Time for Active Management
We have reached the end game for passive investment management.
Despite record valuations and the volatility we experienced just this last April, passive (i.e., buy-and-hold) is the default strategy for most investors whether they are aware, or not. This approach to investing for the long term is endorsed and enouraged first of all by the US government, then by financial academics, and, of course, by the giant Wall Street firms. Buying and holding is hard-wired into the system. After all, it's worked for over forty years . . .
Keeping an Eye on the BigTen
The mechanical implementation of passive strategies creates poorly understood feedback loops that are today significantly distorting the valuations of the Big Ten - the ten largest mega-cap companies that domnate the financial markets.
The growing disconnect between price and value for these issues is becoming a threat to the viability of the financial system. Your portfolio needs to monitor and manage this threat . . .
The KP Trend Model identifies the current trend regime of US equities markets.
Effective December 26, 2025, the Model shifted back to a Yellow status, having previously re-visited Green for just 24 trading days before the Christmas holiday.
The Yellow condition has characterized the US market environment for 34% of all trading days over the past quarter century.
It has generated a positive annualized return of +10.2%, with considerably more volatility (21%) than the Green condition . . .
Identifying Market Trends
The performance of a portfolio of equities is dominated mostly by market trends, not by selections of individual investments.
Forecasting these trends is very challenging, yet even a partially success-ful effort to manage market risk can signifi-cantly reduce portfolio volatility and draw-down . . .
