Investment Strategy Update

November started out very strong, but around the middle of the month small cap stocks began to struggle. Large cap stocks (especially the favored technology and consumer discretionary stocks) went on to make all time highs later in the month. However, during the generally bullish period of the year – around Thanksgiving (Thursday, November 25th) -the large cap leaders also started to sell off.

Our investment strategies focus on markets, sectors, and stocks with the highest relative strength. The strategies outperformed their benchmarks during the month of November.

Core Solution All Cap World

This strategy holds the top 2 ETFs in a momentum ranked asset selection from a classic set of index ETFs. The universe of ETFs extends out to include non-US core markets around the world as well as extends down into smaller cap exposures inside and outside the US. This strategy also monitors money market funds and cash equivalents in order to “raise cash” or maintain a fully invested status.

In November this strategy outperformed other main total return indexes, including the S&P 500, the Dow Jones Industrial Average, Nasdaq Composite, and the MSCI All World Index. The latter is used as the Core Solution Strategy’s benchmark.

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Blue Chip Growth Strategy

The purpose of the Blue Chip Growth Strategy is to identify high relative strength equity opportunities from an inventory of 30 large-cap Blue Chip stocks. The model is designed to hone in on the strongest trends and avoid the weakest trends. It is dispersion of returns within the model inventory that creates the opportunity for a relative strength evaluation process to identify worthwhile trends to follow, as well as those critical to avoid. The inventory of names evaluated for the model holdings are meant to capture those large-cap names that lead market movement.

In November, the Blue Chip Strategy produced a positive return vs negative returns for the major US equity indexes.

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Power 4 Sector Strategy

Up until the last two days of the November, the Power 4 Sector Strategy outperformed US total return indexes with ease. The violent end of month pullback caused the high relative strength ETFs to pull back so that the strategy finished November with losses slightly more than the S&P 500 and the Nasdaq Composite, while easily outperforming the Dow Jones Industrial Average.

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The Power 4 Strategy has strongly outperformed all major US indexes this year with a 31% YTD return. Large gains came in the strongest periods of the early part of the year and from mid-October thru mid-November.

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A full presentation of these investment strategies, including multi-year results, is available upon request. Additional commentary (in Russian) is also available on the last day of the month in a live webinar made available as a recording on our YouTube channel.