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Bulls Loving The “Heads I Win, Tails I Win” Market 01-08-21

Summary:
Portfolio Positioning Update With January kicking off with a bang, we are maintaining our long bias with reduced hedges at the moment.  We made some changes to align our portfolio more with our equal-weighted benchmark index during the past week by reducing some of our overweight in technology, healthcare, and communications. While many other sectors of the market are grossly overbought short-term, we added a 5% weighting of RSP (S&P Equal Weight ETF) and SPY (S&P Market Weight) to our portfolios for the time being as placeholders. We are currently slightly overweight equities and underweight our hedges in fixed income as interest rates press higher. As noted last week, the rally this week was not unexpected: “With the stimulus bill passed, and checks going out, we won’t be surprised to

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Bulls Loving The “Heads I Win, Tails I Win” Market 01-08-21

Portfolio Positioning Update

With January kicking off with a bang, we are maintaining our long bias with reduced hedges at the moment. 

We made some changes to align our portfolio more with our equal-weighted benchmark index during the past week by reducing some of our overweight in technology, healthcare, and communications. While many other sectors of the market are grossly overbought short-term, we added a 5% weighting of RSP (S&P Equal Weight ETF) and SPY (S&P Market Weight) to our portfolios for the time being as placeholders.

We are currently slightly overweight equities and underweight our hedges in fixed income as interest rates press higher.

As noted last week, the rally this week was not unexpected:

“With the stimulus bill passed, and checks going out, we won’t be surprised to see a short-term pop in economic activity. However, given the checks are 50% smaller than the first round, along with extended unemployment benefits, the economic bump will be short-lived. The real question going into 2021 is whether President Biden can spend further into debt to do more stimulus. Or, will a shift toward fiscal responsibility begin to take hold? Much will depend on the Senate run-off outcome in Georgia.

Regardless, the evidence is mounting that economic and earnings data will likely disappoint overly optimistic projections currently. Furthermore, investors are way too confident. Historically, such has always turned out to be a poor mix for a continued bull market advance in the short-term. 

Even with the Senate now a 50/50 split, more moderate Democrats may start to balk at massive increases in debt. There may also be some pushback against some of the more far-left socialistic policies as well.

We will have to wait and see.

For now, we will continue to trade accordingly.

Bulls Loving The “Heads I Win, Tails I Win” Market 01-08-21


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Bulls Loving The “Heads I Win, Tails I Win” Market 01-08-21

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By Lance Roberts, CIO


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Bulls Loving The “Heads I Win, Tails I Win” Market 01-08-21


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Bulls Loving The “Heads I Win, Tails I Win” Market 01-08-21

Lance Roberts
Lance Roberts has sharpened that lens with 30 years in the investing world from private banking and investment management to private and venture capital. Lance Roberts’ perspective and common sense analysis is sought after by media outlets such as Fox 26 News in Houston, CNBC, CNN and Fox Business News along with numerous publications including the Wall Street Journal, USA Today, Reuters and the Washington Post. Roberts is the Editor of the X-Factor report and publishes the blog Daily X-change.

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