Portfolio Update: As mentioned in yesterday’s Market Notes, our tactical models are arguing for patience rather than aggressiveness with respect to equity exposure. That being said we want to stay in harmony with relative opportunities as they emerge. While not putting new money to work, we have tweaked the holdings in our Dynamic Tactical Opportunity Portfolio.
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With fear subsiding but strength slow to emerge, downside tactical risks are rising. We reduced the equity exposure in our Tactical Opportunity portfolio and have moved more cash to the sideline.
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We sold commodities and bought bonds while tweaking where we get our equity exposure.
The Details: While none of the major asset classes are in up-trends, bonds now hold a relative advantage over stocks and commodities. We adjusted the exposure in the Strategic, Cyclical and Tactical portfolios to reflect these shifts and also to reflect leadership shifts we have seen within equities.
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In our cyclical portfolio, we are shifting our global equity exposure, shortening the maturity of our fixed income exposure and getting out of the way of the break down in gold.
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After reviewing the Cyclical Portfolio, we are making the active decision to sit on our hands for now. In the Tactical Opportunity Portfolio, we’ve made a couple of tweaks. We are seeing “Higher for longer” resonate with the bond market and are increasing exposure to one of the few areas that is actually still in an uptrend.
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Breadth is improving and our bull market re-born checklist has satisfied two more of its criteria. We are moving off the sidelines and getting more involved, increasing equity exposure in both the Cyclical and Tactical Portfolios and staying in harmony with current leadership trends.
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We adjusted our international equity exposure to stay in harmony with global leadership and are putting some money to work domestically following the late-July breadth thrust.
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A new quarter brings new positioning for our strategic portfolio, tilting away from equities, taking a fresh look at bonds and trimming up our commodity exposure. Recent strength in bonds has adjusting our fixed income exposure in the cyclical and yield portfolios and adding it to the tactical portfolio. While comfortable limiting our risk exposure for now, we also want to lean toward where the evidence suggests the market is heading.