Q1 2017 Performance Review

Recap
First Quarter of 2017 was very eventful. It started with an overbought market, which continued to gyrate with new president coming into the office and confusing Executive Orders. While all of this happened in January, earnings started coming in better than expected and propelled the market to new highs in February.


After topping on March 1, within IPM turn window, market declined for rest of March. Many reasons were given for this decline including overbought market, high valuations, sentiment, potential for unfulfilled presidential promises and geo-political turmoil. Sadly, this wasn't something new. These kind of events happen all the time, making investing an arduous task.


Now the question is how can someone properly and profitably navigate through such tumultuous markets, while maintaining one's composure. That's why we created strategies that don't depend on market news, rather take into account underlying market currents to make investment decisions. This reduces transaction cost, dampens volatility and increases consistent results.


We are currently running two strategies. Goal of both portfolio is to generate absolute, uncorrelated returns for long-term growth. These are:

• Conservative: Suitable for retirement accounts and risk-averse investors
• Aggressive: Suitable for risk taking investors, with longer-term invest goals

Although both strategies performed amazingly well in Q1'2017, we will review their performance individually.


Conservative - Enhanced PSB (Green )
Conservative strategy went live in 2016. It returned 6.8% (excluding fees) against 6.1% return of SP500 total returns including dividends.

Following chart shows the cumulative performance of Conservative portfolio since inception. Strategy returned 19.8% (excluding fees) vs SP500 total return of 19.8%. In 2016, conservative strategy outperformed SP500 12.2% vs 12%.

Aggressive Strategy - Aggressive Enhanced PSB (Orange)
Aggressive strategy went live in 2017. It returned 15.6% (excluding fees)  against 6.1% return of SP500 total returns including dividends.

Since this strategy went live in 2017, Q1'2017 performance of 15.6% also shows the since inception performance of the Aggressive Strategy.

Although past performance doesn't guarantee future results, Q2'2017 performance remains very robust for both strategies.


The best aspect of these strategies is that they enables the investor to concentrate on the work that is more important in life than losing sleep on investments while looking at news all the day because we do the research and invest using proprietary algorithms and valuation models.


These strategies are open for investment. Please feel free to contact via subscription.ust@gmail.com for details. These strategies can be implemented via managed account setup through a Registered Investment Advisor. Please contact us for details. You can also sign-up for free email updates below: 

 

Gold Rally Can Pause!

We started investing in Gold in 2016 April, after 4 years of being out of the Gold market. We again increased Gold exposure at the start of 2017, in our proprietary strategies (Jan / Feb

2017 Investment Strategies' Performance). Overall, Gold remains in an uptrend but recent development has made us wary of immediate upside of Gold. 

In this post, we have analyzed Gold's short-term prospects using multiple analysis techniques to showcase the rationale behind our caution:

Technical

After experiences a sharp decline in early March, Gold has rebounded nicely. It is now testing significant trend-lines (show below). These trend lines could act as resistance in the near-term and force Gold to consolidate.

Sentiment
While Gold could experience a pause, it will be a very constructive development. But what is not constructive is the fact that news media has recently turned bullish on the yellow metal. Following are some of the recent bullish Gold headlines:

Furthermore, other sentiment indicators also suggest that Gold and Silver are in for some turbulence. Following chart shows Silver positioning among large and small traders. Current positioning is at levels that have resulted in Silver going down or sideways.

One cannot believe the financial news media because they get behind a trend, once everyone is on board. A detailed analysis of 2016 news and market action is presented here. Therefore, investors need to remain objective in terms of their direction and action plan.

Short-term structure:

With sentiment picture on the optimistic side, its likely that the trend will experience some pause before really asserting itself in the next few days. Above chart shows a potential inverted head and shoulders pattern being formed in Gold. However, the right shoulders doesn't look complete. Some back and forth action will be ideal to complete this structure.  

Gold Influence

Gold is significantly influenced by USD and Euro. Strong dollar pressures the commodities complex. It looks like Dollar has completed a long-term correction since the start of 2017, and could rally for few weeks. Start of 2017 is the same time when Gold start rallying. Once US Dollar rallies, it would be negative for Gold and Silver markets.

Furthermore, Euro long positions are also very extreme, which means that Euro will soon experience correction. Euro decline will also fuel Dollar rise; another reason that could dampen Gold’s ascent.

Conclusion

Gold could experience some resistance around these levels because of technical, sentiment and influence from other areas. However, that doesn’t mean that Gold will not spring back or it has entered a down trend. In financial analysis, one needs to remain objective.

How are we positioning?

We have reduced our long exposure but maintain long positions because Gold remains in an uptrend, as per proprietary Market Classification Model. Details will be shared with subscribers by April 9th. Our conservative proprietary strategy has out-performed the market in 2016 and in Q1-2017 through objective risk-management and a combination of strategic & tactical allocation. Detailed performance analysis will be shared in next 2 weeks.

Want to Invest

You can invest in these strategies through “Managed Account” offering or by subscribing to some of the services like Market classification Model (subscription page). MCM serves as the backbone for our model and can help you develop an understanding of the markets.  If interested in investing, you can register below and we will send an update.