Q&A {Part IV}

The markets seem to have had a harder time of it lately.  Your thoughts?

Well as I noted on Friday and as of this writing, futures are indicating disappointment with last week's job's report which came in lighter than expected.  Now for all we know by today that will have been explained away and markets will have turned around.  I mentioned last week, the persistent bid that has hid just underneath stocks this year so it could be that those buyers materialize if the market opens down hard today.  For us though it comes back to seeing what the playbook says and then executing our game plan. 

The game plan is best defined as a tactical and strategic allocation of client assets based on what the playbook tells us has historically occurred. It gives us a direction for our various investment strategies and is further refined to the specific risk/reward parameters of our various client groups. There are times that the game plan is implemented across the board in all client accounts.  Other times it is specific to one of our investment strategies.   As I indicated last week I think that stocks are vulnerable here to a 4-7% correction.  What our plans are at this juncture is to identify specific levels in our portfolios where we might raise a bit more cash.  There are also some specific rotational strategies in client portfolios that we might take advantage of if the opportunity arises.

Can you give some examples?

We generally don't discuss individual securities as it relates to specific client accounts or strategies on this blog.  Anybody who wants to know what some of these might be can contact us or better yet, hire us if they are not already clients!  In terms of raising cash we have certain limits set in regards to the markets and our securities.  If the market's trade to these levels we will review what we see and could possibly raise some more cash.  I can also tell you that we have identified a few of the ETFs we currently own where we feel clients might be better served by switching to a different ETF of the same investment class.  We are in the process of implementing one of those switches now.  We believe that the markets are presenting us with the opportunity to sell out of the current fund and will perhaps give us an opportunity to purchase the targeted fund at lower prices in the coming weeks and months.

Why would you do this?

We monitor an extensive base of ETFs and we believe that this new targeted fund offers a better fit for our client portfolios and strategies due to its lower fee structure and its higher degree of diversification.

Anything else you would like to discuss?

Yes.  I think the markets have the potential to be higher by the year's end and I'll go over why I think that later in the week.  Tomorrow and Wednesday we'll take a look at what the charts are telling us.

*Long ETFs related to the S&P 500 in client and personal accounts.