The Pain Trade Remains Higher
If one wants to know what direction the market is likely to take, simply think of the move that is likely to cause investors the most pain, and you’re likely looking in the right direction. The logic to this approach is that asset prices are impacted by flow of funds, which means that prices often bottom when sellers are exhausted, while prices often fall when supply overtakes demand. Today, investors remain defensive, sitting on cash, with overall positioning remaining net short, which suggests that the pain trade for asset prices may be higher.
As we close out the month of July, the LPAM Tactical Opportunity has advanced 49.69% in 2020 vs. +0.86% for the S&P 500 and a decline of 7.00% for the Dow Jones Industrial Average.
After a two-week price consolidation, our portfolio of long term secular growth stocks broke out higher this week. In this week’s portfolio review, we will discuss the path stocks take when they are in a long term uptrend and why patience is often rewarded for those invested in companies that are on a path of going from good to great. Second, we are going to review investor positioning data and how we use that data to position client portfolios. Lastly, we will review the health of the high yield and investment-grade credit markets, along with a quick discussion on whether election risks are being priced into the market.
The information here is presented by licensed professionals and not specific to any individual’s personal circumstances. Investment advisory services offered through LifePro Asset Management, LLC, a registered investment adviser. Investments involve risk and are not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable or equal any historical performance. Discussion of any specific stocks are based on objective, non-performance criteria and such discussion neither serves as a recommendation nor as the receipt of, or a substitute for, personalized advice. Due to various factors, including changing market conditions, such discussion of positions and/or recommendations may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Advisor, or from any other investment professional. Forward-looking statements such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” are based on management’s views and assumptions at the time such statements were originally made and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. LifePro Asset Management does not undertake any obligation to correct or update any forward-looking statements on the LPAM Site.