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Market & Portfolio Review: 5-20-21

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The Battle for Leadership

As we enter a new decade, the established areas of market leaders such as technology and software are under threat from energy, financial and material stocks. These upstart sectors are under-owned, unloved, and cheap, while their technology peers are owned by everyone, command a religious following, and have a nose bleed valuations. When leadership changes occur, it’s important to have a strategy that can respond to these structural changes by moving toward new leadership and away from the old guard. If done correctly, that’s how a tactical strategy can generate outperformance through multiple market cycles.

In the short term, markets remain in flux as the battle between technology and commodities + banks rages on. Over the past month, we have reduced our technology weight to zero while moving to an overweight position in energy, financials, and materials. This means on days when technology performs well. We will likely underperform as technology is close to 40% of the S&P 500 while the combined weight of energy and materials is only 5%. Over the long term, if our broad macro call on commodities and banking is correct, the portfolios are positioned to generate outperformance if those changes play out at the stock level in each respective sector.

Key Takeaways

  1. The stock market is going through a massive leadership battle 
  2. A new bear market is potentially forming for the U.S. dollar → positive for commodities 
  3. Credit market correlation with the VIX breaking down → bullish for stocks 

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.

Robert Reaburn

Robert Reaburn

Robert Reaburn is the Executive Vice President and Head of Wealth Management at LifePro Asset Management. He works with financial advisors building diverse financial portfolios that best empower their clients with a lifetime of financial security.

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