June Means Time to Consider Changes to Your Portfolio Strategy

June Means Time to Consider Changes to Your Portfolio Strategy

Happy first week of June! I always look forward to the welcome change that June brings as school finally lets out, the weather turns warmer, and the days finally get longer. It always feels like the new beginning of something great. As the weather changes, it is a good time to determine if any updates should also be considered in your investment portfolio. The stock market also experiences changes regarding what areas are moving in and out of favor. It is important to recognize when your allocations are no longer working to your benefit. Just like weeds in your garden can choke out a fruitful harvest, allowing weak performing allocations to stay in your portfolio will cause your performance to drag and creates extra and unnecessary risk. If you have areas in your portfolio that are no longer working for you may want to consider replacing them or at the very least closely monitoring them. Just because something was working well in the past does not mean it will always work well in the future.

Technology is a great current example. “ Tech is king” has really been the mantra of the market since the pandemic started last year. Well, it WAS the mantra. For the past few months there has been a visible rotation in the market away from technology into other areas like financials, industrials, and basic materials. Inflation fears coupled by the fact that many of these areas had experienced unsustainable growth for many months. We expected a temporary to intermediate cool down was likely at some point as a result. At the end of each month our investment committee does a full screening of our current fund allocations to determine if any of our holdings have become a “weed in our garden”. We have strict technical indicators that we follow so we can methodically and unemotionally execute our investment process. If a fund is no longer showing relative strength and momentum it is replaced using a new area. Most months we do not make any changes but we are prepared to act when it is necessary.

This month we are making a few updates to our holdings as we have seen a notable shift in momentum over the past weeks. We are adding in a new sector and replacing one have held for about a year. We abide by the principles of letting our winners run and cutting our losers quick. Just as our seasons change, the stock market’s areas of and strength momentum also ebbs and flows. It is important to have a clear process to follow that allows you to take advantage of increasing momentum and conversely warns you of areas that are weakening. We tell our clients that you should always know why you own the positions you hold. They should have a specific purpose and you should also be willing to cut them loose if they stop fulfilling that purpose. If you are an investor and its been some time since you tended to your investment garden, we would be happy to help you take a look and see if you should consider doing any weeding in preparation for the summer months. We are always happy to help. Have a wonderful June!


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

May is a great time to look at your portfolio

Sell in May and Go Away or a great time to look at your portfolio?

“Sell in May and go away” is a well-known financial-world adage that most investors are familiar with and has to do with the typical “underperformance” markets experience during the months of May-October. But is it a worthwhile trend to consider today? Modern performance numbers say probably not. In fact, data looking at performance returns in the S&P 500 from May to October the average return has been positive 66% of the time going back to 1928. While the performance typically lags what we saw for the proceeding fall and winter, that should not mean that your investments need to take a summer vacation. In fact, summer rallies are common, particularly in the months of May and June. Market volatility should still be expected, particularly at the end of the summer period. There is a history of market weakness in the months of August and September that can be quite extreme.

The beginning of May has been off to a volatile start. The Nasdaq closed over 2% lower this past Tuesday, after big tech was down significantly. Comments made by Janet Yellen increased investors’ fears that the Federal Reserve is still flirting with needing to raise rates to control inflation. As we have previously discussed, rising rates would not be favorable for corporate earnings and so the market remains sensitive to its implications. While we are talking about corporate earnings, it is officially earnings season! Companies have been beating their previous earnings estimates by over 22%! That is basically unheard of. What is interesting is that the market’s response to the reports have been lukewarm at best. It is almost as if the markets needed extraordinary earnings just to keep the valuations where they are. It is quite apparent that perfection has been priced in. The perfection must continue in order to tread water and any surprises have the potential to rattle the markets for now.

So what should investors do? Trying to time the market with a strategy that is summarized with a rhyme is probably not the most prudent investment process. Rather, May is a great time to look at your portfolio and see if you should do any spring cleaning. Do you have any weeds in your portfolio? Are you comfortable with the amount of risk you have taken on? This is a great time to consider if your allocations are still in line with your investment timeline. Does every investment in your lineup fulfill a purpose and are you prepared to cut them immediately if they are no longer doing so? You should know what investments you hold and more importantly know why you hold them. If you are unsure if your current investment allocation mix is still working the way it should, we are always happy to look over them with you. Summer does not mean that your investments have to take a vacation, investors just need to make sure their portfolios find a way to still work hard for them. I wish you a wonderful Spring and as always if you have any questions please do not hesitate to reach out to me at ashleyr@victoryfiduciary.com . We are happy to help in any way.


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

 

 

2021 First Quarter Market Recap

2021 First Quarter Market Recap

It’s time for our 2021 First Quarter Market Recap. As the first quarter of 2021 comes to an end, I wanted to give a quick update on what we have seen regarding market movements. If you have been watching my weekly updates, you know that many of the indexes had been significantly overextended and overstretched from their long-term moving averages coming into January. The mid, small, and technology areas were some of the most egregiously overbought. It was not a question of if, but rather when we would see some type of pullback or consolidation. The time finally came mid-February following an unexpected rise in the 10 year Treasury. This sparked concerns that inflationary pressure could make it difficult for companies to continue to have increased profitability and growth. Although, it rarely matters what the catalyst is when markets are as deviated as they were in January and early February. We saw the broad-based areas all pullback and trade sideways (consolidate) for weeks. Pulling back and trading sideways allows the markets to essentially “burn off some excess” which in the end can allow markets to regain strength and move ahead to new highs. I use the example of a long-distance runner who takes a short break during a long run. You can picture them with their hands on their knees, catching their breath and grabbing a drink before restarting their run to finish strong. Markets need to sometimes pause and “take a breather” in order to regain strength and go on to reach new highs. We are encouraged to see relative strength in all areas of the market appear to finally be in a much healthier place. However, it appears markets are continuing to look for direction and leadership. Despite the short-term downward price movement most broad-based areas were able to end the quarter at least modestly positive. While we saw rotation flood back into growth and tech stocks at the end of the quarter, it would not be surprising to see a bit more churning as we move to the traditionally strong market periods of April and May. We will continue to use the math and rule to guide our positions in the market and make updates as needed. We are not making any portfolio changes currently.

Watch My 2021 First Quarter Market Recap Video

Our Investment Committee consistently reviews and discusses the three market drivers that lead to notable movements in the stock market and I wanted to give you the current outlook for each. Economic fundamentals saw some stagnation last month due to the harsh winter storms that struck the U.S., most infamously the storm that caused the Texas blackout. Both retail sales and housing starts (an annualized number of new homes being built) saw their largest month-over month declines since last April. However, the Department of Commerce expects both to rebound as we enter into spring. The technical view continues to indicate churning in the market, with no clear leadership emerging following the pullback in technology and other hyper growth areas of the market. On a general basis, the trend for U.S. equities remains positive. Consumer sentiment continues to improve as the vaccine rollout expands, with the University of Michigan’s Survey of Consumers hitting its highest sentiment level since last March.

In closing my 2021 First Quarter Market Recap, we remain encouraged by the economic healing we continue to see but acknowledge there will likely continue to be additional hurdles to navigate. We will continue to use the math and rules to employ a prudent investment process for our clients. As always, please reach out if you have any questions regarding this 2021 First Quarter Market Recap. We are always happy to help however we can. Please check out our Youtube channel and Facebook page for more updates. There will be new content coming from our studio soon!


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

Stocks Drop as Interest Rates Skyrocket

Stocks Drop as Interest Rates Skyrocket

February came and went with such velocity, investors were left on the sidelines scratching their heads “wondering what just happened?” The month started with such strong advances, I began to wonder if we would be able to get through the month with strong returns and escape the typically weak performance record of February. We continued to touch and surpass new market highs in the S&P 500 through mid-month. However, the last week of February saw significant downward price pressure and by the end of the month the S&P 500 had given up nearly all its gains.

This time the catalyst was seeing 10-year treasury numbers unexpectedly spike to a one year high of 1.61%. This spooked investors, who have been eyeing the rise in interest rates as a possible hindrance to the recovery and deviation from last year’s ultra-low borrowing costs backdrop. On the exterior, one would think this does not come close to competing with stocks in a major way, as the average yield on equities is about 2%. However, given that the low in the yield of the Treasury-10 over the past year has been 0.40%, seeing yield triple considered to be cause for concern.

The ramifications of higher interest rates apply to nearly every aspect of the economy. As rates rise, so does the rates on credit cards, mortgages, auto loans, business loans, and so on. As the cost to borrow goes up, corporate profitability goes down. As inflation increases, these costs will have to be passed along to cash-strapped consumers or absorbed by companies with already razor-thin margins in many cases. This is troubling in any economic environment, but it is particularly concerning when we are seeing most areas of the market to be trading extremely elevated from their long-term moving averages. In short, stocks are overpriced over most indexes and investor now must grapple with it becoming more expensive for businesses to borrow money and operate. The Federal Reserve indicated last week they do intend to keep interest rates low for the foreseeable future, which helped to calm some of the volatility.

Technology was the hardest sector hit as it has been trading nearly three standard deviations above its mean. The NASDAQ fell nearly 5% in five trading days. This was lead by declines in areas like Tesla, Apple, and Amazon. However, as we saw a swift rotation out of technology to more “value” areas this does not necessarily mean that technology is “out”. Relative strength in the technology sector remains strong. Tech also ranks third out of all sectors and has a significant lead over the fourth area. As we have seen technology just continue to skyrocket, we have been watching for a short-term pullback to occur. As I always say, stocks cannot just go straight up forever. A healthy market requires periods of cooling down in order to allow those areas to continue to advance to new highs. So for now, we will just watch to see if this is just a temporary and necessary cooling off or a start to something more permanent and we will act in accordance either way.

Navigating markets while they are making significant swings in either direction can be challenging and even scary at times. If you have questions about your current investment strategy, you can always give us a call. We are happy to help. ashleyr@victoryfiduciary.com


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

Short Squeeze - Understanding GME, AMC and Shorts

Understanding GME, AMC and the Short Squeeze

It has been an interesting start to the 2021 market environment. Everyone has developed an interest in investing. In case you somehow missed the news, individual investors have been in a purchasing frenzy trying to cause a “short squeeze” among highly shorted companies in the stock market. Institutional investors and hedge funds will “short” a company that they believe will be worth less in the future. For example, Company A’s shares are currently worth $100 each. The short-seller may decide to borrow 10 shares from their lender or broker, and then sell them. 100 x 10 = $1,000. If the investor is correct and X’s shares decrease to $80 then the “short” worked. The short-seller buys back the shares and gets to keep the spread which is $20 per share.

It does not always work out this way however. This short-seller might have been wrong, and instead a big week for Company A causes the shares to increase to $110. Now concerned that the shares will continue to rise, the short-seller decides to purchase the shares back before he incurs any more losses. Instead of multiplying a profit of $20 by 10 shares, they are multiplying a loss of $10 increase in price by 10 shares they must repay. Their loss is $100.

The GME Short Squeeze Phenomenon

Now let’s discuss what has been happening in the market since last week. Highly shorted stocks like GameStop and AMC were being significantly driven upwards by online investing groups encouraging others to “short squeeze” Wall Street. As investors continued to buy shares and skyrocket prices, hedge funds helped prices continue to surge as they had to scramble and cover their “shorts” by buying back their borrowed shares. Hedge funds literally lost billions overnight and individual investors made millions collectively. It was quite the David and Goliath story and it got the attention of even non-investors. The issue is that this is not a long-term phenomenon and eventually the demand for these stocks will dry up as the buying slows. GameStop was trading over $450 at its peak last week, despite trading near $30 for the past year. No one believed the stock was now fairly valued at $450, but rather the price was manipulated in the short term. People are willing to significantly overpay for GameStop because they believe they will be able to still sell it for higher in the future. The issue is what happens when there are no longer any more buyers willing to pay. It will become almost impossible to sell at a premium. Remember, the stock market is merely a place to bring buyers and sellers together. It is driven completely by supply and demand. When the mania dies down and someone yells “fire” in the theater, there will not be enough exits for those trying to leave.

The latest market movements in stocks like GameStop and AMC has been fascinating to observe. But I would be remiss to not also mention that the latest actions also have me concerned. Investors seem to continue to exhibit increased greed and exuberance when it comes to their stock market attitudes and actions. Just as we saw in the early 1990s and again in the early 2000s, investors seem to think the market is nothing but a casino. There seems to be a reckless attitude towards investing and the consensus is that “investing is just too easy”. That is usually about the time that investors are reminded there are two sides to the stock market. The fact is, that while investing using a disciplined approach can absolutely help investors acquire a great deal of wealth, the flip side is that careless investing always ends poorly for investors eventually. Everyone always hopes, “this time will be different.” but the reality is it never is. If you have questions about your current investment management strategy, please do not hesitate to reach out. We would love to help.


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

Predicting Stock Market Performance for a New Year

Predicting Stock Market Performance for a New Year

The old January adage says “So goes the week, so goes the month, so goes the year” when looking at predicting stock market performance for a new year. The first few days of 2021 have been choppy so far. This trend will likely continue as the market and the world continues to adjust to the dreaded “new normal” we find ourselves in.

As we look at market performance in general, they remain extremely deviated from their long-term moving averages. For now, buyers continue to be comfortable paying premium prices for stocks. This trend will continue until this is no longer the case. I know it seems like an oversimplified explanation but it always comes down to supply and demand. If there are buyers willing to pay, prices can rise. The problem is that while market performance is already trading at 36x times earnings, it is becoming increasingly difficult to justify overpaying for earnings. Eventually, corporate earnings are going to have to markedly improve, or prices will have to revert back closer to their means. When that happens, it is usually swift and unexpected. Remember February 2020? A mean reversion event usually happens when markets are extremely over extended and then experience an unexpected exogenous event. What causes the event? Unfortunately, no one ever knows what it will be which is why markets get caught off guard.

This leaves advisors in a tough place. We are hired by clients to find the best market performance. As we have seen many times, markets can run extended for a while. They can actually run much longer than we would expect. Therefore, we must find ways to participate in the upside while also preparing that things may change quickly. We do this by using a math and rules-based process that allows us to focus on areas of the market experiencing positive relative strength and momentum. We steer away from the areas that are conversely lagging in relative strength and momentum. This sets us up for the best opportunity to “take what the markets will give us” over the long run. We are currently fully invested to our typical allocations. We have been pleased with how those allocations have performed relative to the broad-based markets and so we will remain in those areas as long as the math and rules support it. We are just also cognizant of the need to remain vigilant to the process as momentum and relative strength can and will change over time. When that happens, its important to already know where your next areas of opportunity will be and reallocate accordingly.

We hope (as every one else does) that 2021 proves to be less challenging than its preceding year. Our nation continues to show its ability to overcome and persevere despite significant obstacles and I am confident we will emerge on the other side as a stronger nation. In the meantime, please stay well and if you have questions about your current investment plan please do not hesitate to reach out. We would love to help.


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

the Santa Claus Rally

Here Comes the Santa Claus Rally

Here comes the Santa Claus rally? September and October were certainly weak times for the stock market. Both months experienced significant declines from the market highs we saw September 1st. November proved to be a better time for investors as markets saw a boost after the uncertainty of the election passed and it looked like we would have political gridlock. Some find it a surprise that the stock market does better under these circumstances. Markets typically like knowing that neither party will have full control, therefore reducing risk of “radical policy” on either side. From September 1 through October 31 the S&P500 was down over 7.2%. However, the month of November we saw the index move up over 10%. On the first day of December, markets once again saw the market highs that had been eluding investors since September 1st.

So what does this all mean as we head into the last month of 2020? While elevated risk has not left the market completely, we do have all technical indicators giving the green light currently. Our math and rules-based process has allowed us to invest in the strongest areas of the market while also avoiding the weakest areas. In doing so, our models did not experience the same drawdowns the broad markets did in early fall. We have been using the corrections in September and October to add to our equity positions in our portfolios. Over the past 3 months, these equity positions have all been outperforming their indexes by at least double, and in some instances, they have even quadrupled the market’s returns. Short term risks to the market include the annual distributions that mutual fund managers will be making in the next two weeks. Managers have the lowest amount of cash on hand in history, meaning they will need to sell in order to meet obligations. Pension funds are also about to rebalance portfolios and therefore we can expect short term price downward pressure.

Once we get through the first two weeks in December, typically the market has a strong finish to the year. Some refer to it as Santa Claus rally”. Considering it is 2020, “typical” does not usually apply so we will just have to see how the last few weeks finish. Markets remain significantly extended from their long-term moving averages. In order to resolve this, it means there will either need to be a price reversion or stocks will need to trade sideways for awhile to burn off the excess. Broad based markets are still significantly detached from corporate earnings. As we have seen, they can run detached for a significant time but they will always eventually need to reconcile. For now, we will continue to use our process to find those areas of the market that will offer us the best opportunities.

It is hard to believe that the next time I write to you, it will be 2021. As I sat writing a blog 12 months ago, I could not have imagined all that we would experience in a short period of time. We have evolved as an advisory firm even over this past year. One of the “positives” of this past year is we began hosting a weekly video series to update investors with what is happening in the market and what steps we should be considering as a result. It became much bigger than we expected and are looking forward to additional expansions of our videos very soon. We would love for you to follow us every Wednesday on FB or youtube.

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I can answer any questions for you, please do not hesitate to reach out to me. I am happy to help however I can. As I close out my last blog for 2020, I would like to wish you and your family continued safety, health, a very Merry Christmas, and a Happy New Year!


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

2020 Presidential Election in the United States of America

Election 2020 – The Day After

It is the morning after the 45th Presidential Election and like most of you I am here scratching my head at “what comes next”. We anticipated this would likely be an election like never before and so far it is living up to expectations. It could certainly be days before we have certain outcome. We saw the broad-based markets pull back again through most of the month of October, likely in anticipation of a complicated election decision. If you have been following along with my videos you have heard me mention that markets tend to not actually care who becomes president. They can quickly price in policy changes and adjust. What markets do not like however is uncertainty. Going back to 2000 we can see how markets reacted last time we experienced a contested election. Markets fell over 7% during the time between the election and December 13th when the Supreme Court declared George Bush the winner. Therefore, it is fascinating to me to see markets having such a positive surge today despite increasing uncertainties about our election results. 2020 continues to live up to that now despised word “unprecedented”. It was also interesting to see significant money quickly move back into technology overnight. We had seen big tech come under selling pressure over the past two months. Many analysts thought that may have pointed to the market predicting that Joe Biden would win as there were positive flows into areas that would do well if there were hefty stimulus packages passed. As technology futures began seeing huge inflows last night, some wondered if this meant investors were “shifting their bets” that Donald Trump would win. The outcome remains anyone’s guess but the market movements have been fascinating to watch.

What should investors do in spite of all this “noise” we currently have? Now more than ever it is so important to make sure you are following a rules-based approach to your investments. Using emotion to guide your actions will almost always work out against you. When math and rules are your driving force, it tends to help you see through the static even if it does not always “feel right”. We let our winners run and cut our losers quick. If your positions are not working now, they probably won’t work later. Using relative strength allows us to concentrate on areas of the market that are strong and avoid areas of weakness that become drags on performance. It is also important to understand how much risk and volatility is present in your portfolio. If you were uncomfortable during the pullback in September and October, you may want to consider adding a few “hedge” positions to alleviate some volatility. By being invested in the strongest areas of the market, our models have tracked the broad-based indexes closely while still holding a significant portion of fixed income and cash. We will likely be adding additional equity positions very shortly. The technicals tell us when to add positions and where to add them to. This means that the ultimate election outcome will not affect our decisions because the math and rules are always guiding our next steps. I know these remain uncertain times for so many investors and if you have any questions, I would be happy to help however I can. Feel free to call or email me. Have a great day!


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

Markets Face Headwinds Headed Into October

Markets Face Headwinds Headed Into October

Markets face headwinds rather than tailwinds headed into October. September was ripe for a sell off. We had been warning that the signs were all there of a market that was overstretched, overvalued, and overdue for a pullback. The S&P 500 was trading two standard deviations above its moving averages. As a reminder, moving averages act like a magnet pulling markets towards them when they trade too far above or below them. The further away they move, the swifter (and more painful) a reversion can be. For example, during this current correction the NASDAQ was down over 12%. While the sell-off was not unexpected, it still caught investors off guard who had become accustomed to the market “only going up”.

So here we are on the last day of September and you may be asking your self “what now”? We have seen the market have a “reflexive rally” in the past few days. This is not surprising either as the markets are all relatively oversold on the short term. It is important to make mention that despite the recent advances, we have been unable to break through the 50 day moving average above us. This points to possible additional selling pressure for the markets. If we are unable to break above the 50 day, it is possible to see a retracement down to the 200 day moving average, or an additional 7.2% decline.

Markets face headwinds rather than tailwinds currently. It appears likely that any additional stimulus program will not be passed, at least not until after the election. The stock market was counting on more stimulus and economic recovery indicators have begun to shift disappointedly as the extra stimulus has now gone dry. The Federal Reserve also made it clear that we should not expect new aggressive intervention from them for now. They have punted the football back to congress, saying it is now in their court to pass a new program. This will likely further concern markets. We are also still dealing with the effects of COVID-19, and the uncertainty of what the winter months may bring in terms of resurgences. We remain in an economic recession and corporate earnings continue to dip. 2021 S&P 500 earnings estimates are down nearly $30 per share since the original estimates made in January 2020. Did I mention we have a presidential election coming up?

With all the headwinds we see, as well as the fact that markets are still very overvalued when compared to longer term means we think investors should remain cautious for now. If you were uncomfortable during this current pullback, you may be taking more risk than necessary. You could consider using any short-term rallies to rebalance your portfolio and adding in some defensive positions until the rest of the headwinds have cleared. I am not suggesting you need to sell all your equity positions, just consider trimming them temporarily. We remain invested and our tactical allocations have continued to perform very well compared to the major indexes. The power in using relative strength and positive momentum to choose allocations means we do not have to take on more risk than we are comfortable with. It also allows us to choose areas that are performing strongly, while excluding the laggards that wind up being drags on performance.

There is no crystal ball when it comes to investing. However, we think investing using emotions, hope, and feelings are not a good strategy. That’s why we rely on math and rules. If you have any questions, you can always email me at ashleyr@victoryfiduciary.com. I am happy to help any way I can. Have a great month!


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

Tread Carefully in Today's Market Climate

Tread Carefully in Today’s Market Climate

It has been an interesting month for the stock market so far, especially considering we are only nine days in. We have seen a significant increase in volatility as compared with August. In general September tends to be a weaker month for the market, even without a weak economic backdrop. You may recall last month I discussed the importance of paying attention to the technical moving averages for the market. Moving averages act like a magnet, pulling markets back to them when they become grossly disconnected.

Last Wednesday, during my Midweek Market update I sounded the alarm that the NASDAQ was trading two standard deviations above its moving averages and that a pullback would be unavoidable. We were just too extended for it to be sustainable. The S&P 500 was also trading significantly above its averages, just not quite to the extent of the NASDAQ. The next day we began to experience a significant selloff across the market over the next three trading days. As of Tuesday’s close, the NASDAQ was down 10% and the S&P 500 was down 7%. Most importantly, both indexes are now sitting directly on their 50 day moving average. It is a good reminder that technicals really do matter in the stock market, even if emotional exuberance seems to say otherwise.

The level of greed and speculation occurring in the market makes some advisors have flashbacks to what happened back in the late 90s. Knowing what happened then and is happening now makes me uncomfortable. It feels like history is repeating itself in some ways. Markets remain extremely overvalued at the same time our country is experiencing significant economic weakness. Investor sentiment seems to be “the market can only go higher”. Call options are at all time highs, meaning that investors are “betting” that the market will go higher and not using any type of hedge in their portfolios against downside risk. Many were caught off guard these past few days as markets sold off quickly. Sadly, many inexperienced investors found out that trading options without understanding risk can sometimes turn around and bite you fast. It is important to understand that markets could absolutely turn lower, an additional correction of 10% would not be out of the question.

So what should investors do now? On Wednesday, the market was experiencing a bit of a reflexive rally, which is expected after such a sharp pullback. The question many ask is should I buy stocks now or should I wait? There is fine line between “buying the dip” and “trying to catch a falling knife”. As an investment committee we are concerned about technical data that indicates there could be some additional headwinds for the market, at least in the short term. So in short, we continue to tread carefully. Our five equity positions continue to perform strongly, outpacing the indexes. They also held up remarkably well over this past pullback, further reinforcing why using relative strength to choose your investments can help you outperform the markets. We will be adjusting our current allocations and adding asset classes once we have confirmation that this pullback is complete. We just do not want to try to handle this pullback like a teddy bear, and then find out it is actually a porcupine. As always, please reach out to me if you have any questions. I would love to talk to you. Have a wonderful day.


Ashley Rosser, President

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.