Looking Around the Corner
The Model. Fueled by this year’s tech rally, our Trend Model remains positive. Full exposure to US equities. When we implement the exposure recommendations of the KP Trend Model over several years, we are likely to experience risk-adjusted investment returns significantly higher than those achieved by passive investors. While our annualized investment returns are likely improve modestly, there will invariably be a huge reduction in portfolio volatility and drawdown. This will especially be true with popular index ETFs such as SPY, QQQ, or IWM. The current position of the...
Read MoreIntermediate Momentum
The Model: The KP Trend Model is solidly Green, maximum exposure to US equities. From the Trading Room: Tactical Exposure remains at Plus 1, overbought in the context of a advancing market trend, as the oscillator continues to contract from an extremely overbought condition. The slower moving, more deliberate KP-1 Intermediate Trend Model broke out to a high for the move, into levels not seen since December 2020, then on the way to this Models all-time high, and subsequent market highs in January 2022. There is still more room for the Short-Term oscillators to pull back from...
Read MoreA Solid Model
The Model. The KP Trend Model is Green. Full policy exposure to US equities. From the Trading Room. It has been just one week since our trend model returned to Green on Friday, April 26 after a very brief six trading days in Yellow status. As we’ve said many times, the Model doesn’t read newspapers and thus doesn’t “know” anything. As tempting as it might be, we can’t read any special meaning into these short-term reversals — they simply reflect the underlying mathematics which process a mountain of daily market data. Given the inherent tendency of financial...
Read MoreDrawdown is Everything
The Model. The KP Model remains Green – full policy exposure to US equities. From the Trading Room. When it comes to investing for retirement, the biggest challenge for investors is the volatility of the underlying investments — generally stocks and mutual funds — which, historically is quite large. Typically, it will run two or three times the expected annual return. For example, if we have a portfolio that has returned, say, 8% annually over the last 10 years, we can assume that the annual volatility of that investment ranged roughly from 15% to 25%. That’s challenging...
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