Time for Active Management
We are approaching the end game for passive invest-ment management.
The ball room's burning, yet they're still dancing inside. Despite the portfolio drawdowns and extreme volatility we experienced just this last April, passive (i.e., buy and hold) continues to be the default choice for most investors, financial academics, and the Wall Street giants. The paradigm has been hard-wired into the system. After all, it's worked for forty-five years.
Monitoring the
Magnificent 7
The mechanical implementation of passive strategies creates poorly understood feedback loops that are today significantly distorting the valuations of a small group of very large companies.
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 be able to manage its exposure to such a threat . . .
On May 15, the KP Trend Model returned to a Green status after a brief visit to Yellow and even a few days in Red during the chaotic days at the beginning of April.
Accordingly, our recom-mended US equity allocation is once again fully invested, which we implement as 95% large cap equties and roughly 5% cash.
The Green condition has dominated the US market environment of the past quarter century and is characterized by high returns and low volatility . . .
Identifying Market Trends
Market trends, not investment selections, dominate the performance of invest-ment portfolios.
Forecasting these trends is a challenging undertaking, but even a partially successful effort to manage market risk will significantly reduce volatility and portfolio drawdown . . .
