long funds (blue), 8% short bear fund (red), and 19% cash (yellow). The bear fund effectively “neutralizes” or offsets the impact of an equivalent position of long holdings (shaded blue area). In other words, if the long position moves down, the bear fund moves up and the return on that combination should be negligible for the day. Therefore, the net long position, or overall exposure to the equity market, is the 73% long position minus the 8% short position which is equal to a 65% “net” long position.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why is the ProShares Short S&amp;P 500 ETF (SH) a good choice for the Model Fund Portfolio?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We recommended SH for a number of reasons. Our portfolio holdings are based on S&amp;P 500 sectors, so it’s appropriate to select an inverse index fund correlated to this broad market Index. ProShares Short S&amp;P 500 was incepted in 2006 and has a solid track record through the last bear market. It is the largest and most liquid inverse S&amp;P 500 fund, currently holding over $1.6B in assets. We also like some of the advantages ETFs have over mutual funds such as lower expense ratios and the ability to trade throughout the day.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, this fund is passively managed to inversely correlate to the Index’s daily returns. Actively managed funds typically focus on profiting from shorting individual stocks, frequently use resource holdings, and may concentrate on attempts to time the market. Performance can vary depending on the manager’s ability to pick the right stocks to short. Thus, for a safety-first strategy, a more predictable passive fund is the best choice for our purposes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Can you provide a list of bear fund alternatives?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We’ve assembled a list of some of the larger funds that have longer track records, including both ETFs and mutual funds. Before purchasing any on the list below, you should perform your own due diligence to determine the suitability for your portfolio. Reasons for providing these additional choices include:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Some retirement accounts are limited to mutual fund investments only.</li><li>When using a passively managed fund, it’s best to choose one based on an index that most closely matches your portfolio holdings.</li><li>If you are willing to accept the added risk that comes with an actively managed fund, you may want to consider one of the total return alternatives.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4801,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bear_market_funds2.png\" alt=\"alternatives to bear market funds\" class=\"wp-image-4801\"/><figcaption><strong>Bear Market Alternatives</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>If a passive bear fund offsets the market on a daily basis, what happens over a longer period of time?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Due to the compounding of daily returns, performance over periods longer than one day will likely differ from the inverse of the target index. To demonstrate, let’s look at an exaggerated example of how compounding affects returns.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4802,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/SH_SP500_07_10.png\" alt=\"S&amp;P 500 and SH after the stock market peak in October 2007\" class=\"wp-image-4802\"/><figcaption>S&amp;P 500 and SH after the stock market peak in October 2007</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Assume that both ProShares Short S&amp;P 500 (SH) and the S&amp;P 500 start with a value of $100. On Day 1, the S&amp;P 500 loses 10% causing SH to gain 10%. The S&amp;P 500, therefore, ends Day 1 with a price of $90, while SH has grown to $110. If on Day 2 the S&amp;P 500 loses 10% again, its price drops to $81 and SH increases to $121. While achieving perfect correlation on a daily basis, after two days the S&amp;P 500 is down 19% and SH is up 21%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If the stock market continues to decline after purchasing a bear fund, gains can be much more than you might expect due to progressively larger dollar changes based on the increasing value of the investment. On the other hand, if the stock market rises persistently after a bear fund is purchased, the daily percentage changes result in progressively smaller dollar changes as the value of the investment decreases. Hence, investors lose less than they might expect when the fund’s return over the course of the rally is calculated.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This point is illustrated in the graphs at right, which show the S&amp;P 500 and SH after the stock market peak in October 2007. Clearly, bear funds can serve as valuable “insurance” in a declining market, even if the position is held past the market bottom. <strong>One important note:</strong> bear fund performance in trendless, volatile markets is less predictable than in markets persistently trending up or down. In fact, due to compounding effects, an inverse index fund may even decline as the market remains flat.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why don’t you use a leveraged bear fund?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A leveraged bear fund is designed to go up two or three times as much as its benchmark goes down on a daily basis. “More” might sound better to the average investor; however, trying to time bear markets or corrections rarely works, and one can easily get burned with leveraged funds if the market doesn\'t move as anticipated and the compounding effect is magnified. With this in mind, we’d avoid the leveraged bear market funds due to the increased volatility and risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Summary: A Safety-first Approach</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bear market funds should be used to neutralize portfolio risk and help you sleep at night – not as a tool for speculative short-term trading. With a safety-first investment strategy, an inverse index fund can serve as an effective, low cost insurance offering an efficient way to offset rising market risk and reduce portfolio volatility. When considering a bear fund, the following guidelines should be helpful:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Use bear funds as an insurance to offset a portion of your portfolio investments.</li><li>Stay with the passively managed bear funds that inversely correlate with the broader indexes.</li><li>Choose the larger more liquid funds with longer track records.</li><li>Gradually implement a bear fund position as a bear market becomes more likely.</li><li>Do not use leveraged funds.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>If bear funds are not an option for your portfolio, the alternative is to reduce your long positions to reach the target “net” allocation and hold the balance in cash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em>  - February 12, 2016</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/BearFund.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format</a>.&nbsp;</p>\n<!-- /wp:paragraph -->','The \"Bare Necessities\" About Bear Funds','Why use a bear fund instead of selling positions and raising cash?Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns. \n','inherit','closed','closed','','2457-revision-v1','','','2021-07-20 19:24:43','2021-07-20 19:24:43','',2457,'https://ns2020-investech.investech.com/?p=9406',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9407,2,'2021-07-20 19:28:45','2021-07-20 19:28:45','','Model-Portfolio-Bar-Chart','','inherit','closed','closed','','model-portfolio-bar-chart','','','2021-07-20 19:28:45','2021-07-20 19:28:45','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Model-Portfolio-Bar-Chart.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9408,2,'2021-07-20 19:29:25','2021-07-20 19:29:25','<!-- wp:heading -->\n<h2>Managing risk in the final stages of a market cycle</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns.  With a safety-first investment strategy, the first line of defense for protecting assets is to selectively take profits off the table and hold the proceeds in cash. Adjusting stock and sector weightings toward more resilient areas of the market can also fortify a portfolio. When bear market warning flags begin to wave, adding a bear fund can further reduce exposure to downside market movements and lower portfolio volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Bear Fund Fundamentals</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A bear fund is a mutual fund or exchange-traded fund (ETF) designed to increase in value as the market drops. Conversely, the fund will lose value when the market rises. The original bear market mutual funds have been around since the mid-1990s, and several bear fund ETFs following the same principles were incepted just over a decade ago, prior to the last bear market. At InvesTech Research, the primary reason for using a bear fund is as an “insurance policy” to offset potential losses in core holdings of the portfolio during market declines. Our recommendation to add a bear fund to the Model Fund Portfolio has raised some questions from our subscribers. The most frequently asked questions –some simple, some more complex– are addressed below.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why use a bear fund instead of selling positions and raising cash?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Increasing cash in the portfolio is an important part of a defensive strategy, but there are several reasons for maintaining select long positions and partially offsetting them with the “insurance policy” of a bear market fund:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Diversification</strong>: Bear fund insurance allows you to hold onto more stocks in a portfolio, thus maintaining greater diversification while counteracting the impact of a stock or sector that doesn’t perform as anticipated.</li><li><strong>Lower portfolio volatility</strong>: Market volatility usually increases as risks rise. A strategy that manages risk is inherently less volatile, and by “neutralizing” a portion of the portfolio, volatility is reduced.</li><li><strong>Dividends</strong>: Dividend payments continue for the positions that are maintained in a portfolio.</li><li><strong>Reduce capital gains tax</strong>: In taxable accounts, selling stocks can create sizeable realized gains. Limiting sales can lessen the tax bite.</li><li><strong>Prepare for the next bull market</strong>: When risks begin to resolve and the time is right to increase market allocation, new additions for the portfolio must be properly vetted prior to purchase. In the meantime, exposure can be quickly increased by removing the bear fund, which “de-neutralizes” a portion of the portfolio to participate in the market recovery without delay.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What do we mean by a “net” long position?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9407,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Model-Portfolio-Bar-Chart.png\" alt=\"\" class=\"wp-image-9407\"/><figcaption>InvesTech Model Fund Portfolio Allocation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The “net” long position in the Model Fund Portfolio is currently 65%. Fully one-third of the portfolio is not exposed to the downside effects of the market due to the protective cash and inverse index (short) bear fund. But how does this all add up?</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As illustrated in the chart at right, current holdings include 73% long funds (blue), 8% short bear fund (red), and 19% cash (yellow). The bear fund effectively “neutralizes” or offsets the impact of an equivalent position of long holdings (shaded blue area). In other words, if the long position moves down, the bear fund moves up and the return on that combination should be negligible for the day. Therefore, the net long position, or overall exposure to the equity market, is the 73% long position minus the 8% short position which is equal to a 65% “net” long position.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why is the ProShares Short S&amp;P 500 ETF (SH) a good choice for the Model Fund Portfolio?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We recommended SH for a number of reasons. Our portfolio holdings are based on S&amp;P 500 sectors, so it’s appropriate to select an inverse index fund correlated to this broad market Index. ProShares Short S&amp;P 500 was incepted in 2006 and has a solid track record through the last bear market. It is the largest and most liquid inverse S&amp;P 500 fund, currently holding over $1.6B in assets. We also like some of the advantages ETFs have over mutual funds such as lower expense ratios and the ability to trade throughout the day.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, this fund is passively managed to inversely correlate to the Index’s daily returns. Actively managed funds typically focus on profiting from shorting individual stocks, frequently use resource holdings, and may concentrate on attempts to time the market. Performance can vary depending on the manager’s ability to pick the right stocks to short. Thus, for a safety-first strategy, a more predictable passive fund is the best choice for our purposes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Can you provide a list of bear fund alternatives?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We’ve assembled a list of some of the larger funds that have longer track records, including both ETFs and mutual funds. Before purchasing any on the list below, you should perform your own due diligence to determine the suitability for your portfolio. Reasons for providing these additional choices include:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Some retirement accounts are limited to mutual fund investments only.</li><li>When using a passively managed fund, it’s best to choose one based on an index that most closely matches your portfolio holdings.</li><li>If you are willing to accept the added risk that comes with an actively managed fund, you may want to consider one of the total return alternatives.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4801,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bear_market_funds2.png\" alt=\"alternatives to bear market funds\" class=\"wp-image-4801\"/><figcaption><strong>Bear Market Alternatives</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>If a passive bear fund offsets the market on a daily basis, what happens over a longer period of time?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Due to the compounding of daily returns, performance over periods longer than one day will likely differ from the inverse of the target index. To demonstrate, let’s look at an exaggerated example of how compounding affects returns.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4802,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/SH_SP500_07_10.png\" alt=\"S&amp;P 500 and SH after the stock market peak in October 2007\" class=\"wp-image-4802\"/><figcaption>S&amp;P 500 and SH after the stock market peak in October 2007</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Assume that both ProShares Short S&amp;P 500 (SH) and the S&amp;P 500 start with a value of $100. On Day 1, the S&amp;P 500 loses 10% causing SH to gain 10%. The S&amp;P 500, therefore, ends Day 1 with a price of $90, while SH has grown to $110. If on Day 2 the S&amp;P 500 loses 10% again, its price drops to $81 and SH increases to $121. While achieving perfect correlation on a daily basis, after two days the S&amp;P 500 is down 19% and SH is up 21%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If the stock market continues to decline after purchasing a bear fund, gains can be much more than you might expect due to progressively larger dollar changes based on the increasing value of the investment. On the other hand, if the stock market rises persistently after a bear fund is purchased, the daily percentage changes result in progressively smaller dollar changes as the value of the investment decreases. Hence, investors lose less than they might expect when the fund’s return over the course of the rally is calculated.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This point is illustrated in the graphs at right, which show the S&amp;P 500 and SH after the stock market peak in October 2007. Clearly, bear funds can serve as valuable “insurance” in a declining market, even if the position is held past the market bottom. <strong>One important note:</strong> bear fund performance in trendless, volatile markets is less predictable than in markets persistently trending up or down. In fact, due to compounding effects, an inverse index fund may even decline as the market remains flat.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why don’t you use a leveraged bear fund?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A leveraged bear fund is designed to go up two or three times as much as its benchmark goes down on a daily basis. “More” might sound better to the average investor; however, trying to time bear markets or corrections rarely works, and one can easily get burned with leveraged funds if the market doesn\'t move as anticipated and the compounding effect is magnified. With this in mind, we’d avoid the leveraged bear market funds due to the increased volatility and risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Summary: A Safety-first Approach</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bear market funds should be used to neutralize portfolio risk and help you sleep at night – not as a tool for speculative short-term trading. With a safety-first investment strategy, an inverse index fund can serve as an effective, low cost insurance offering an efficient way to offset rising market risk and reduce portfolio volatility. When considering a bear fund, the following guidelines should be helpful:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Use bear funds as an insurance to offset a portion of your portfolio investments.</li><li>Stay with the passively managed bear funds that inversely correlate with the broader indexes.</li><li>Choose the larger more liquid funds with longer track records.</li><li>Gradually implement a bear fund position as a bear market becomes more likely.</li><li>Do not use leveraged funds.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>If bear funds are not an option for your portfolio, the alternative is to reduce your long positions to reach the target “net” allocation and hold the balance in cash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em>  - February 12, 2016</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/BearFund.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format</a>.&nbsp;</p>\n<!-- /wp:paragraph -->','The \"Bare Necessities\" About Bear Funds','Why use a bear fund instead of selling positions and raising cash?Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns. \n','inherit','closed','closed','','2457-revision-v1','','','2021-07-20 19:29:25','2021-07-20 19:29:25','',2457,'https://ns2020-investech.investech.com/?p=9408',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9413,2,'2021-07-20 19:32:19','2021-07-20 19:32:19','<!-- wp:heading -->\n<h2>Managing risk in the final stages of a market cycle</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns.  With a safety-first investment strategy, the first line of defense for protecting assets is to selectively take profits off the table and hold the proceeds in cash. Adjusting stock and sector weightings toward more resilient areas of the market can also fortify a portfolio. When bear market warning flags begin to wave, adding a bear fund can further reduce exposure to downside market movements and lower portfolio volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Bear Fund Fundamentals</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A bear fund is a mutual fund or exchange-traded fund (ETF) designed to increase in value as the market drops. Conversely, the fund will lose value when the market rises. The original bear market mutual funds have been around since the mid-1990s, and several bear fund ETFs following the same principles were incepted just over a decade ago, prior to the last bear market. At InvesTech Research, the primary reason for using a bear fund is as an “insurance policy” to offset potential losses in core holdings of the portfolio during market declines. Our recommendation to add a bear fund to the Model Fund Portfolio has raised some questions from our subscribers. The most frequently asked questions –some simple, some more complex– are addressed below.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why use a bear fund instead of selling positions and raising cash?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Increasing cash in the portfolio is an important part of a defensive strategy, but there are several reasons for maintaining select long positions and partially offsetting them with the “insurance policy” of a bear market fund:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Diversification</strong>: Bear fund insurance allows you to hold onto more stocks in a portfolio, thus maintaining greater diversification while counteracting the impact of a stock or sector that doesn’t perform as anticipated.</li><li><strong>Lower portfolio volatility</strong>: Market volatility usually increases as risks rise. A strategy that manages risk is inherently less volatile, and by “neutralizing” a portion of the portfolio, volatility is reduced.</li><li><strong>Dividends</strong>: Dividend payments continue for the positions that are maintained in a portfolio.</li><li><strong>Reduce capital gains tax</strong>: In taxable accounts, selling stocks can create sizeable realized gains. Limiting sales can lessen the tax bite.</li><li><strong>Prepare for the next bull market</strong>: When risks begin to resolve and the time is right to increase market allocation, new additions for the portfolio must be properly vetted prior to purchase. In the meantime, exposure can be quickly increased by removing the bear fund, which “de-neutralizes” a portion of the portfolio to participate in the market recovery without delay.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What do we mean by a “net” long position?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9407,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Model-Portfolio-Bar-Chart.png\" alt=\"\" class=\"wp-image-9407\"/><figcaption>InvesTech Model Fund Portfolio Allocation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The “net” long position in the Model Fund Portfolio is currently 65%. Fully one-third of the portfolio is not exposed to the downside effects of the market due to the protective cash and inverse index (short) bear fund. But how does this all add up?</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As illustrated in the chart at right, current holdings include 73% long funds (blue), 8% short bear fund (red), and 19% cash (yellow). The bear fund effectively “neutralizes” or offsets the impact of an equivalent position of long holdings (shaded blue area). In other words, if the long position moves down, the bear fund moves up and the return on that combination should be negligible for the day. Therefore, the net long position, or overall exposure to the equity market, is the 73% long position minus the 8% short position which is equal to a 65% “net” long position.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why is the ProShares Short S&amp;P 500 ETF (SH) a good choice for the Model Fund Portfolio?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We recommended SH for a number of reasons. Our portfolio holdings are based on S&amp;P 500 sectors, so it’s appropriate to select an inverse index fund correlated to this broad market Index. ProShares Short S&amp;P 500 was incepted in 2006 and has a solid track record through the last bear market. It is the largest and most liquid inverse S&amp;P 500 fund, currently holding over $1.6B in assets. We also like some of the advantages ETFs have over mutual funds such as lower expense ratios and the ability to trade throughout the day.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, this fund is passively managed to inversely correlate to the Index’s daily returns. Actively managed funds typically focus on profiting from shorting individual stocks, frequently use resource holdings, and may concentrate on attempts to time the market. Performance can vary depending on the manager’s ability to pick the right stocks to short. Thus, for a safety-first strategy, a more predictable passive fund is the best choice for our purposes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Can you provide a list of bear fund alternatives?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We’ve assembled a list of some of the larger funds that have longer track records, including both ETFs and mutual funds. Before purchasing any on the list below, you should perform your own due diligence to determine the suitability for your portfolio. Reasons for providing these additional choices include:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Some retirement accounts are limited to mutual fund investments only.</li><li>When using a passively managed fund, it’s best to choose one based on an index that most closely matches your portfolio holdings.</li><li>If you are willing to accept the added risk that comes with an actively managed fund, you may want to consider one of the total return alternatives.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9409,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bear-Market-Funds.png\" alt=\"\" class=\"wp-image-9409\"/><figcaption><strong>Bear Market Alternatives</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>If a passive bear fund offsets the market on a daily basis, what happens over a longer period of time?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Due to the compounding of daily returns, performance over periods longer than one day will likely differ from the inverse of the target index. To demonstrate, let’s look at an exaggerated example of how compounding affects returns.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9412,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2018/11/SH-SP500.png\" alt=\"\" class=\"wp-image-9412\"/><figcaption>S&amp;P 500 and SH after the stock market peak in October 2007</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Assume that both ProShares Short S&amp;P 500 (SH) and the S&amp;P 500 start with a value of $100. On Day 1, the S&amp;P 500 loses 10% causing SH to gain 10%. The S&amp;P 500, therefore, ends Day 1 with a price of $90, while SH has grown to $110. If on Day 2 the S&amp;P 500 loses 10% again, its price drops to $81 and SH increases to $121. While achieving perfect correlation on a daily basis, after two days the S&amp;P 500 is down 19% and SH is up 21%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If the stock market continues to decline after purchasing a bear fund, gains can be much more than you might expect due to progressively larger dollar changes based on the increasing value of the investment. On the other hand, if the stock market rises persistently after a bear fund is purchased, the daily percentage changes result in progressively smaller dollar changes as the value of the investment decreases. Hence, investors lose less than they might expect when the fund’s return over the course of the rally is calculated.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This point is illustrated in the graphs at right, which show the S&amp;P 500 and SH after the stock market peak in October 2007. Clearly, bear funds can serve as valuable “insurance” in a declining market, even if the position is held past the market bottom. <strong>One important note:</strong> bear fund performance in trendless, volatile markets is less predictable than in markets persistently trending up or down. In fact, due to compounding effects, an inverse index fund may even decline as the market remains flat.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why don’t you use a leveraged bear fund?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A leveraged bear fund is designed to go up two or three times as much as its benchmark goes down on a daily basis. “More” might sound better to the average investor; however, trying to time bear markets or corrections rarely works, and one can easily get burned with leveraged funds if the market doesn\'t move as anticipated and the compounding effect is magnified. With this in mind, we’d avoid the leveraged bear market funds due to the increased volatility and risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Summary: A Safety-first Approach</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bear market funds should be used to neutralize portfolio risk and help you sleep at night – not as a tool for speculative short-term trading. With a safety-first investment strategy, an inverse index fund can serve as an effective, low cost insurance offering an efficient way to offset rising market risk and reduce portfolio volatility. When considering a bear fund, the following guidelines should be helpful:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Use bear funds as an insurance to offset a portion of your portfolio investments.</li><li>Stay with the passively managed bear funds that inversely correlate with the broader indexes.</li><li>Choose the larger more liquid funds with longer track records.</li><li>Gradually implement a bear fund position as a bear market becomes more likely.</li><li>Do not use leveraged funds.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>If bear funds are not an option for your portfolio, the alternative is to reduce your long positions to reach the target “net” allocation and hold the balance in cash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em>  - February 12, 2016</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/BearFund.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format</a>.&nbsp;</p>\n<!-- /wp:paragraph -->','The \"Bare Necessities\" About Bear Funds','Why use a bear fund instead of selling positions and raising cash?Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns. \n','inherit','closed','closed','','2457-revision-v1','','','2021-07-20 19:32:19','2021-07-20 19:32:19','',2457,'https://ns2020-investech.investech.com/?p=9413',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9415,2,'2021-07-20 19:36:12','2021-07-20 19:36:12','<!-- wp:heading -->\n<h2>Managing risk in the final stages of a market cycle</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns.  With a safety-first investment strategy, the first line of defense for protecting assets is to selectively take profits off the table and hold the proceeds in cash. Adjusting stock and sector weightings toward more resilient areas of the market can also fortify a portfolio. When bear market warning flags begin to wave, adding a bear fund can further reduce exposure to downside market movements and lower portfolio volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Bear Fund Fundamentals</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A bear fund is a mutual fund or exchange-traded fund (ETF) designed to increase in value as the market drops. Conversely, the fund will lose value when the market rises. The original bear market mutual funds have been around since the mid-1990s, and several bear fund ETFs following the same principles were incepted just over a decade ago, prior to the last bear market. At InvesTech Research, the primary reason for using a bear fund is as an “insurance policy” to offset potential losses in core holdings of the portfolio during market declines. Our recommendation to add a bear fund to the Model Fund Portfolio has raised some questions from our subscribers. The most frequently asked questions –some simple, some more complex– are addressed below.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why use a bear fund instead of selling positions and raising cash?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Increasing cash in the portfolio is an important part of a defensive strategy, but there are several reasons for maintaining select long positions and partially offsetting them with the “insurance policy” of a bear market fund:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Diversification</strong>: Bear fund insurance allows you to hold onto more stocks in a portfolio, thus maintaining greater diversification while counteracting the impact of a stock or sector that doesn’t perform as anticipated.</li><li><strong>Lower portfolio volatility</strong>: Market volatility usually increases as risks rise. A strategy that manages risk is inherently less volatile, and by “neutralizing” a portion of the portfolio, volatility is reduced.</li><li><strong>Dividends</strong>: Dividend payments continue for the positions that are maintained in a portfolio.</li><li><strong>Reduce capital gains tax</strong>: In taxable accounts, selling stocks can create sizeable realized gains. Limiting sales can lessen the tax bite.</li><li><strong>Prepare for the next bull market</strong>: When risks begin to resolve and the time is right to increase market allocation, new additions for the portfolio must be properly vetted prior to purchase. In the meantime, exposure can be quickly increased by removing the bear fund, which “de-neutralizes” a portion of the portfolio to participate in the market recovery without delay.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What do we mean by a “net” long position?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9407,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Model-Portfolio-Bar-Chart.png\" alt=\"\" class=\"wp-image-9407\"/><figcaption>InvesTech Model Fund Portfolio Allocation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The “net” long position in the Model Fund Portfolio is currently 65%. Fully one-third of the portfolio is not exposed to the downside effects of the market due to the protective cash and inverse index (short) bear fund. But how does this all add up?</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As illustrated in the chart at right, current holdings include 73% long funds (blue), 8% short bear fund (red), and 19% cash (yellow). The bear fund effectively “neutralizes” or offsets the impact of an equivalent position of long holdings (shaded blue area). In other words, if the long position moves down, the bear fund moves up and the return on that combination should be negligible for the day. Therefore, the net long position, or overall exposure to the equity market, is the 73% long position minus the 8% short position which is equal to a 65% “net” long position.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why is the ProShares Short S&amp;P 500 ETF (SH) a good choice for the Model Fund Portfolio?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We recommended SH for a number of reasons. Our portfolio holdings are based on S&amp;P 500 sectors, so it’s appropriate to select an inverse index fund correlated to this broad market Index. ProShares Short S&amp;P 500 was incepted in 2006 and has a solid track record through the last bear market. It is the largest and most liquid inverse S&amp;P 500 fund, currently holding over $1.6B in assets. We also like some of the advantages ETFs have over mutual funds such as lower expense ratios and the ability to trade throughout the day.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, this fund is passively managed to inversely correlate to the Index’s daily returns. Actively managed funds typically focus on profiting from shorting individual stocks, frequently use resource holdings, and may concentrate on attempts to time the market. Performance can vary depending on the manager’s ability to pick the right stocks to short. Thus, for a safety-first strategy, a more predictable passive fund is the best choice for our purposes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Can you provide a list of bear fund alternatives?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We’ve assembled a list of some of the larger funds that have longer track records, including both ETFs and mutual funds. Before purchasing any on the list below, you should perform your own due diligence to determine the suitability for your portfolio. Reasons for providing these additional choices include:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Some retirement accounts are limited to mutual fund investments only.</li><li>When using a passively managed fund, it’s best to choose one based on an index that most closely matches your portfolio holdings.</li><li>If you are willing to accept the added risk that comes with an actively managed fund, you may want to consider one of the total return alternatives.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9409,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bear-Market-Funds.png\" alt=\"\" class=\"wp-image-9409\"/><figcaption><strong>Bear Market Alternatives</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>If a passive bear fund offsets the market on a daily basis, what happens over a longer period of time?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Due to the compounding of daily returns, performance over periods longer than one day will likely differ from the inverse of the target index. To demonstrate, let’s look at an exaggerated example of how compounding affects returns.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9412,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2018/11/SH-SP500.png\" alt=\"\" class=\"wp-image-9412\"/><figcaption>S&amp;P 500 and SH after the stock market peak in October 2007</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Assume that both ProShares Short S&amp;P 500 (SH) and the S&amp;P 500 start with a value of $100. On Day 1, the S&amp;P 500 loses 10% causing SH to gain 10%. The S&amp;P 500, therefore, ends Day 1 with a price of $90, while SH has grown to $110. If on Day 2 the S&amp;P 500 loses 10% again, its price drops to $81 and SH increases to $121. While achieving perfect correlation on a daily basis, after two days the S&amp;P 500 is down 19% and SH is up 21%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If the stock market continues to decline after purchasing a bear fund, gains can be much more than you might expect due to progressively larger dollar changes based on the increasing value of the investment. On the other hand, if the stock market rises persistently after a bear fund is purchased, the daily percentage changes result in progressively smaller dollar changes as the value of the investment decreases. Hence, investors lose less than they might expect when the fund’s return over the course of the rally is calculated.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This point is illustrated in the graphs at right, which show the S&amp;P 500 and SH after the stock market peak in October 2007. Clearly, bear funds can serve as valuable “insurance” in a declining market, even if the position is held past the market bottom. <strong>One important note:</strong> bear fund performance in trendless, volatile markets is less predictable than in markets persistently trending up or down. In fact, due to compounding effects, an inverse index fund may even decline as the market remains flat.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why don’t you use a leveraged bear fund?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A leveraged bear fund is designed to go up two or three times as much as its benchmark goes down on a daily basis. “More” might sound better to the average investor; however, trying to time bear markets or corrections rarely works, and one can easily get burned with leveraged funds if the market doesn\'t move as anticipated and the compounding effect is magnified. With this in mind, we’d avoid the leveraged bear market funds due to the increased volatility and risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Summary: A Safety-first Approach</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bear market funds should be used to neutralize portfolio risk and help you sleep at night – not as a tool for speculative short-term trading. With a safety-first investment strategy, an inverse index fund can serve as an effective, low cost insurance offering an efficient way to offset rising market risk and reduce portfolio volatility. When considering a bear fund, the following guidelines should be helpful:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Use bear funds as an insurance to offset a portion of your portfolio investments.</li><li>Stay with the passively managed bear funds that inversely correlate with the broader indexes.</li><li>Choose the larger more liquid funds with longer track records.</li><li>Gradually implement a bear fund position as a bear market becomes more likely.</li><li>Do not use leveraged funds.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>If bear funds are not an option for your portfolio, the alternative is to reduce your long positions to reach the target “net” allocation and hold the balance in cash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em>  - February 12, 2016</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in PDF format </p>\n<!-- /wp:paragraph -->','The \"Bare Necessities\" About Bear Funds','Why use a bear fund instead of selling positions and raising cash?Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns. \n','inherit','closed','closed','','2457-revision-v1','','','2021-07-20 19:36:12','2021-07-20 19:36:12','',2457,'https://ns2020-investech.investech.com/?p=9415',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9416,2,'2021-07-20 19:36:26','2021-07-20 19:36:26','<!-- wp:heading -->\n<h2>Managing risk in the final stages of a market cycle</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns.  With a safety-first investment strategy, the first line of defense for protecting assets is to selectively take profits off the table and hold the proceeds in cash. Adjusting stock and sector weightings toward more resilient areas of the market can also fortify a portfolio. When bear market warning flags begin to wave, adding a bear fund can further reduce exposure to downside market movements and lower portfolio volatility.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Bear Fund Fundamentals</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A bear fund is a mutual fund or exchange-traded fund (ETF) designed to increase in value as the market drops. Conversely, the fund will lose value when the market rises. The original bear market mutual funds have been around since the mid-1990s, and several bear fund ETFs following the same principles were incepted just over a decade ago, prior to the last bear market. At InvesTech Research, the primary reason for using a bear fund is as an “insurance policy” to offset potential losses in core holdings of the portfolio during market declines. Our recommendation to add a bear fund to the Model Fund Portfolio has raised some questions from our subscribers. The most frequently asked questions –some simple, some more complex– are addressed below.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why use a bear fund instead of selling positions and raising cash?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Increasing cash in the portfolio is an important part of a defensive strategy, but there are several reasons for maintaining select long positions and partially offsetting them with the “insurance policy” of a bear market fund:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Diversification</strong>: Bear fund insurance allows you to hold onto more stocks in a portfolio, thus maintaining greater diversification while counteracting the impact of a stock or sector that doesn’t perform as anticipated.</li><li><strong>Lower portfolio volatility</strong>: Market volatility usually increases as risks rise. A strategy that manages risk is inherently less volatile, and by “neutralizing” a portion of the portfolio, volatility is reduced.</li><li><strong>Dividends</strong>: Dividend payments continue for the positions that are maintained in a portfolio.</li><li><strong>Reduce capital gains tax</strong>: In taxable accounts, selling stocks can create sizeable realized gains. Limiting sales can lessen the tax bite.</li><li><strong>Prepare for the next bull market</strong>: When risks begin to resolve and the time is right to increase market allocation, new additions for the portfolio must be properly vetted prior to purchase. In the meantime, exposure can be quickly increased by removing the bear fund, which “de-neutralizes” a portion of the portfolio to participate in the market recovery without delay.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What do we mean by a “net” long position?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9407,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Model-Portfolio-Bar-Chart.png\" alt=\"\" class=\"wp-image-9407\"/><figcaption>InvesTech Model Fund Portfolio Allocation</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The “net” long position in the Model Fund Portfolio is currently 65%. Fully one-third of the portfolio is not exposed to the downside effects of the market due to the protective cash and inverse index (short) bear fund. But how does this all add up?</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As illustrated in the chart at right, current holdings include 73% long funds (blue), 8% short bear fund (red), and 19% cash (yellow). The bear fund effectively “neutralizes” or offsets the impact of an equivalent position of long holdings (shaded blue area). In other words, if the long position moves down, the bear fund moves up and the return on that combination should be negligible for the day. Therefore, the net long position, or overall exposure to the equity market, is the 73% long position minus the 8% short position which is equal to a 65% “net” long position.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why is the ProShares Short S&amp;P 500 ETF (SH) a good choice for the Model Fund Portfolio?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We recommended SH for a number of reasons. Our portfolio holdings are based on S&amp;P 500 sectors, so it’s appropriate to select an inverse index fund correlated to this broad market Index. ProShares Short S&amp;P 500 was incepted in 2006 and has a solid track record through the last bear market. It is the largest and most liquid inverse S&amp;P 500 fund, currently holding over $1.6B in assets. We also like some of the advantages ETFs have over mutual funds such as lower expense ratios and the ability to trade throughout the day.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, this fund is passively managed to inversely correlate to the Index’s daily returns. Actively managed funds typically focus on profiting from shorting individual stocks, frequently use resource holdings, and may concentrate on attempts to time the market. Performance can vary depending on the manager’s ability to pick the right stocks to short. Thus, for a safety-first strategy, a more predictable passive fund is the best choice for our purposes.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Can you provide a list of bear fund alternatives?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>We’ve assembled a list of some of the larger funds that have longer track records, including both ETFs and mutual funds. Before purchasing any on the list below, you should perform your own due diligence to determine the suitability for your portfolio. Reasons for providing these additional choices include:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Some retirement accounts are limited to mutual fund investments only.</li><li>When using a passively managed fund, it’s best to choose one based on an index that most closely matches your portfolio holdings.</li><li>If you are willing to accept the added risk that comes with an actively managed fund, you may want to consider one of the total return alternatives.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9409,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bear-Market-Funds.png\" alt=\"\" class=\"wp-image-9409\"/><figcaption><strong>Bear Market Alternatives</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>If a passive bear fund offsets the market on a daily basis, what happens over a longer period of time?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Due to the compounding of daily returns, performance over periods longer than one day will likely differ from the inverse of the target index. To demonstrate, let’s look at an exaggerated example of how compounding affects returns.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9412,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2018/11/SH-SP500.png\" alt=\"\" class=\"wp-image-9412\"/><figcaption>S&amp;P 500 and SH after the stock market peak in October 2007</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Assume that both ProShares Short S&amp;P 500 (SH) and the S&amp;P 500 start with a value of $100. On Day 1, the S&amp;P 500 loses 10% causing SH to gain 10%. The S&amp;P 500, therefore, ends Day 1 with a price of $90, while SH has grown to $110. If on Day 2 the S&amp;P 500 loses 10% again, its price drops to $81 and SH increases to $121. While achieving perfect correlation on a daily basis, after two days the S&amp;P 500 is down 19% and SH is up 21%.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>If the stock market continues to decline after purchasing a bear fund, gains can be much more than you might expect due to progressively larger dollar changes based on the increasing value of the investment. On the other hand, if the stock market rises persistently after a bear fund is purchased, the daily percentage changes result in progressively smaller dollar changes as the value of the investment decreases. Hence, investors lose less than they might expect when the fund’s return over the course of the rally is calculated.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This point is illustrated in the graphs at right, which show the S&amp;P 500 and SH after the stock market peak in October 2007. Clearly, bear funds can serve as valuable “insurance” in a declining market, even if the position is held past the market bottom. <strong>One important note:</strong> bear fund performance in trendless, volatile markets is less predictable than in markets persistently trending up or down. In fact, due to compounding effects, an inverse index fund may even decline as the market remains flat.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Why don’t you use a leveraged bear fund?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A leveraged bear fund is designed to go up two or three times as much as its benchmark goes down on a daily basis. “More” might sound better to the average investor; however, trying to time bear markets or corrections rarely works, and one can easily get burned with leveraged funds if the market doesn\'t move as anticipated and the compounding effect is magnified. With this in mind, we’d avoid the leveraged bear market funds due to the increased volatility and risk.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Summary: A Safety-first Approach</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bear market funds should be used to neutralize portfolio risk and help you sleep at night – not as a tool for speculative short-term trading. With a safety-first investment strategy, an inverse index fund can serve as an effective, low cost insurance offering an efficient way to offset rising market risk and reduce portfolio volatility. When considering a bear fund, the following guidelines should be helpful:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>Use bear funds as an insurance to offset a portion of your portfolio investments.</li><li>Stay with the passively managed bear funds that inversely correlate with the broader indexes.</li><li>Choose the larger more liquid funds with longer track records.</li><li>Gradually implement a bear fund position as a bear market becomes more likely.</li><li>Do not use leveraged funds.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>If bear funds are not an option for your portfolio, the alternative is to reduce your long positions to reach the target “net” allocation and hold the balance in cash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em>  - February 12, 2016</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available to read in <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/BearFund.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->','The \"Bare Necessities\" About Bear Funds','Why use a bear fund instead of selling positions and raising cash?Managing risk in the final stages of a market cycle is vitally important for preserving capital and generating superior long-term investment returns. \n','inherit','closed','closed','','2457-revision-v1','','','2021-07-20 19:36:26','2021-07-20 19:36:26','',2457,'https://ns2020-investech.investech.com/?p=9416',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9419,2,'2021-07-20 19:39:27','2021-07-20 19:39:27','','Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640','','inherit','closed','closed','','jan-brueghel-the-younger-satire-tulip-mania-1640','','','2021-07-20 19:39:27','2021-07-20 19:39:27','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9420,2,'2021-07-20 19:40:38','2021-07-20 19:40:38','<!-- wp:spacer {\"height\":8} -->\n<div style=\"height:8px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Holland, 1636</h2>\n<!-- /wp:heading -->\n\n<!-- wp:columns {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-top\"><!-- wp:column {\"verticalAlignment\":\"top\",\"width\":\"60%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\" style=\"flex-basis:60%\"><!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>One would suppose that there must have been some great virtue in this flower to have made it so valuable in the eyes of so prudent a people as the Dutch; but it has neither the beauty nor the perfume of the rose – hardly the beauty of the ‘sweet, sweet-pea;’ neither is it as enduring as either…\"</p><p>\"At last, however, the more prudent began to see that this folly could not last for ever… It was seen that somebody must lose fearfully in the end. As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers.\"</p><cite>– Tulipomania, Holland, 1636, excerpted from Extraordinary Popular Delusions &amp; the Madness of Crowds, written by Charles Mackay 1841</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:image {\"id\":9419,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640-1024x655.jpg\" alt=\"\" class=\"wp-image-9419\"/><figcaption>A Satire of Tulip Mania by Jan Brueghel the Younger (ca. 1640) depicts speculators as brainless monkeys in contemporary upper-class dress.</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:heading -->\n<h2>Fast forward to 2017: Cryptocurrency Markets</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The quotes above referring to the Tulipomania of the 1600s may seem bizarre and distant to many. However, we see striking similarities between the investor psychology that once surrounded those antiquated tulip bulbs and that which is driving the current mania in cryptocurrencies, particularly Bitcoin:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-top\"><!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Wealth Managers Are Being Inundated With Calls About Bitcoin</p><cite>Bloomberg, 11/21/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Someone in 2010 bought 2 pizzas with 10,000 bitcoins – which today would be worth $100 million</p><cite>Business Insider, 11/28/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Owning bitcoin is so much damn fun</p><cite>Yahoo! Finance, 11/30/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin swings from bull to bear and back in a day </p><cite>Financial Times, 11/30/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin’s Wildest Ride: Up 40% in 40 Hours </p><cite>Wall Street Journal, 12/7/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin Futures Debut With 26% Rally, Trigger CBOE Trading Halts</p><cite>Bloomberg, 12/11/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bitcoin and the Lure of Decentralization</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bitcoin is the most widely-recognized and largest cryptocurrency by market capitalization. Specifically, a cryptocurrency is a digital currency which has no central issuing or regulating authority, but instead uses a decentralized system of computers to record transactions and manage the issuance of new units. The digital asset relies on cryptography to prevent counterfeiting and fraudulent transactions. While over 1,000 unique cryptocurrencies exist today, they all share a common purpose: to enable and serve decentralized applications – a way to create a self-supporting service that no single entity operates or regulates.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Way of the future? It’s complicated…</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Cryptocurrencies may sound like the way of the future, but they are incredibly complex and difficult to understand. To illustrate, let’s take a high-level look at a theoretical transaction paid for in Bitcoin, as depicted by the flow chart below. Once the transaction is proposed, independent entities (called “miners”) compete on the open network to time stamp and verify the transaction by performing computationally difficult calculations. The reward for winning the elaborate race to verify and add the transaction to the public digital ledger (the blockchain) is a fraction of the transaction’s value, plus a processing fee, both denominated in Bitcoin. The integrity of the ledger is upheld by the economic self-interest of the miners – pure, unadulterated capitalism.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":8307,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2021/06/bitcoinflowchart.jpg\" alt=\"\" class=\"wp-image-8307\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bitcoin vs. Internet Bubble</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4739,\"width\":352,\"height\":416,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bitcoin-1.png\" alt=\"Bitcoin vs. the Internet Bubble chart via Yahoo! Finance\" class=\"wp-image-4739\" width=\"352\" height=\"416\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Although Bitcoin has been in existence since 2009, its ascension to mainstream relevance is far more recent. Originally beloved by a very small group of passionate believers, Bitcoin saw relatively steady price appreciation in its early years while remaining virtually unknown to the general public. Over time, public enthusiasm surrounding Bitcoin has crescendoed, with the price of the digital currency rising exponentially, attracting hordes of amateur “investors” and speculators. As a result, the price of one Bitcoin has exploded by an absurd +3960% since the beginning of 2016! The ride has been volatile, including five drawdowns of at least -25% (daily close) during that period. Bitcoin’s meteoric rise dwarfs even the gains seen in the Internet Index at the peak of the notorious Tech Bubble. ➞</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Love at First Bit?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Why has the world seemingly become enamored with the concept of cryptocurrencies? The following are some of the advantages being widely touted by Bitcoin advocates:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Freedom </strong>– It is possible to send and receive Bitcoin payments anywhere in the world at any time, without scrutiny. Users don’t have to worry about third party delays or approvals, banking holidays, transfer limits, or any other laws due to lack of central authority.</li><li><strong>Anonymity </strong>– Anyone, of any age, from anywhere in the world, with access to the Internet can transact with Bitcoins without providing any paperwork or proof of identification. Since personal information is not being tied to transactions, the risk of identity theft is eliminated.</li><li><strong>Low Fees </strong>– Transaction fees for processing Bitcoin payments are relatively low. Additionally, digital currency exchanges (e.g., Coinbase) can help merchants process transactions by converting Bitcoins into fiat currency for a fee that is generally lower than most credit card processing fees.</li><li><strong>Less Risk for Merchants </strong>– Because Bitcoin transactions cannot be reversed and do not carry any personal information with them, merchants are protected from potential losses that could occur from credit card fraud.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Despite the increasing hype and number of new Bitcoin advocates, doubters and skeptics abound – and you can count us among them. An asset’s value does not go parabolic without carrying extreme risk. In addition, there are numerous pitfalls and uncertainties associated with cryptocurrencies:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Price Volatility </strong>– It is impossible for Bitcoin to be a good store of value and a legitimate tool for transacting business when prices change so rapidly. Imagine trying to buy a car with Bitcoin when its value is gyrating by hundreds, or even thousands of dollars over a short period of time.</li><li><strong>Intangible </strong>– Many skeptics take issue with the fact that a Bitcoin is represented by a unique string of numbers stored on a hard drive – there is no physical coin.</li><li><strong>Moral Dilemma</strong> – The anonymity provided by Bitcoin is a double-edged sword, as it makes the digital currency inherently ideal for black market dealings.</li><li><strong>Regulation </strong>– The IRS has begun taxing digital currency gains and payments. Furthermore, there is the potential that certain countries could attempt to ban cryptocurrencies altogether, particularly if terrorist activities are funded by Bitcoin.</li><li><strong>Cybersecurity and Fraud </strong>– Digital currency assets can be stolen by hackers. Additionally, as the demand for cryptocurrencies has grown, scammers and poseurs have created their own bogus digital assets.</li><li><strong>Scalability</strong> – Major digital currency exchanges (e.g., Coinbase) have had difficulty handling traffic, which causes scalability and liquidity issues.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading -->\n<h2>Our Perspective</h2>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":4742,\"width\":462,\"height\":260,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bitcoin-3-kings-cartoon.jpg\" alt=\"Cartoon depicting three wise men, one offering bitcoin...\" class=\"wp-image-4742\" width=\"462\" height=\"260\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Throughout history, there have been numerous examples of revolutionary ideas or innovations that turned into dangerous bubbles due to feverish speculation and Wall Street hype ─ regardless of how well-intentioned the underlying concept. In our opinion, cryptocurrencies like Bitcoin are among them. Any dispute regarding the practical applications of Bitcoin matters not to the crazed speculators driving today’s rampant price gains.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Many will argue that cryptocurrencies are isolated from other aspects of the economy and financial markets. However, we are concerned that the potential impact of a violent collapse in cryptocurrency prices could be bigger and more far-reaching than anticipated. And we are not alone:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Bitcoin’s Bubble Matters</strong>  </p><p><span style=\"font-size: inherit;\"><em>If there’s a price crash in the cryptocurrency, it could hit the tech sector–and more</em></span></p><cite>Wall Street Journal - 10/8/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><span style=\"font-size: inherit;\"><strong>Deutsche Bank Economist Says a Bitcoin Crash Would Endanger Global Markets</strong></span> </p><cite>Fortune - 12/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Whether speculation is in tulip bulbs, real estate, stocks, sub-prime mortgages, or cryptocurrencies, the pattern is usually the same. For investors, emotions run the gamut from greed, to defiance, to fear at any hint of a disruption in the system. Unless you have a voracious appetite for risk and a high tolerance for loss, today’s cryptocurrency bubble is best left to the speculators.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator {\"className\":\"is-style-default\"} -->\n<hr class=\"wp-block-separator is-style-default\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - December 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Bitcoin.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format.</a> </p>\n<!-- /wp:paragraph -->','Bitcoin - Tiptoe, through the Tulips...','We see striking similarities between the investor psychology that once surrounded those antiquated tulip bulbs and that which is driving the current mania in cryptocurrencies, particularly Bitcoin.','inherit','closed','closed','','2418-revision-v1','','','2021-07-20 19:40:38','2021-07-20 19:40:38','',2418,'https://ns2020-investech.investech.com/?p=9420',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9421,2,'2021-07-20 19:43:33','2021-07-20 19:43:33','','Bitcoin-Flowchart','','inherit','closed','closed','','bitcoin-flowchart','','','2021-07-20 19:43:33','2021-07-20 19:43:33','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bitcoin-Flowchart.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9422,2,'2021-07-20 19:43:55','2021-07-20 19:43:55','<!-- wp:spacer {\"height\":8} -->\n<div style=\"height:8px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Holland, 1636</h2>\n<!-- /wp:heading -->\n\n<!-- wp:columns {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-top\"><!-- wp:column {\"verticalAlignment\":\"top\",\"width\":\"60%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\" style=\"flex-basis:60%\"><!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>One would suppose that there must have been some great virtue in this flower to have made it so valuable in the eyes of so prudent a people as the Dutch; but it has neither the beauty nor the perfume of the rose – hardly the beauty of the ‘sweet, sweet-pea;’ neither is it as enduring as either…\"</p><p>\"At last, however, the more prudent began to see that this folly could not last for ever… It was seen that somebody must lose fearfully in the end. As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers.\"</p><cite>– Tulipomania, Holland, 1636, excerpted from Extraordinary Popular Delusions &amp; the Madness of Crowds, written by Charles Mackay 1841</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:image {\"id\":9419,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640-1024x655.jpg\" alt=\"\" class=\"wp-image-9419\"/><figcaption>A Satire of Tulip Mania by Jan Brueghel the Younger (ca. 1640) depicts speculators as brainless monkeys in contemporary upper-class dress.</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:heading -->\n<h2>Fast forward to 2017: Cryptocurrency Markets</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The quotes above referring to the Tulipomania of the 1600s may seem bizarre and distant to many. However, we see striking similarities between the investor psychology that once surrounded those antiquated tulip bulbs and that which is driving the current mania in cryptocurrencies, particularly Bitcoin:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-top\"><!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Wealth Managers Are Being Inundated With Calls About Bitcoin</p><cite>Bloomberg, 11/21/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Someone in 2010 bought 2 pizzas with 10,000 bitcoins – which today would be worth $100 million</p><cite>Business Insider, 11/28/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Owning bitcoin is so much damn fun</p><cite>Yahoo! Finance, 11/30/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin swings from bull to bear and back in a day </p><cite>Financial Times, 11/30/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin’s Wildest Ride: Up 40% in 40 Hours </p><cite>Wall Street Journal, 12/7/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin Futures Debut With 26% Rally, Trigger CBOE Trading Halts</p><cite>Bloomberg, 12/11/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bitcoin and the Lure of Decentralization</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bitcoin is the most widely-recognized and largest cryptocurrency by market capitalization. Specifically, a cryptocurrency is a digital currency which has no central issuing or regulating authority, but instead uses a decentralized system of computers to record transactions and manage the issuance of new units. The digital asset relies on cryptography to prevent counterfeiting and fraudulent transactions. While over 1,000 unique cryptocurrencies exist today, they all share a common purpose: to enable and serve decentralized applications – a way to create a self-supporting service that no single entity operates or regulates.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Way of the future? It’s complicated…</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Cryptocurrencies may sound like the way of the future, but they are incredibly complex and difficult to understand. To illustrate, let’s take a high-level look at a theoretical transaction paid for in Bitcoin, as depicted by the flow chart below. Once the transaction is proposed, independent entities (called “miners”) compete on the open network to time stamp and verify the transaction by performing computationally difficult calculations. The reward for winning the elaborate race to verify and add the transaction to the public digital ledger (the blockchain) is a fraction of the transaction’s value, plus a processing fee, both denominated in Bitcoin. The integrity of the ledger is upheld by the economic self-interest of the miners – pure, unadulterated capitalism.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9421,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bitcoin-Flowchart.jpg\" alt=\"\" class=\"wp-image-9421\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bitcoin vs. Internet Bubble</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4739,\"width\":352,\"height\":416,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bitcoin-1.png\" alt=\"Bitcoin vs. the Internet Bubble chart via Yahoo! Finance\" class=\"wp-image-4739\" width=\"352\" height=\"416\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Although Bitcoin has been in existence since 2009, its ascension to mainstream relevance is far more recent. Originally beloved by a very small group of passionate believers, Bitcoin saw relatively steady price appreciation in its early years while remaining virtually unknown to the general public. Over time, public enthusiasm surrounding Bitcoin has crescendoed, with the price of the digital currency rising exponentially, attracting hordes of amateur “investors” and speculators. As a result, the price of one Bitcoin has exploded by an absurd +3960% since the beginning of 2016! The ride has been volatile, including five drawdowns of at least -25% (daily close) during that period. Bitcoin’s meteoric rise dwarfs even the gains seen in the Internet Index at the peak of the notorious Tech Bubble. ➞</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Love at First Bit?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Why has the world seemingly become enamored with the concept of cryptocurrencies? The following are some of the advantages being widely touted by Bitcoin advocates:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Freedom </strong>– It is possible to send and receive Bitcoin payments anywhere in the world at any time, without scrutiny. Users don’t have to worry about third party delays or approvals, banking holidays, transfer limits, or any other laws due to lack of central authority.</li><li><strong>Anonymity </strong>– Anyone, of any age, from anywhere in the world, with access to the Internet can transact with Bitcoins without providing any paperwork or proof of identification. Since personal information is not being tied to transactions, the risk of identity theft is eliminated.</li><li><strong>Low Fees </strong>– Transaction fees for processing Bitcoin payments are relatively low. Additionally, digital currency exchanges (e.g., Coinbase) can help merchants process transactions by converting Bitcoins into fiat currency for a fee that is generally lower than most credit card processing fees.</li><li><strong>Less Risk for Merchants </strong>– Because Bitcoin transactions cannot be reversed and do not carry any personal information with them, merchants are protected from potential losses that could occur from credit card fraud.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Despite the increasing hype and number of new Bitcoin advocates, doubters and skeptics abound – and you can count us among them. An asset’s value does not go parabolic without carrying extreme risk. In addition, there are numerous pitfalls and uncertainties associated with cryptocurrencies:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Price Volatility </strong>– It is impossible for Bitcoin to be a good store of value and a legitimate tool for transacting business when prices change so rapidly. Imagine trying to buy a car with Bitcoin when its value is gyrating by hundreds, or even thousands of dollars over a short period of time.</li><li><strong>Intangible </strong>– Many skeptics take issue with the fact that a Bitcoin is represented by a unique string of numbers stored on a hard drive – there is no physical coin.</li><li><strong>Moral Dilemma</strong> – The anonymity provided by Bitcoin is a double-edged sword, as it makes the digital currency inherently ideal for black market dealings.</li><li><strong>Regulation </strong>– The IRS has begun taxing digital currency gains and payments. Furthermore, there is the potential that certain countries could attempt to ban cryptocurrencies altogether, particularly if terrorist activities are funded by Bitcoin.</li><li><strong>Cybersecurity and Fraud </strong>– Digital currency assets can be stolen by hackers. Additionally, as the demand for cryptocurrencies has grown, scammers and poseurs have created their own bogus digital assets.</li><li><strong>Scalability</strong> – Major digital currency exchanges (e.g., Coinbase) have had difficulty handling traffic, which causes scalability and liquidity issues.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading -->\n<h2>Our Perspective</h2>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":4742,\"width\":462,\"height\":260,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bitcoin-3-kings-cartoon.jpg\" alt=\"Cartoon depicting three wise men, one offering bitcoin...\" class=\"wp-image-4742\" width=\"462\" height=\"260\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Throughout history, there have been numerous examples of revolutionary ideas or innovations that turned into dangerous bubbles due to feverish speculation and Wall Street hype ─ regardless of how well-intentioned the underlying concept. In our opinion, cryptocurrencies like Bitcoin are among them. Any dispute regarding the practical applications of Bitcoin matters not to the crazed speculators driving today’s rampant price gains.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Many will argue that cryptocurrencies are isolated from other aspects of the economy and financial markets. However, we are concerned that the potential impact of a violent collapse in cryptocurrency prices could be bigger and more far-reaching than anticipated. And we are not alone:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Bitcoin’s Bubble Matters</strong>  </p><p><span style=\"font-size: inherit;\"><em>If there’s a price crash in the cryptocurrency, it could hit the tech sector–and more</em></span></p><cite>Wall Street Journal - 10/8/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><span style=\"font-size: inherit;\"><strong>Deutsche Bank Economist Says a Bitcoin Crash Would Endanger Global Markets</strong></span> </p><cite>Fortune - 12/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Whether speculation is in tulip bulbs, real estate, stocks, sub-prime mortgages, or cryptocurrencies, the pattern is usually the same. For investors, emotions run the gamut from greed, to defiance, to fear at any hint of a disruption in the system. Unless you have a voracious appetite for risk and a high tolerance for loss, today’s cryptocurrency bubble is best left to the speculators.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator {\"className\":\"is-style-default\"} -->\n<hr class=\"wp-block-separator is-style-default\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - December 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Bitcoin.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format.</a> </p>\n<!-- /wp:paragraph -->','Bitcoin - Tiptoe, through the Tulips...','We see striking similarities between the investor psychology that once surrounded those antiquated tulip bulbs and that which is driving the current mania in cryptocurrencies, particularly Bitcoin.','inherit','closed','closed','','2418-revision-v1','','','2021-07-20 19:43:55','2021-07-20 19:43:55','',2418,'https://ns2020-investech.investech.com/?p=9422',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9423,2,'2021-07-20 19:46:13','2021-07-20 19:46:13','','Bitcoin-VS-Internet_Bubble','','inherit','closed','closed','','bitcoin-vs-internet_bubble','','','2021-07-20 19:46:13','2021-07-20 19:46:13','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bitcoin-VS-Internet_Bubble.png',0,'attachment','image/png',0);
INSERT INTO `wp_posts` VALUES (9425,2,'2021-07-20 19:48:05','2021-07-20 19:48:05','','Bitcoin-Three-Kings','','inherit','closed','closed','','bitcoin-three-kings','','','2021-07-20 19:48:05','2021-07-20 19:48:05','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bitcoin-Three-Kings.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9426,2,'2021-07-20 19:55:28','2021-07-20 19:55:28','','Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640','','inherit','closed','closed','','jan-brueghel-the-younger-satire-tulip-mania-1640-2','','','2021-07-20 19:55:28','2021-07-20 19:55:28','',2418,'https://ns2020-investech.investech.com/wp-content/uploads/2017/12/Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9427,2,'2021-07-20 19:55:37','2021-07-20 19:55:37','<!-- wp:spacer {\"height\":8} -->\n<div style=\"height:8px\" aria-hidden=\"true\" class=\"wp-block-spacer\"></div>\n<!-- /wp:spacer -->\n\n<!-- wp:heading -->\n<h2>Holland, 1636</h2>\n<!-- /wp:heading -->\n\n<!-- wp:columns {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-top\"><!-- wp:column {\"verticalAlignment\":\"top\",\"width\":\"60%\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\" style=\"flex-basis:60%\"><!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>One would suppose that there must have been some great virtue in this flower to have made it so valuable in the eyes of so prudent a people as the Dutch; but it has neither the beauty nor the perfume of the rose – hardly the beauty of the ‘sweet, sweet-pea;’ neither is it as enduring as either…\"</p><p>\"At last, however, the more prudent began to see that this folly could not last for ever… It was seen that somebody must lose fearfully in the end. As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers.\"</p><cite>– Tulipomania, Holland, 1636, excerpted from Extraordinary Popular Delusions &amp; the Madness of Crowds, written by Charles Mackay 1841</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:image {\"id\":9419,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Jan-Brueghel-The-Younger-Satire-Tulip-Mania-1640-1024x655.jpg\" alt=\"\" class=\"wp-image-9419\"/><figcaption>A Satire of Tulip Mania by Jan Brueghel the Younger (ca. 1640) depicts speculators as brainless monkeys in contemporary upper-class dress.</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:heading -->\n<h2>Fast forward to 2017: Cryptocurrency Markets</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>The quotes above referring to the Tulipomania of the 1600s may seem bizarre and distant to many. However, we see striking similarities between the investor psychology that once surrounded those antiquated tulip bulbs and that which is driving the current mania in cryptocurrencies, particularly Bitcoin:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-top\"><!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Wealth Managers Are Being Inundated With Calls About Bitcoin</p><cite>Bloomberg, 11/21/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Someone in 2010 bought 2 pizzas with 10,000 bitcoins – which today would be worth $100 million</p><cite>Business Insider, 11/28/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Owning bitcoin is so much damn fun</p><cite>Yahoo! Finance, 11/30/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"top\"} -->\n<div class=\"wp-block-column is-vertically-aligned-top\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin swings from bull to bear and back in a day </p><cite>Financial Times, 11/30/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin’s Wildest Ride: Up 40% in 40 Hours </p><cite>Wall Street Journal, 12/7/17</cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p>Bitcoin Futures Debut With 26% Rally, Trigger CBOE Trading Halts</p><cite>Bloomberg, 12/11/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bitcoin and the Lure of Decentralization</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Bitcoin is the most widely-recognized and largest cryptocurrency by market capitalization. Specifically, a cryptocurrency is a digital currency which has no central issuing or regulating authority, but instead uses a decentralized system of computers to record transactions and manage the issuance of new units. The digital asset relies on cryptography to prevent counterfeiting and fraudulent transactions. While over 1,000 unique cryptocurrencies exist today, they all share a common purpose: to enable and serve decentralized applications – a way to create a self-supporting service that no single entity operates or regulates.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Way of the future? It’s complicated…</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Cryptocurrencies may sound like the way of the future, but they are incredibly complex and difficult to understand. To illustrate, let’s take a high-level look at a theoretical transaction paid for in Bitcoin, as depicted by the flow chart below. Once the transaction is proposed, independent entities (called “miners”) compete on the open network to time stamp and verify the transaction by performing computationally difficult calculations. The reward for winning the elaborate race to verify and add the transaction to the public digital ledger (the blockchain) is a fraction of the transaction’s value, plus a processing fee, both denominated in Bitcoin. The integrity of the ledger is upheld by the economic self-interest of the miners – pure, unadulterated capitalism.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":9421,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Bitcoin-Flowchart.jpg\" alt=\"\" class=\"wp-image-9421\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Bitcoin vs. Internet Bubble</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4739,\"width\":352,\"height\":416,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bitcoin-1.png\" alt=\"Bitcoin vs. the Internet Bubble chart via Yahoo! Finance\" class=\"wp-image-4739\" width=\"352\" height=\"416\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Although Bitcoin has been in existence since 2009, its ascension to mainstream relevance is far more recent. Originally beloved by a very small group of passionate believers, Bitcoin saw relatively steady price appreciation in its early years while remaining virtually unknown to the general public. Over time, public enthusiasm surrounding Bitcoin has crescendoed, with the price of the digital currency rising exponentially, attracting hordes of amateur “investors” and speculators. As a result, the price of one Bitcoin has exploded by an absurd +3960% since the beginning of 2016! The ride has been volatile, including five drawdowns of at least -25% (daily close) during that period. Bitcoin’s meteoric rise dwarfs even the gains seen in the Internet Index at the peak of the notorious Tech Bubble. ➞</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>Love at First Bit?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Why has the world seemingly become enamored with the concept of cryptocurrencies? The following are some of the advantages being widely touted by Bitcoin advocates:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Freedom </strong>– It is possible to send and receive Bitcoin payments anywhere in the world at any time, without scrutiny. Users don’t have to worry about third party delays or approvals, banking holidays, transfer limits, or any other laws due to lack of central authority.</li><li><strong>Anonymity </strong>– Anyone, of any age, from anywhere in the world, with access to the Internet can transact with Bitcoins without providing any paperwork or proof of identification. Since personal information is not being tied to transactions, the risk of identity theft is eliminated.</li><li><strong>Low Fees </strong>– Transaction fees for processing Bitcoin payments are relatively low. Additionally, digital currency exchanges (e.g., Coinbase) can help merchants process transactions by converting Bitcoins into fiat currency for a fee that is generally lower than most credit card processing fees.</li><li><strong>Less Risk for Merchants </strong>– Because Bitcoin transactions cannot be reversed and do not carry any personal information with them, merchants are protected from potential losses that could occur from credit card fraud.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Despite the increasing hype and number of new Bitcoin advocates, doubters and skeptics abound – and you can count us among them. An asset’s value does not go parabolic without carrying extreme risk. In addition, there are numerous pitfalls and uncertainties associated with cryptocurrencies:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li><strong>Price Volatility </strong>– It is impossible for Bitcoin to be a good store of value and a legitimate tool for transacting business when prices change so rapidly. Imagine trying to buy a car with Bitcoin when its value is gyrating by hundreds, or even thousands of dollars over a short period of time.</li><li><strong>Intangible </strong>– Many skeptics take issue with the fact that a Bitcoin is represented by a unique string of numbers stored on a hard drive – there is no physical coin.</li><li><strong>Moral Dilemma</strong> – The anonymity provided by Bitcoin is a double-edged sword, as it makes the digital currency inherently ideal for black market dealings.</li><li><strong>Regulation </strong>– The IRS has begun taxing digital currency gains and payments. Furthermore, there is the potential that certain countries could attempt to ban cryptocurrencies altogether, particularly if terrorist activities are funded by Bitcoin.</li><li><strong>Cybersecurity and Fraud </strong>– Digital currency assets can be stolen by hackers. Additionally, as the demand for cryptocurrencies has grown, scammers and poseurs have created their own bogus digital assets.</li><li><strong>Scalability</strong> – Major digital currency exchanges (e.g., Coinbase) have had difficulty handling traffic, which causes scalability and liquidity issues.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading -->\n<h2>Our Perspective</h2>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":4742,\"width\":462,\"height\":260,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/bitcoin-3-kings-cartoon.jpg\" alt=\"Cartoon depicting three wise men, one offering bitcoin...\" class=\"wp-image-4742\" width=\"462\" height=\"260\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Throughout history, there have been numerous examples of revolutionary ideas or innovations that turned into dangerous bubbles due to feverish speculation and Wall Street hype ─ regardless of how well-intentioned the underlying concept. In our opinion, cryptocurrencies like Bitcoin are among them. Any dispute regarding the practical applications of Bitcoin matters not to the crazed speculators driving today’s rampant price gains.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Many will argue that cryptocurrencies are isolated from other aspects of the economy and financial markets. However, we are concerned that the potential impact of a violent collapse in cryptocurrency prices could be bigger and more far-reaching than anticipated. And we are not alone:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:columns -->\n<div class=\"wp-block-columns\"><!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Bitcoin’s Bubble Matters</strong>  </p><p><span style=\"font-size: inherit;\"><em>If there’s a price crash in the cryptocurrency, it could hit the tech sector–and more</em></span></p><cite>Wall Street Journal - 10/8/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column -->\n\n<!-- wp:column -->\n<div class=\"wp-block-column\"><!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><span style=\"font-size: inherit;\"><strong>Deutsche Bank Economist Says a Bitcoin Crash Would Endanger Global Markets</strong></span> </p><cite>Fortune - 12/10/17</cite></blockquote>\n<!-- /wp:quote --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:paragraph -->\n<p>Whether speculation is in tulip bulbs, real estate, stocks, sub-prime mortgages, or cryptocurrencies, the pattern is usually the same. For investors, emotions run the gamut from greed, to defiance, to fear at any hint of a disruption in the system. Unless you have a voracious appetite for risk and a high tolerance for loss, today’s cryptocurrency bubble is best left to the speculators.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator {\"className\":\"is-style-default\"} -->\n<hr class=\"wp-block-separator is-style-default\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - December 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>This report is also available to <a href=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/Bitcoin.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">read in PDF format.</a> </p>\n<!-- /wp:paragraph -->','Bitcoin - Tiptoe, through the Tulips...','We see striking similarities between the investor psychology that once surrounded those antiquated tulip bulbs and that which is driving the current mania in cryptocurrencies, particularly Bitcoin.','inherit','closed','closed','','2418-revision-v1','','','2021-07-20 19:55:37','2021-07-20 19:55:37','',2418,'https://ns2020-investech.investech.com/?p=9427',0,'revision','',0);
INSERT INTO `wp_posts` VALUES (9428,2,'2021-07-20 22:17:05','2021-07-20 22:17:05','','iceberg-4ReskwNsh68-unsplash','','inherit','closed','closed','','iceberg-4reskwnsh68-unsplash','','','2021-07-20 22:17:05','2021-07-20 22:17:05','',9376,'https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash.jpg',0,'attachment','image/jpeg',0);
INSERT INTO `wp_posts` VALUES (9430,2,'2021-07-20 22:22:28','2021-07-20 22:22:28','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":4901,\"width\":483,\"height\":237,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/MorganStanley-1024x502.png\" alt=\"Morgan Stanley ad for securities-backed loans\" class=\"wp-image-4901\" width=\"483\" height=\"237\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4902,\"width\":366,\"height\":310,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/WellsFargo.png\" alt=\"Wells Fargo advertising securities-backed loans\" class=\"wp-image-4902\" width=\"366\" height=\"310\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4903,\"width\":435,\"height\":319,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/UBS-1024x751.png\" alt=\"UBS advertising securities-backed loans\" class=\"wp-image-4903\" width=\"435\" height=\"319\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":4904,\"width\":346,\"height\":233,\"sizeSlug\":\"medium\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-medium is-resized\"><img src=\"https://ns2020-investech.investech.com/wp-content/uploads/2020/12/GoldmanSachs-300x204.png\" alt=\"Goldman Sachs securities lending advertisement\" class=\"wp-image-4904\" width=\"346\" height=\"233\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:22:28','2021-07-20 22:22:28','',2472,'https://ns2020-investech.investech.com/?p=9430',0,'revision','',0);
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INSERT INTO `wp_posts` VALUES (9437,2,'2021-07-20 22:29:49','2021-07-20 22:29:49','<!-- wp:columns {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-columns are-vertically-aligned-center\"><!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:heading {\"className\":\"unclear\"} -->\n<h2 class=\"unclear\">Securities-Backed Loans… Just the Tip of the Iceberg?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Aging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.</p>\n<!-- /wp:paragraph --></div>\n<!-- /wp:column -->\n\n<!-- wp:column {\"verticalAlignment\":\"center\"} -->\n<div class=\"wp-block-column is-vertically-aligned-center\"><!-- wp:image {\"id\":9428,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/iceberg-4ReskwNsh68-unsplash-1024x576.jpg\" alt=\"\" class=\"wp-image-9428\"/><figcaption>Nine-tenths of an iceberg\'s volume is below the water</figcaption></figure>\n<!-- /wp:image --></div>\n<!-- /wp:column --></div>\n<!-- /wp:columns -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Markets are relaxing merrily on a powerful time bomb</strong> - Stock and bond market leverage is everywhere.</p><cite><em>Business Insider – 7/30/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>The article goes on to say, <em>\"Some of (this leverage) is transparent, such as NYSE margin debt which was $539 billion as of the June report. But the hottest form of stock and bond market leverage is opaque, offered by financial firms that usually don’t disclose the totals: securities-based loans (SBLs) – or “shadow margin” because no one knows how much of it there is.\"</em></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>Innovative Lending Practices Make a Come-back</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>It’s been over 12 years since we warned about the highly questionable mortgage lending practices that mushroomed during the Housing Bubble. Now it appears that innovative lending is back in vogue. Securities-backed loans (SBLs) are among Wall Street’s hottest new products in this bull market, and they’ve been growing faster than Jack’s beanstalk over the past few years:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Borrowing With Stock Soars as Market Rises</strong></p><cite><em>Wall Street Journal, 7/28/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Fidelity taps Goldman Sachs to expand lending services through RIAs</strong></p><cite><em>Investment News, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Goldman Sachs is launching a digital platform for the rich to borrow as much as $25 million</strong></p><cite><em>Reuters, 7/27/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Wall Street Sharks Entice Customers With Securities-Backed Loans</strong></p><cite><em>Seeking Alpha, 8/13/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p>SBLs are often referred to as “shadow margin” because they’re not tracked in the margin debt figures, nor are they tracked by either the SEC or the brokerage regulator FINRA. Nobody knows how extensive such loans are, but based on anecdotal evidence they total at least $100 billion and we believe the figure could be much larger.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"left\",\"id\":9431,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushleft\"} -->\n<div class=\"wp-block-image pushleft\"><figure class=\"alignleft size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Morgan-Stanley.png\" alt=\"\" class=\"wp-image-9431\"/><figcaption>Morgan Stanle<strong>y</strong> Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to a July 2017 <em>Wall Street Journal</em> article, Bank of America’s wealth unit had $40 billion in outstanding securities-backed loans at the end of 2016, up 140% from 2010. Morgan Stanley had $30 billion in these loans, more than double the amount in 2013. And, not to be left behind, Goldman Sachs is teaming up with Fidelity and other brokerages to broaden the availability of credit via its new digital lending program, “GS Select.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What are securities-backed loans (SBLs), and why are they popular?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9433,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Wells-Fargo.png\" alt=\"\" class=\"wp-image-9433\"/><figcaption>Wells Fargo Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>In simple terms, SBLs are loans that are marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the securities in one’s investment portfolio without having to liquidate those holdings. Funds can be used for any purpose <strong><em>except </em></strong>buying more stock or repaying a margin loan. For instance, these loans might be used for buying real estate, investing in a business, funding education, or for personal use like taking a trip or paying for a wedding.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Fixed loans can run the gamut from $25,000 to $25 million or more, depending on the lender and the amount of collateral. A typical SBL agreement permits an investor to borrow from 50% to 95% of the value of the assets in his or her non-retirement investment account, based on the size of the portfolio and the types and mix of securities held. These lending arrangements can be set up as a fixed loan, but more often they’re established as a revolving SBL line of credit (SBLOC). It’s not uncommon for a firm to require that account assets have a market value of at least $100,000 to qualify for an SBLOC.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>The sales pitch is irresistible!</h3>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Looking at the promotional materials shown in this report from broker websites touting SBLs, who wouldn’t want to avail themselves of this offering? According to the ads, you’ve worked hard to grow your investments over the years; now you can capitalize on those assets to finance your dreams without drawing down your portfolio.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9432,\"sizeSlug\":\"large\",\"linkDestination\":\"none\",\"className\":\"pushright\"} -->\n<div class=\"wp-block-image pushright\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/UBS-Wealth-Management-1024x751.png\" alt=\"\" class=\"wp-image-9432\"/><figcaption>UBS Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>There are some of the benefits of establishing a securities-backed line of credit (SBLOC) being touted to potential customers:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>With an SBLOC, the cash is readily available (up to the credit limits) any time you need it.</li><li>Other than securities related transactions, there are no restrictions on how you use the loan.</li><li>An SBLOC lets you keep your investment account intact, allowing it to continue to grow.</li><li>By borrowing to meet your cash needs, you can avoid selling securities and triggering capital gains taxes.</li><li>Because SBLs are backed by portfolio assets, interest rates can be much lower than traditional loans.</li><li>Once an SBLOC is in place, it can be used repeatedly <strong><em>and </em></strong>you’re only required to make monthly interest payments – there is no maturity date.</li><li>There are usually no fees to establish the loan or credit line and funds are available quickly. Goldman Sachs’ digital platform promotes a 24-hour turnaround.</li><li>Typically, no personal financial statements, tax returns, or other documents are required.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>What’s in it for the brokers?</h3>\n<!-- /wp:heading -->\n\n<!-- wp:image {\"align\":\"right\",\"id\":9436,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<div class=\"wp-block-image\"><figure class=\"alignright size-large\"><img src=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/Goldman-Sachs-1024x698.png\" alt=\"\" class=\"wp-image-9436\"/><figcaption>Goldman Sachs Advertisement</figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>SBLs and lines of credit have become lucrative new sources of income for brokerages, helping to replace revenue lost due to recent cuts in commission rates. In addition, brokers retain portfolio assets, along with their associated fees, as customers can access cash without making withdrawals. In some cases, establishing these loans may factor into a broker’s compensation, and marketing these credit options creates “sticky” clients as it’s hard to transfer assets to another broker with a securities-backed loan outstanding. Even if a client doesn’t use the line of credit immediately, the longer it’s in place, the more likely it is that he or she will eventually tap it.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading -->\n<h2>So, where’s the risk with SBLs?</h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>With SBLs, as with all financial obligations, it’s vitally important to read the fine print or risks section before committing. Careful attention to this step reveals that brokerages and banks get all the benefits of secured, full-recourse loans, while customers take all the risk. This may seem acceptable in a healthy bull market, but it can be catastrophic to the pledged portfolio in a downturn.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The following are some of the risks that investors may face if they borrow against an investment account. It’s these risks that prompted the SEC and FINRA to issue a special Investor Alert in 2015 regarding this type of lending:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>If the value of the securities declines below a minimum level, you may be subject to a collateral “maintenance call” with little or no advanced warning, giving you minimal time to pay the loan or deposit more cash or securities in the account. Note that if this occurs, there are no extensions, and a broker can change its collateral maintenance requirement at any time without notifying you.</li><li>If you are unable to meet a maintenance call, the broker can liquidate part, or all, of your portfolio holdings at their discretion. You do not pick the stocks to sell. In a bear market, that could mean selling core holdings at a market bottom or alternatively realizing significant tax gains on long-held securities.</li><li>In a major downturn, you could be forced to forfeit all your pledged assets – in this case, the stocks, funds, and bonds in your portfolio. This is a major drawback to asset-backed loans…  In the worst-case scenario, you might lose more funds than are held in the collateral account, and as a full-recourse loan, you would be liable for any deficiency.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:quote {\"className\":\"is-style-headline-highlight\"} -->\n<blockquote class=\"wp-block-quote is-style-headline-highlight\"><p><strong>Why Goldman Sachs Seized a Client’s 217-Foot Yacht</strong></p><cite><em>Wall Street Journal - 8/10/17</em></cite></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:block {\"ref\":5343} /-->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list {\"className\":\"is-style-default\"} -->\n<ul class=\"is-style-default\"><li>For SBLOCs, the interest rate on your loan is generally a floating rate that can change daily. With interest rates rising, the cost of your SBLOC could increase significantly.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>The proliferation of SBLs and SBLOCs obviously increases the risks in this late-stage bull market. While history shows that excessive debt accumulation does not trigger a stock market peak, it can accelerate and intensify losses when the leverage starts to unwind in a bear market. Today’s levels of these securities-backed loans are small relative to overall consumer and business debt, but they can be dangerous. Like subprime mortgage loans 10 years ago, if trouble appears in terms of mass collateral maintenance calls, it could be just the tip of the iceberg.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator\"/>\n<!-- /wp:separator -->\n\n<!-- wp:heading {\"level\":4} -->\n<h4>Excerpt from <em>InvesTech Research</em> - September 15, 2017</h4>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Also available in <a href=\"https://ns2020-investech.investech.com/wp-content/pdf_files_wp/SBLs.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">PDF format </a></p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p></p>\n<!-- /wp:paragraph -->','Securities-Backed Loans','Securities-Backed Loans… Just the Tip of the Iceberg?\n\nAging bull markets are naturally predisposed to excesses –particularly in debt and leverage– and once again nontraditional loans are taking center stage.','inherit','closed','closed','','2472-revision-v1','','','2021-07-20 22:29:49','2021-07-20 22:29:49','',2472,'https://ns2020-investech.investech.com/?p=9437',0,'revision','',0);
