A pattern has developed over the past 15 years. The market swoons, triggers a sell signal, gathers itself together for one more run and then declines.
We have seen the recent swoon and sell signal and are in the middle of the run. The next step could be a decline.
The only questions is – When?
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Below are our ratings for asset classes and sectors
O – Overweight S/T – Short term (< 6 mos)
U – Underweight I/T – Intermediate Term (6 mos – 24 mos)
S – Sell/Short L/T – Long Term (> 24 mos)
H – Hold
Meaning and Distribution of Ratings:
O – Overweight – Asset class we anticipate to have a higher allocation within the CIS Model portfolio. We anticipate Overweighted asset classes to out-perform.U – Underweight – Asset class we anticipate to have a lower allocation in the CIS Model portfolio. We anticipate Underweighted asset classes to under-perform. S – Sell/Short – Asset class we believe is overvalued or anticipate to have negative performance. H – Hold – Asset class we don’t expect out-performance from, but don’t expect under-performance from either.
CIS allocations are not based on the S&P 500 or other market indices, but according to CIS internal research. CIS will shift asset allocations according to our internal research, short term, intermediate term and long term cycles and trends.
No guarantee in given or implied that any asset class will perform as expected.
This information is for application to CIS managed accounts and opinions may change without prior notice.
*Note on Ratings:
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Fundamental Analysis/Research – “method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security’s value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management).” – Investopedia
Technical Analysis/Research – “A method of evaluating securities by analysing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.” – Investopedia
Additional Significant Risk Factors and Investment Considerations
The securities or trading strategies discussed in this report may not be suitable for some investors. Investors must independently evaluate each issuer, security, or instrument discussed in this report and consult independent advisors where necessary.
1. Past Performance is not indicative of future results.
2. Market Risk: Securities may decline in value due to factors affecting securities markets generally or particular industries. The value of a security may be worth less than the original investment.
3. Concentration risk: Investing a substantial portion of assets in securities within a single industry or sector of the economy may be subject to greater price volatility or adversely affected by the performance of securities in that particular sector or industry.
4. Leverage Risk: Fluctuations in interest rates on borrowings or the dividend rates on preferred shares as a result of changes in short-term interest rates may reduce the return to common shareholders or result in fluctuations in the dividends paid on the common shares. There is no assurance that a leverage strategy will be successful.
5. Foreign Investment Risk: Investment in foreign securities (both governmental and corporate) may involve a high degree of risk. In regards to debt securities, such risks may impair the timely payment of principal and/or interest.
6. Short selling involves an inordinate amount of risk including the theoretical potential for unlimited losses and losses that can greatly exceed the principal amount invested. In contrast, the potential gain from short selling is generally limited to the principal amount invested. Short sellers can have their stock called away by the lender of the shares shorted, subjecting the short seller to incremental risk. Short sellers by definition must borrow shares, subjecting short sellers to margin risk. The risks cited here with respect to short selling are not all inclusive and investors should consult with their independent advisors prior to engaging in any recommended short selling strategies, including, if applicable, the short sale recommended in this report.
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The information contained herein is illustrative and is not intended to predict actual results, which may differ substantially from those reflected herein.
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This was prepared for informational purposes only. It is not an official confirmation of terms. It is based on information generally available to the public from sources believed to be reliable but there is no guarantee that the facts cited in the foregoing material are accurate or complete. Changes to assumptions may have a material impact on returns. Past performance is not indicative of future results. The views and opinions expressed in an article or column are the author’s own and not necessarily those of Cantella & Co., Inc.
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Past performance is no guarantee of future results
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