Tuesday, February 9, 2016

Portfolio Performance and Market

Today's market action was choppy and classic corrective. Market is trying to digest the decline, before the next leg down.

However, keep in mind that this sell-off is getting stretched and the Elliott Wave pattern suggests that we have couple of stair-steps down before we can see another rally. This rally might come in early March.

Some of the readers might have forgotten how it feels in a bear market. But think of it as inversion of a bull markets: Bull markets go up with quick down moves as corrections; Bear market decline over time with mini rallies as corrections.

Over the next few days, we will have some significant earnings reports from DIS and Cisco. If  Disney falls on a strong earnings report, it would further help categorize the market and its nature i.e. Bear Market.

In financial markets the best approach to invest is to follow the trend because in a downtrend, good news will result in bad market reaction and in an uptrend, bad results will result in strong market action.

In order to automate trend following and ensure risk-management aspects of the portfolio, we have incorporated some critical portfolio management aspects into an algorithm. The portfolio performance based on this algorithm is shown below:

We will keep updating the performance of this portfolio on this blog. This is a simplified portfolio with few holdings, low turn over rate and Beta of -0.5. Therefore, it reduces the portfolio correlation risk with the market, ensures effective risk-management and allows for dividend payments over time.

As market dynamics change, the portfolio will undergo tactical and strategic adjustments to optimize performance across different market conditions and asset classes. We are closely looking at other asset classes to identify upcoming investment opportunities, which will be automatically added.

No comments:

Post a Comment

I would love to hear from you! Please leave your comment below!!