Equity, ETF & Factor Rotation Models
As discussed in this past weekend’s Bull Bear Report, the deviation between growth and value has reached an even more extreme level, triggering our model to rotate from value to growth. As noted in that report:
“Nobody has to call the bottom in tech to act on this. The better approach is to trim where the excess is largest. We started last Friday, taking profits in Kinder Morgan and Williams in our equity model as energy pushed into overbought territory. The staples we added on October 5 are where we’d look next. Then rebuild growth exposure in stages and let the market confirm the turn. We continue to recommend the following.”
“Let me reiterate my point above. The staging matters more than the names themselves. We will use a first tranche on weakness to start gaining exposure at lower levels if the turn is real. At the same time, we will wait until the 50-day mark before adding the second tranche to avoid doubling down on a trade the market hasn’t yet confirmed. Lastly, if the stops trigger, the market has told you the value case won another round, and that’s fine. You’ll have trimmed energy near a record high on the way.”
That is what we are doing today: we are first rebalancing portfolios back to target weights, without aggressively adding exposure. If we get a buy signal on the market as a whole, the next step will be to increase exposure heading into year-end.
Equity Model Trades
- See transaction report for all trades.
ETF Model Trades
- See transaction report for all trades.
Equity Model Trades
- See transaction report for all trades.
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Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube
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