SECTOR INVESTING FOR MAXIMUM PROFITS
We focus on Sector Investing Strategies using proprietary Money Flow, Momentum and Relative Volume indicators to select Stocks and ETFs. We can go long or short depending on market conditions. A small select group of 2x Index ETFs are also key parts of our portfolio mix.
Follow the Top 3 Sector Portfolio, with a return of +138% from the March low (3/23)
up 151% past 1.5 years and +174% past 3 years. All charts and data updated daily to keep you in touch.
Highest Total Return thru Sector ETFs in industries that disrupt, innovate and improve the way the world works. Like ARKK - Ark Innovations ETF. Our #1 holding up 412% past 3.5 yrs. That's a 118% yearly return.
Thursday 10/29/20 12:40 pm
MARKET UPDATE 12:40 PM THURSDAY
Stocks try to recover after yesterday's 3.5% drop in the SP500. Currently, the
Dow is up 109 points, or .4% to 26,624, SP500 is up .8% to 3,298, and the
Nasdaq is up 1.4% to 11,163.
Breadth is improving at 1800 advances to 1150 declines, Dollar rising .6%,
Bonds are down .7%, Gold miners GDX is up 1.5%, and Oil is continuing
it's descent, now down another 3.5%.
All eyes are on the market close today, as Facebook, Amazon, Alphabet, Apple,
and Twitter will all report quarterly earnings after the bell. We expect strong results,
but they will have to be outstandingly strong to keep the stocks upward momentum.
There is a very good chance that invstors will sell the news.
We continue to hold QID and SDS as insurance against further downward pressure
in the market.
Here are some of the big earnings announcements this week:
Earnings: Apple, Amazon, Alphabet, Facebook, Comcast, Twitter, MGM Resorts, Starbucks, Kellogg, Dr. Pepper, Ralph Lauren, Activision Blizzard, ConocoPhillips, Kraft Heinz, Shake Shack, Archer Daniels Midland, Devon Energy, Ethan Allen, Avis Budget, Cheesecake Factory, Hartford Financial, Stryker, Flex Cabot Oil, U.S. Steel, Mohawk Industries, Anheuser-Busch Inbev, Avis Budget, Illumina, Yamana Gold, IMAX
8:30 a.m. Initial claims
8:30 a.m. Real Q3 GDP
10:00 a.m. Pending home sales
8:30 a.m. Personal income/spending
8:30 a.m. Employment cost index
9:45 a.m. Chicago PMI
10:00 a.m. Consumer sentiment
BEST SECTOR/INDEX ETFs SO FAR IN 2020
#1 - ARKK +91% #2 WCLD Cloud +70% #3 Social Media +58%,
#4 QLD +47% #5 Internet FDN +40%
Energy -53%, Airlines -47% , Banks -32%
MARKET INDEXES YEAR TO DATE
Nasdaq QQQ +30%
S&P 500 +2%
Russell 2000 -7%
Dow Jones -7%
Thursday 10/29/20 12:10 PM
Stocks rise as Big Tech gains ahead of earnings, GDP data tops expectations
"Stocks rose on Thursday as shares of major tech companies advanced ahead of their quarterly earnings reports. Sentiment also got a lift from better-than-expected economic data.
The Dow Jones Industrial Average traded 150 points higher, or 0.6%. The S&P 500 climbed 1% and the Nasdaq Composite advanced 1.3%.
Shares of Amazon and Apple were up by 0.9% and 2.7%, respectively. Alphabet traded 2.6% higher and Facebook popped 4.3%. All four companies are slated to report earnings after the bell Thursday.
More than 270 S&P 500 companies have reported calendar third-quarter earnings thus far. Of those companies, 85% have reported better-than-expected earnings, according to The Earnings Scout. Despite the high beat rate, several stocks have fallen after releasing their quarterly results.
Bob Doll, chief equity strategist at Nuveen, said on “Closing Bell” that the failure for a stronger-than-expected first half of earnings season to boost the broader market was a cause for concern.
“Another thing that bothers me is a lot of companies are coming out with much less-worse earnings than expected, the stocks initially go up and then they fade. Too many stocks falling on good earnings results. The market’s just tired and needs a rest,” Doll said.
Better-than-expected GDP, jobless claims data
U.S. gross domestic product for the third quarter expanded at a 33.1% annualized pace, its fastest growth ever. The reading came after a 31.4% plunge in the second quarter and was better than the 32% estimate from economists surveyed by Dow Jones.
“Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated,” said Paul Ashworth, chief U.S. economist at Capital Economics. “But, with coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower.”
Meanwhile, the number of first-time unemployment-benefits filers declined for a second straight week and hit its lowest level since March. Initial weekly U.S. jobless claims came in at 751,000 for the week ending Oct. 24, better than a Dow Jones estimate of 778,000.
Thursday’s moves came a day after the market’s biggest sell-off in months. Both the Dow and S&P 500 had their worst day on Wednesday since June. The Nasdaq had its biggest one-day drop since Sept. 8.
The sell-off mirrored a rough day for European markets, as rising Covid cases on that continent spurred leaders of Germany and France to announce new economic restrictions for the next month. New cases have also been rising domestically, with former Food and Drug Administration chief, Dr. Scott Gottlieb, telling CNBC that the U.S. was on a path that is three or four weeks behind Europe." -cnbc.com 10/29/20
STOCKS IN THE NEWS
Comcast (CMCSA) – The NBCUniversal and CNBC parent reported quarterly profit of 65 cents per share, 13 cents a share above estimates. Revenue beat forecasts as well. Comcast added 663,000 broadband customers during the quarter, and said its Peacock streaming service signups had reached nearly 22 million. The company said theme park results continue to weigh on results due to the pandemic. The shares rose 2.4% in premarket trading as of 7:33 a.m. ET.
Marvell Technology (MRVL) – Marvell struck a deal buy fellow chipmaker Inphi (IPHI) for $10 billion in cash and stock. The deal values Inphi at roughly $157.83 per share, more than 40 percent above Inphi’s Wednesday close.
Spotify (SPOT) – The streaming music service reported a slightly wider-than-expected loss for its latest quarter, with revenue roughly in line with estimates. It also saw premium subscriber numbers rise by a better than expected 27%. Spotify fell 3.9% in premarket trading as of 7:33 a.m. ET.
Tapestry (TPR) – The parent of the Coach and Kate Spade brands reported quarterly profit of 58 cents per share, well above the 23 cents a share consensus estimate. Revenue also topped forecasts, helped by lower expenses and gains from digital transactions. The shares jumped 10% in premarket trading as of 7:33 a.m. ET.
Tempur Sealy (TPX) – The mattress retailer earned $2.94 per share for its latest quarter, beating the consensus estimate of $2.20 a share. Revenue came in above Wall Street forecasts as well. The company also declared a 4-for-1 stock split and boosted its share repurchase program by $170 million to $300 million. The shares rose 4.7% in premarket trading as of 7:33 a.m. ET.
Kontoor Brands (KTB) – The maker of Lee and Wrangler jeans and other apparel earned $1.33 per share for its latest quarter, well above the 58 cents a share consensus estimate. Revenue also beat estimates, and Kontoor announced it had reinstated its dividend. The shares gained 5% in premarket trading as of 7:33 a.m. ET.
Molson Coors (TAP) – The beer brewer earned $1.62 per share for its latest quarter, compared to the $1.02 a share consensus estimate. Revenue also came in above forecasts. The company said it’s also seeing strong growth for its hard seltzer products. Molson shares rose 6% in premarket trading as of 7:33 a.m. ET.
Tiffany (TIF) – Tiffany and French luxury goods maker LVMH have agreed on a revised takeover deal, with LVMH paying $131.50 per share. That’s down from the original $135 per share deal that the two sides had agreed to last November, prior to the pandemic. LVMH subsequently sued to back out of buying Tiffany, accusing the company of mismanaging the business during the pandemic.
Shopify (SHOP) – The e-commerce platform provider reported quarterly profit of $1.13 per share, compared to a 53 cents a share consensus estimate. Revenue scored a beat as well. Shopify benefited from an increasing number of brick-and-mortar retailers turning to online sales to boost results as the pandemic drives growth in online shopping. The shares gained 4% in premarket trading as of 7:33 a.m. ET.
Pinterest (PINS) – Pinterest earned 13 cents per share for its latest quarter, 10 cents a share above estimates. Revenue also exceeded forecasts. The image-sharing platform reported a larger-than-expected number of active users, and gave an upbeat current-quarter revenue forecast. The shares surged 32% in premarket trading as of 7:33 a.m. ET.
Visa (V) – Visa came in 3 cents a share above estimates, with quarterly profit of $1.12 per share. Revenue also beat Wall Street projections. Profits were down 29% from a year earlier, however, due to fewer transactions on its payment network.
Ford Motor (F) – Ford more than tripled the consensus estimate of 19 cents a share, with quarterly profit of 65 cents per share. The automaker also reported better-than-expected revenue. Results were helped by increased demand for SUVs and pickup trucks. Ford also said it would report a full-year profit. The shares gained 5% in premarket trading as of 7:33 a.m. ET.
Amgen (AMGN) – Amgen reported quarterly earnings of $4.37 per share, beating the $3.81 consensus estimate. The biotech company’s revenue was slightly above forecasts, helped by stronger drug sales, although drug prices were lower during the quarter.
Gilead Sciences (GILD) – Gilead beat estimates by 21 cents a share, with quarterly earnings of $2.11 per share. The drugmaker’s revenue also came in above analysts’ forecasts. Gilead cut its 2020 revenue forecast, however, due to lower-than-expected demand, and uncertainty surrounding the sales of Covid-19 treatment remdesivir.
EBay (EBAY) – EBay earned 85 cents per share for its latest quarter, 8 cents a share above estimates. Revenue also topped consensus, however the number of active buyers on the retail platform came in lower than analysts had been forecasting. The shares lost 5% in premarket trading as of 7:33 a.m. ET.
Etsy (ETSY) – Etsy beat estimates by 10 cents a share, reporting quarterly profit of 70 cents per share. Revenue also exceeded Wall Street forecasts, boosted by strong sales of face masks and home décor amid the pandemic.
Exxon Mobil (XOM) – Exxon kept its fourth-quarter dividend at 87 cents per share, marking the first time since 1982 that the energy giant did not raise its dividend.
Sector ETF Performance Today 12:40 pm
QLD +3%, Social Media 3%, Sem's 2.2%, Transports 2%
Oil -3.7%, QID -3.3%, SDS -1.7%, Hlth Care -.8%, Bonds -.7%
Select Stock* Performance
Twitter +7.8%, IGT 6%, FB 5%, NOW 5%, UPS 4.7%
WDC -2.3%, SNAP -2%, TOL -2%, KBH -1.8%, ATVI -1.9%
*This list of "Select Stocks" represents key companies in each sector we track. They are meant to be bellwether sector indicators. Rather than show a ton of stocks just to cover all the favorites, this keeps the list to a minimum, allowing easier observation of unusual volume in each sector.
STOCKS WITH HIGHEST VOLUME RATIOS *
#1 EBAY -7% on 500% above avg daily volume.
#2 NOW +5% on 330% volume
#3 Twitter +8% on 320% volume
#4 MA +.5% on 280% volume
*Note: The Zanger Volume Ratio measures the volume as a percent of the average daily volume for that stock. This is quite different from the 'most active' volume measures, and is ultimately more predictive of where the stock is trending than traditional cumulative volume indictors. Zanger's trading system based on volume
ratios has been highly successful in delivering above market returns.
CHARTS WE ARE WATCHING...
2x Short Nasdaq etf - QID pierces the 50 DMA, but needs to clear 11
for the break out. We hold QID in our Top 3 Portfolio:
2x Short SP500 etf - SDS breaks out above the 50 DMA, needs to clear 17.5 for a true break out. We own this in Top 3 Portfolio:
20 Yr Bond etf - TLT - Fell 9% then recaptured the the 200 DMA
(red line). Mostly on stock weakness and fear of Covid resurgence.
Down 7% off the high, trying to find support at the 100 DMA (purple line) at 328. Could fall to 322, which was the Sept. low.
QQQ Chart: Falling 10% from the 9/2 peak, should
have support at the 100 DMA (purple line) at 269.
QLD - 2x Nasdaq etf - Pops 202% from the March low, then pulls back 21% to exactly the 100 DMA (purple line).
Moving up 141% from the March 23 low, pulls back 17% to our first
blue line support at 113. Could easily fall to 107.35 (100 DMA purple line).
BEST SECTORS/INDEXES FROM THE 3/23/20 LOW
Let's take a look at how Sector ETFs have done since the March Pandemic low on 3/23/20:
#1 ARKK 174% #2 QLD +149% #3 Builders 118%
#4 Soc Media 117%
SP500 +47% QQQ +62%
THURSDAY STOCK MARKET ACTION
HOSPITALS HIT MAX LEVEL IN 9 STATES
COVID VIRUS CAN LAST 28 DAYS ON TOUCH SCREENS AND PAPER CURRENCY
TOP 3 SECTOR PORTFOLIO STATUS
As of 10/29/20, the Top 3 Sector Portfolio is up 121% from the 3/23/20
March low. The SP500 is up 47% same time frame.
Our #1 holding is ARKK, up 174% since the March lows, #2 QLD +145%,
#3 is Social Media SOCL +117%.
The portfolio is beating the SP500 benchmark by 74% in the past 7 months.
It's up 135% in the past 1.5 years and +156% past 3 yrs.
In the Top 3 Sector Portfolio we bought 1/2 position in QID and SDS
on 10/26/20. This is for experienced investors only, the 1x short
versions are SPDN and PSQ. Make sure you set stops at the time you
buy. When we do take a position in an inverse Index fund,
it is usually for a brief period of time (more for traders than long term investor.
We were stopped out on several ETFs today, 10/26/20, on the intraday sell-down
We sold 1/3 positions in QLD, FDN, and IGV. We continue to hold all 3 long.
In the Top 7 Stock Portfolio, we bought a position in Apple on 9/21/20.
On 9/28/20 we added Lam Research to the portfolio.
Markets are turning down today, 10/26/20 as stimulus stalls, election looms,
Covid cases hit 82,000 per day a new record, with hospitals filling up,
all leading to some trimming of positions and taking gains prior to the
increased cap gains tax coming in 2021.
Shortable corrections tend to be fast, and can bounce very quickly before you can sell. That's why a tight stop is required. We use only TWM, QID and SDS inverse ETFS. These are all 2x funds, but you can also obviously use the 1x inverse ETF corollaries of short Russell: 1x RWM, Inverse SP500 1x (SH or SPDN) and Inverse Nasdaq 1x PSQ which are less volatile. Always set your stop after purchasing any
inverse etf - that will keep you protected in case of a rapid upturn in trend.
Keep in mind that expense ratios for inverse funds are higher than most, often in the 1% to 1.5% or more range.
Important Note: We are now tracking the Top 3 Sector Portfolio total return from
the 3/23/20 March low, in order to show the most recent activity in the last 6 months.
The portfolio performance from the 12/24/18 low (1.5 yrs) is published right after the "ETF Charts In Top 3 Sector Portfolio" section below.
Thus it is easy to compare how the portfolio is doing in short term (6 months) as
well as long term (1.5 yrs) time spans.
Note that our recorded Gains/Losses are based on when we began tracking
the Top 3 Sector Portfolio on the 12/24/18 Xmas Eve low.
B. QID @ 9.11 on 10/26
B. SDS @ 15.27 on 10/26
XBI - S. 1/3 on 10/20 (Gain +68%) from 12/24/18 purchase
QLD - S. 1/3 on 10/26 (Gain: +220%)
IGV - S. 1/3 on 10/26 (Gain:+ 98%)
FDN - S. 1/3 on 10/26 (Gain: +82%)
SOCL - S. 1/3 @ 51.47
BOTZ - S. 1/3 @ 27.22
QID - S. 100% @ 9.22
SDS - S. 100% @ 16.10
S. 1/3 QLD @ 85.23
S. 1/3 ARKK @ 92.63
S. 1/3 FDN @ 188.37
S. 1/3 VIG @ 124.21
S. 1/3 IGV @ 307.72
S. 1/3 IVW @ 55.35
*Sell stops are not indicators of imminent corrections, or a sudden drop in
the market. They are in keeping with our strategy of being pro-active in volatile market conditions, and protecting our investors and their profits.
TOP 3 SECTOR PORTFOLIO
Gain from 3/23/20 low to 10/29/20 (past 7 months)
ETF SECTOR PRICE 3/23/20 % Gain
Index Allocation 34%
QLD (22%) Nasdaq 2x 36.54 145%
IVW (6%) SP500 Growth 144.56 58%
SDS 1/2 p Sh SPY 2x 15.27 7%
QID 1/2 p Sh QQQ 2x 9.11 4%
Index Subtotal: 137%
Sector Allocation 57%
ARKK Ark Innovation (15%) 34.78 3/18/20 174%
SOCL Social Media (15%) 25.19 117%
BOTZ Robotics (10%) 15.47 81%
XBI Biotech (3%) 68.57 67%
FDN Internet (11%) 111.72 74%
IGV Software (9%) 190.47 64%
Sector Subtotal: 108%
Dividend Stock Allocation 9%
VIG Divid Apprec 2% Div* 89.24 41%
Dividend Stock Subtotal: 41%
International Subtotal: 0%
TOTAL RETURN: +121% SP500 +47%
from 3/23/20 low Beating SP500 by 74%
TOP 7 STOCK PORTFOLIO
From 3/23/20 Low as of 10/29/20 (Past 7 months)
Stock Company Price on 3/23/20 % Gain
AMZN Amazon 1902.83 + 68%
SBUX Starbucks 56.55 55%
MA Mastercard 203.30 47%
MSFT Microsoft 135.98 51%
BLK Blackrock 327.43 84%
AAPL Apple 104.66 (B. 9/21/20) 8%
LRCX Lam Research 331.52 (B. 9/28/20) 3%
Total Return +64% SP500 +48%
from 3/23/20 Low Beating SP500 by 16%
TOP 7 STOCK PORTFOLIO UPDATE
In the Top 7 Stock Portfolio, we bought a position in Apple on 9/21/20.
On 9/28/20 we added Lam Research to the portfolio. On 9/29/20 we added a 1/2 position in PayPal. We sold PayPal on 10/12/20 @ 197.91 (3% gain).
AAPL - B. 1/3 position on 9/21 @ 104.66
LRCX - B. 1/2 position on 9/28/20 @ 331.52
MA - S. 1/3 @ 299.40 (Gain: +68%) from original purchase 12/24/18
BLK - S. 1/3 @ 608.07 (Gain: +38%)
MSFT - S. 1/3 @ 207.27 (Gain: +118%)
MA - S. 1/3 @ 309.45 Triggered 10/29 @ 299.40
BLK - S. 1/3 @ 608.11 Triggered 10/27 @ 608.07
MSFT - S. 1/3 @ 207.28 Triggered 10/28 @ 207.27
LRCX - S. 1/2 @ 347.37
TOP 3 SECTOR PORTFOLIO - HISTORIC PERFORMANCE
Let's look at 3 time periods for performance of our Top 3 Sector Portfolio.
Each period begins with a significant low in the market, so that it's a level playing field
Note how ARKK, QLD, IGV, SOCL, FDN and XBI stayed consistently in the Top 6-7 for
every time period.
Last 6 months (from 3/23/20 to 10/16/20)
Total Return: +132% SP500 +55%
Last 1.5 years (12/24/18 low to 10/16/20)
Total Return: +144% SP500 +45%
Last 3.5 years (From 1/3/17 low to 10/16/20)
Total Return: +165% SP500 +52%
CHARTS OF ALL ETFs AND STOCKS
IN TOP 3 SECTOR PORTFOLIO
Please find below all ETFs and Stocks currently in our Top 3 Sector
and Top 7 Stock Portfolios.
ETFs: QLD, ARKK, XBI, BOTZ, SOCL, FDN, IGV, VIG, IVW
Stocks: AMAZON STARBUCKS MASTERCARD MICROSOFT BLACKROCK
Moving Average Key for All Charts
Green line: 21 Day Moving average (or Wkly Avg if Wkly Chart)
Orange: 50 DMA
Purple: 100 DMA
Blue: 150 DMA
Red: 200 DMA
Blue horizontal lines represent support or resistance, can also be used for suggested sell stops. Click on each chart to enlarge.
QLD - Up 170% in past 6 months - quite good!
ARKK - Ark Innovation, rose 195% from 3/23/20, our #1 holding in
Top 3 Sector Portfolio:
XBI BIOTECH etf: Stil up 88% from March low. Bounced off
the 150 DMA (blue line) and popped 18%.
ROBOTICS ETF - BOTZ UP 93% from March low:
SOCL Social Media etf - Up 103% from 3/23/20, now on
Internet ETF - FDN - The "FANG" stocks, nicely up 86%.
Software ETF - IGV up 80% from 3/23/20, watch for possible
Vanguard Dividend Appreciation VIG. Up 50% past 6 months:
SP500 Growth ETF - IVW, rising 66% past 6 months,
May be stalling out a bit here, didn't breach previous high:
STOCKS IN TOP 7 STOCK PORTFOLIO
Featuring: AMAZON STARBUCKS MASTERCARD MICROSOFT BLACKROCK
APPLE LAM RESEARCH
Amazon ran up 112% in past 6 months.
Bounce up 19% from the 100 DMA (purple line)
Starbucks roaring up 69% from the March low:
Mastercard sitting on the 50 DMA (orange line), but still up 67%
from 3/23/20 low.
Microsoft up 64% from 3/23/20, nice bounce off the 100 DMA:
Blackrock solid bounce off the 9/23/20 low, up 24% from there.
Apple pops 111% in the past 6 months - one to own for life:
Lam Research - we bought this recently in our Top 7 Stock Portfolio,
it's up 24% from the 9/23/20 low, one of the best performers:
TOP 3 SECTOR PORTFOLIO & TOP 7 STOCK PORTFOLIO PERFORMANCE FROM 12/24/18 LOW
Here's how both portfolios have done from the well-
documented Christmas Eve 2018 low - approximately 1.5 years:
TOP 3 SECTOR PORTFOLIO From 12/24/18 low
Gain from 12/24/18 low to 10/16/20 (1.5 years)
ETF SECTOR PRICE 12/24/18 % Gain
Index Allocation 34%
QLD (28%) Nasdaq 2x 29.18 237%
IVW (6%) SP500 Growth 140.58 70%
Index Subtotal: 198%
ARKK Ark Innovation 35.34 191%
XBI Biotech 65.42 69%
FDN Internet 107.21 73%
SOCL Social Media 26.60 86%
BOTZ Robotics 16.33 77%
IGV Software 214.22 105%
Sector Subtotal: +150%
Dividend Stock 9%
VIG Divid Apprec 2% Div* 90.55 48%
Dividend Stock Subtotal: 48%
International Subtotal: 0%
TOTAL RETURN: +161% SP500 +45%
from 12/24/18 low Beating SP500 by 116%
TOP 7 STOCK PORTFOLIO
From 12/24/18 Low as of 10/16/20 (Past 1.5 years)
Stock Company Price on 12/24/18 % Gain
AMZN Amazon 1343.96 + 144%
SBUX Starbucks 60.56 46%
MA Mastercard 174.65 94%
MSFT Microsoft 94.13 133%
BLK Blackrock 436.33 51%
Total Return +118% SP500 +40%
from 12/24/18 Low Beating SP500 by 66%
ALL SECTOR ETFS:
LONG TERM RETURN - From 12/24/18 Market Low
(as of 10/16/20)
Sector ETF Performance Past 1.5 years
Here are all sector ETFs we track with a longer term performance
from the Xmas eve low 12/24/18 through 10/16/20, approximately 1.5 yrs.
#1 QLD +236% #2 ARKK +191% #3 SMH Semi's +130%
Energy -44%, Airlines -35%, Banks -8%.
The SP500 is now up 48% from the 12/24/18 low.
Best Performing Sector ETFs Past 3.5 Years
ETF Rating* 3.5 Yr Avg (% per yr)
ARKK 837 118%
QLD 717 91% avg gain per yr
ITB 373 33%
IGV 371 57%
SMH 368 45%
SOCL 320 38%
FDN 306 42%
XBI 262 28%
IHI 261 (MedDevice)
*Rating is a cumulative score based on multiple performance and technical proprietary indicators unique to Top 3 Sector Portfolio.
SELECT STOCK* PERFORMANCE PAST 1.5 YEARS
#1 ROKU +637% #2 TSLA +609% #3 AMD +400%
Macy's -78%, AAL -58%, Boeing -48%.
SP500 is up 48% since the 12/24/18 low:
*This list of "Select Stocks" represents key companies in each sector we track. They are meant to be bellwether indicators, and rather than cram a ton of stocks in just to cover all the favorites, this keeps the list to a minimum, allowing easier observation of where the money is flowing.
Best Performing Stocks 12/24/18 and 3/23/20 Time Periods and Average Yearly gains past 3 yrs:
12/24 + 3/23
STOCK Rating* 3 Yr Avg (% per yr)
TSLA 965 26% Avg Gain per Year
SQ 662 76%
AMD 525 73%
NVDA 505 43%
AAPL 343 44%
NOW 331 28%
PYPL 296 43%
AMZN 228 36%
ADBE 215 48%
MSFT 196 39%
*Rating is a cumulative score based on multiple performance and technical proprietary indicators unique to Top 3 Sector Portfolio.
Top 3 Sector Portfolio Strategy
Our investment strategy is unique. In the Top 3 Sector Portfolio, we invest solely in ETFs, both long and short, with an emphasis on Sectors, as they always outperform indexes.
We will also use 2x ETFs, focusing on 6 key indexes only (SSO, QLD, UWM, TWM, QID, SDS) as warranted by market conditions. We do not short sectors.
In addition to the "Top 3 Sector ETF Portfolio," we also feature an all-stock portfolio entitled "Top 7 Stock Portfolio," utilizing the same criteria for selection of stocks as the Top 3 Sector ETF Portfolio.
WHAT DOES "TOP 3 SECTOR" MEAN?
The term 'Top 3 Sector Portfolio' comes from a phenomenon we call the
"Top 3 Effect," where the top 3 sectors that emerge first from a pivot high or low, tend to outperform for longer durations.
After a flush out low, the best ETFs will continue to outperform 2, 3 or 6 months later.
Here's an example of this effect:
The first time period is from the 12/24/18 Christmas Eve market bottom to today, 8/24/20, roughly 1 1/2 years. This is a perfect low, as ALL sectors were levelled by the correction. Ground Zero so to speak. What rises first?
The second period is the past 5 months from the much discussed 3/23/20 low
to today, 8/24/20.
Past 1.5 years (from 12/24/28 to 8/24/20:
Past 5 months (from 3/23/20 to 8/24/20):
Let's look at the first Table (from 12/24/18)
Best 3 ETFs past 1.5 years:
#1 QLD (2x QQQ) +226%
#2 ARKK +154%
#3 ITB (Builders) +98%
When you look at Table 2 - (past 5 months) we see:
Best 3 ETFs past 5 months:
#1 QLD (2x QQQ) +163%
#2 ARKK +158%
#3 ITB (Builders) +134%
Note the QLD, ARKK (Ark Innovation) and ITB (Builders) are in the top 3 for both time frames.
Point being, that the Top 3 that emerged in the longer 1.5 year time frame, tend to continue that out performance as we see in the shorter time frame.
We will also allocate more capital to the Top 3 ETFs - concentrating resources on the best performing assets which greatly improves our returns.
The top 3-6 will vary a bit, but the first ones off that flush-out low, tend to be the ones still on top 6 months later, and 12 months later, etc.
One other thing to note, the Top 3 tend to 'pull away from the pack'
as time goes on. As time increases, this divergence increases as well.
Note that the Top 3 for the last 1.5 years are up an average of 164%, but the average of the next tier of 3 drops to 96%. The same effect can be seen in the 6 month period.
We have observed this effect over the course of nearly 18 years of trading, giving more credence to the power of the "Top 3 Sector Strategy."
The momentum strategy has been documented by two recent research studies, where stocks that outperformed by a wide margin over a 5 month and 12 month period also delivered a much greater gain longer term. The MTUM Momentum ETF follows a similar strategy.
Here are 3 links to the research done on 3, 6 and 12 month momentum studies:
SHORT OR LONG - WE TAKE ADVANTAGE OF THE TREND
The beauty of this strategy is that we make money in both Bull and Bear markets, as we can switch to short ETFs when a positive trend is ending, whereas nearly all mutual funds are long only - giving them a definite disadvantage when markets decline.
Since Sectors always outperform indexes, we have a larger portfolio allocation to this area (57%).
For instance, as seen above in Table 2 (from the 3/23/20 low), ARKK is up 158%,
ITB (Builders) is up 134%, while the SP500 is up 52%.
Yes, sectors always outperform indexes. When you note that 92% of all managed funds have not beaten the SP500 index in the last 15 years, it's even more impressive.
In normal market conditions, we allocate as follows:
2 Index ETFs (QLD and IVW)
5 Sector ETFs (This may vary between 4-6 due to mkt conditions)
2 Dividend Stock ETFs (only VIG currently)
2 International ETFs (Currently none)
As of 8/24/20, our portfolio allocation is currently:
Dividend Stock: 9%
This portfolio strategy is aggressive, and is recommended for experienced investors, especially since we employ the 2x ETFs, as well as Inverse ETFs.
THE POWER OF DIVIDENDS
Dividend Yield ETFs are also critical to outperforming the benchmarks.
Investors today are desperate for yield.
We utilize domestic and international dividend stock ETFs (although currently we are in domestic only).
Currently we have VIG for our Dividend Yield allocation. VIG - Dividend Appreciation etf is up 34% the past 3 months, with a dividend of 2%.
Dividends are taxed at only 15%, (for those with incomes less than $250,000/year). Interest income would be in the 22% to 24% in the same earning bracket.
The power of re-invested dividends for total return is simply amazing.
From January 1990 to today (8/24/20), the SP500 is up 767%. Not too bad for a 30 year return.
But wait, add in dividends reinvested, and that SP500 return rises to
an astonishing +1,494% !
Dividends should ALWAYS be reinvested. Always.
Here's a list of Dividend Stock ETFs, as well as some Domestic and
international bond funds that measures performance from the 3/23/20
low to 8/24/20.
Note that our VIG - Vang Dividend Appreciation is up 43% in past 5 months,
with a dividend of 1.74%.
Top 10 Holdings of Top 3 Sector Portfolio ETFs
The Top 10 holdings in Sector ETFs can vary considerably when it comes
to concentration. Some are heavily top weighted, such as Social Media SOCL with over 65% of stocks in top 10, versus XBI Biotech which only has 20% of the ETF in its top 10 stocks.
The QQQ has 57% of its stocks in the top 10 - that concentration helps to explain its outperformance. But a whopping 45% of the QQQ is only 5 stocks: AAPL, MSFT, GOOGL, AMZN and Facebook.
Nasdaq 100 etf - QQQ Top 10: 57% Internet FDN: Top 10: 48%
Social Media SOCL: 10: 65% Software etf - IGV - 10: 57%
Robotics etf - BOTZ Top 10: 60% ARKK Ark Innov. - Top 10: 57%
Biotech XBI: Vang. Div Apprec. etf: VIG
Top 10: 20% Top 10: 32%
SP500 Growth etf - IVW - Top 10 - 39%
NUALOLO VALLEY, KAUAI
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