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Top 3 Sector Portfolio Market Update

Updated: 7 hours ago


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. The portfolio 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 +180% from the March pandemic low (3/23/20) up 221% past 2 years and +240% past 4 years.

All charts and data updated daily to keep you in touch.


Mission:


Highest Total Return thru Sector ETFs in industries that disrupt, innovate and improve the way the world works. One example: ARKK - Ark Innovations ETF. Our #1 holding is up 550% past 4 yrs as of 2/26/21. That's a 139% per year average return.




Best Stock Returns YTD 2021* :


#1 PENN +46%

#2 Ford +43%

#3 TWTR +40%

#4 AMAT +38%

#5 XOM +37%



Laggards: PG -10%, VRSN -10%, VRTX -10%, even Walmart struggling , down 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.





MARKET DASHBOARD

Monday 3 1 21 1:00 pm






MARKET SNAPSHOT

Tuesday 3/2/21 1:20 pm


At 1:20 pm, the Dow is up 47 points, or .15% to 31,581, SP500 is down .2% to 3,896,

Nasdaq -.6% to 13,495 and Russell 2000 down 1%.


The Adv/Decline line is 1500/1600 - dead even, Dollar down .3%, Bonds down .5%

with the 10 year yield at 1.41%, still receding from last week's 1.61% high.

Oil up .6%, GDX positive for onece, up 3% and Utilites down .1%.


Sellers are present, but damage is slight as most are hanging on desperately to their

longs. But at one point we expect to see more market weakness as March plays out.


The VIX is still quite low at 22.97, and UVXY is trading 8.38, near a 3 year low. Usually when the VIX gets to these levels, a correction is drawing near. Stay alert, and

stay defensive.


In terms of sectors, Biotech, Semi's, Cloud and Telecom are all down 1.5% to 2%,

while Gold, Materials and Oil are leading (an all commodity leadership).




Sector ETF Performance Today


SECTORS UP

GDX +4%, TWM 2.5%, Mat'ls 1%, Oil 1%, Builders .4%


SECTORS DOWN

Biotech -2.3%, Semi's -2%, QLD - 1.7%, Cloud -1.5%, Telecom -1.5%, China -1.5%, Real Estate -1%, Software -1%, ARKK -1%, Internet -1%




STOCK INDEXES YEAR TO DATE

S&P 500 +4%

Nasdaq QQQ +2.4%

Dow Jones +3.3%

Russell 2000 +14%




Top 3 Sector Portfolio - Total Return 2021


Here's how the Top 3 Portfolio has performed so far this year:

Total return 8% SP500 +4%


#1 Banks KBE +22%

#2 Social Media SOCL 19%

#3 ARKK 10%

#3 Internet FDN 8%

#4 Biotech 8%

#4 ARKK 5%









MARKET OVERVIEW

Tuesday 3/2/21



Dow Jones Slides As Stocks Reverse; Target Falls On These Fears; Nio, Boeing Stall


The Dow Jones Industrial Average fell as the bears struck back at the bulls following Monday's strong gains. Target (TGT) stock sank lower despite posting strong earnings, while EV stock Nio (NIO) dived on mixed results. Boeing (BA) stalled after initially flying higher.

Among other EV stocks, Tesla (TSLA) also fell, while General Motors (GM) managed to turn in a gain. Bitcoin was down slightly, which caused Grayscale Bitcoin Trust (GBTC) to give up some gains.

Nasdaq, S&P 500 Retreat

The Nasdaq was the worst performing major index, falling around 1.3%. E-commerce stock MercadoLibre (MELI) was the biggest loser, giving up around 5%.

The S&P 500 also lost ground, giving up around 0.7%. Enphase Energy (ENPH) was the biggest laggard, slipping almost 7%.

Volume was mixed compared to the same time Monday. It fell around 5% on the Nasdaq and rose almost 5% on the NYSE.

The S&P sectors were coming under pressure, with most posting losses. Only materials and energy were in the green. Small caps were also being battered by the bears. The Russell 2000 fell 1.3%. Growth stocks were also struggling, with the Innovator IBD 50 ETF (FFTY) giving up around 1.4%.

Boeing Stock Stalls As Dow Jones Falls

The Dow Jones Industrial Average was the best performing major index, falling around 0.3%. Boeing gave up early gains, reversing around 0.5%. This caused it to lose ground on a cup base buy point of 244.18.

It comes a day after Boeing stock was the standout component, gaining almost 6%. However, its Composite Rating highlights the challenges ahead, as it has slumped to a dismal 12 out of 99.

Dow (DOW) was the top performer, rising almost 2%. Caterpillar (CAT) was the biggest loser, falling almost 2%

Target Reverses On This

IBD Leaderboard stock Target fell hard, slipping almost 5%. It tumbled despite the retail giant reporting fiscal Q4 earnings and sales that topped analyst views, thanks to a strong holiday season and stimulus checks. Analysts are concerned about how well the company will perform against tough comparisons. UBS analyst Michael Lasser is neutral on the stock, with a 190 price target. "Unlike WMT, TGT decided to hold off on providing an outlook for its upcoming year given uncertainty related to COVID-19," he said in a note to clients. "We note that it will be facing a particularly tough compare as it laps FY20's 19.3% comp. We think the wallet share gain portion of this is particularly at risk as the economy begins to reopen."

Nio Stock Sinks; Tesla Stock Stalls

Chinese EV stock Nio was down almost 10% after the firm posted disappointing results. The firm warned the global chip shortage will slow production.

The China electric vehicle maker reported a Q4 loss of 14 cents a share on $1.02 billion in revenue. Analysts expected a 7-cent loss on $1.01 in sales. A previous breakout from a cup base with a 57.30 buy point failed, and the stock is now well below this entry point.

IBD Leaderboard stock Tesla also fell, surrendering around 2%. Last week, TSLA fell more than 13%. It remains marooned beneath its 10-week line.

Tesla stock has also bee hit been affected by the chip shortage, which caused it to reportedly halt production of its Model 3 sedan at its Fremont, Calif., factory. The stock remains well extended from a 466 buy point of a cup with handle.

GM stock bucked the trend, rising almost 3%. This helped move further away from its 50-day moving average. It broke out from a cup base Jan. 12 on positive EV news. However, it has given up ground after a surge.

General Motors was Monday's IBD Stock Of The Day due to its bullish rebound from its 10-week moving average. This set up a potential buying opportunity. It also retook its 21-day line and a trend line.

Bitcoin Retreats

Bitcoin was holding fairly steady, though it was off 24-hour highs. It currently sits around $48,500, according to CoinDesk. The price of Bitcoin is still well short of the record high of $58,332, which it reached Feb. 21.

Grayscale Bitcoin Trust ended up giving up most of its early session gains, though it was still up around 0.4%. GBTC stock plunged 23.8% last week, but is still holding above its 10-week moving average.

Highly Rated Chip Stock Flashes Bullish Sign

Lam Research (LRCX) flashed a bullish sign as its RS line hit a fresh high, despite the negative action. It comes as Lam Research stock looks to close in on a buy zone as it forms an ascending base pattern. The buy point here is 603.70.

LRCX stock is strong all-around, with its Composite Rating coming in at a perfect 99. Earnings performance a bit better than stock market performance. EPS has risen by an average 53% over the past three quarters.

Lam Research is a global supplier of wafer fabrication equipment and services to the semiconductor industry." - Michael Larkin, Investors.com 3/1/221




STOCKS IN THE NEWS TODAY



"Rocket Companies — The online mortgage provider’s stock price skyrocketed more than 21%, on track for its best day ever, in a surprising move on no apparent new news. Rocket has large short bets placed against it by hedge funds and appears to have garnered some bullish interest from day traders on Reddit’s WallStreetBets.


Novavax — Shares of Novavax slipped more than 15% after missing on the top and bottom lines of its quarterly results. Novavax reported a loss of $2.70 per share, compared to the loss of $1.49 per share expected on Wall Street, according to Refinitiv. The company made $279.7 million, lower than the forecast $304.9 million.


TripAdvisor – Shares of the travel booking site jumped more than 7% after Citi upgraded the stock to a buy rating. The firm said the company’s new subscription offering, which is currently in beta, could attract 10 million subscribers while creating an additional $1 billion of high-margin revenue. Citi also raised its price target on TripAdvisor to $62, up from $29.


Switch – Shares of the data center operator dropped nearly 15% following the company’s fourth quarter earnings. Switch beat earnings estimates, reporting a 6 cent per share profit excluding items compared to the expected 5 cent per share profit, but revenue fell short of expectations. The company said sales reached $127.7 million during the period, short of the expected $131.3 million, according to analysts surveyed by Refinitiv.


Lemonade — The insurance stock sank about 14% despite Lemonade beating expectations on the top and bottom lines in its fourth-quarter report. The company said it expected its gross loss ratio to increase during the first quarter of this year due in part to claims from the winter storm in Texas.


Target — Shares of the big box retailer fell close to 5% despite reporting better-than-expected quarterly results. Same-store sales rose 20.5%, compared to the estimated 16.8%, according to Refinitiv. Sales got a lift from a strong holiday season and stimulus checks. Target reported earnings per share of $2.67 on revenue of $28.34 billion. Analysts expected earnings per share of $2.54 on revenue of $27.48 billion.


Kohl’s — Shares of the retail chain were up more than 2% after the company said it brought in two million new customers last year thanks to a partnership with Amazon. Kohl’s also reported fourth-quarter earnings that topped analyst expectations. The retailer posted earnings per share of $2.22 on revenue of $5.88 billion. Analysts polled by Refinitiv expected earnings per share of $1.01 on revenue of $5.86 billion.


Carnival, Royal Caribbean, Norwegian -- Cruise stocks rose on Tuesday after Macquarie upgraded Carnival, Royal Caribbean and Norwegian to outperform from neutral. The firm said in a note that it believes that negative catalysts related to the pandemic are now in the past for the industry. Shares of all three companies rose more than 2%.


Foot Locker —Shares of the shoe retailer lost more than 2% following a downgrade to hold from buy from Williams Trading. The Wall Street firm citied valuation and increased competition for the rating change."

— with reporting from CNBC’s Yun Li, Pippa Stevens, Jesse Pound and Rich Mendez.



Sector ETF Performance Today


SECTORS UP

GDX +4%, TWM 2.5%, Mat'ls 1%, Oil 1%, Builders .4%


SECTORS DOWN

Biotech -2.3%, Semi's -2%, QLD - 1.7%, Cloud -1.5%, Telecom -1.5%, China -1.5%, Real Estate -1%, Software -1%, ARKK -1%, Internet -1%








Select Stock* Performance Intraday


STOCKS UP

SQ +6%, F 5%, GM 4.8%, NEM 4%, LVS 3%, MS 2.2%, AZO 2%


STOCKS DOWN

TGT -5%, AMAT -3%, MU -3%, TWTR -2.8%, ROKU -2.7%, DDOG -2.5%







KEY STOCK INDEXES SP500, Nasdaq, Russell



SP500 - SPY Chart: Broke briefly below the 21 DMA (green line)

now recapturing it







NASDAQ 100 - QQQ Chart: Rising 97% since March lows

Falling below the 50 DMA (orange line), first time since

October 2020 - watch this one...






Our Core holding: 2x NASDAQ 100 ETF - $QLD - nice +261%

run up from the 3/23/20 low. Fell 15% from the recent high,

with support at the 109 level (100 DMA). A break below 109 bearish.







RUSSELL 2000 SMALL CAP INDEX - IWM

Rising 129% from the March low, biggest 9 month gain in its history.

now pulling back to 21 DMA (green line)





HOT CHARTS TO WATCH TODAY



APPLE - at 12% of the QQQ, it is key to the Nasdaq's

future fate. Gapped down on 2/22/21 below the 50 DMA

which is a bearish pattern







10 year bond yield hits a high of 1.61% on 2/26/21

before falling back a bit to 1.41%. Could

challenge stock yields and repress home buying if it continues at this rapid pace.






TLT - 20 year Bond ETF - Could have made a V shaped low on 2/26/21?







Best Sector ETFs So Far In 2021*


Here's how sector ETFs have done year to date.



#1 Energy XLE +31%

#2 Russ 2x UWM +29%

#2 Retail +29%

#4 Banks +23%

#5 Social Media +20%


Laggards: Gold just a disaster, with GDX -11% for the year, Bonds -11%, Utilities -5%


The SP500 is up 4% YTD.



*Our select list of representative sector and index ETFs. We do not cover every sub- sector. We also look for lowest expense ratios and highest relative strength in selecting ETFs. Our stock list below features stocks representative of key sectors

as well.






Sector Performance From The 3/23/20 Pandemic Low

(Past 12 Months)


Let's take a look at how all Index and Sector ETFs have done since the March Pandemic low on 3/23/20. This is how we measure current performance in

the Top 3 Sector Portfolio,


NOTE: We like to use significant pivot lows (not a calendar) to evaluate true performance, as those kind of Armageddon sell downs tend to level all sector ETFs and stocks to ground zero. We like to avoid 'calendar year' performance measurement, which is not an accurate account of true relative performance.



#1 Russ 2x UWM +358%

#2 Ark Innov ARKK +289%

#3 Nasdaq 2x QLD +232%

#4 Retail XRT +208%

#5 Soc Media SOCL +193%


SP500 +74% QQQ +88%





TOP 3 SECTOR PORTFOLIO - Performance

Past 12 Months (from 3/23/20)


Here's how our Top 3 Sector portfolio performed past 12 months:


#1 ARKK +289%

#2 QLD +231%

#3 Soc Media +193%


Total Return: +191%


SP500 +74%









BREAKING NEWS LINKS



TUESDAY MARKET ACTION


$1.9 TRILLION STIMULUS BILL PASSES HOUSE,

WHAT'S NEXT?


TWITTER SURGES ON REPORTS THEY WILL DOUBLE REVENUES IN COMING YEAR


EVERYONE LOVES EMERGING MARKETS - SHOULD YOU?


CATHIE WOOD - CEO OF ARK INVESTMENTS - SHARES HER OUTLOOK ON TESLA AND NEW BUYS


ELON MUSK BUYS $1.5 BILLION IN BITCOIN

TESLA BUYERS CAN USE IT FOR AUTO PURCHASES


3 TRAVEL STOCKS TO BUY FOR RE-OPENING


ARK INNOVATION WILL LAUNCH A "SPACE EXPLORATION" ETF MAXAR AND VIRGIN GALACTIC POP





TOP 3 SECTOR PORTFOLIO UPDATE 2/26/21


With stock indexes near record highs, it is time to take some precautions

in the Top 3 Sector Portfolio. The Portfolio is currently up 190% since the

3/23/20 low (approx 12 months), while the SP500 is up 74%, showing the portfolio's dramatic outperformance.


Those kinds of gains are impressive, but we need to make sure

we realize profits before the inevitable 'healthy' correction that we

expect to occur in the end of February. We use trailing stops to set our sell targets.

Please check our new sell stops in the "Buy/Sell" section below.


On most of our charts, you will see three blue horizontal lines of support for each security. We tend to use the 'middle' blue support line for our 1st sell stop, but if market conditions and stock price appreciation become more volatile,

that exact level could change.




TOP 3 SECTOR PORTFOLIO LATEST CHANGES


As of 3/2/21, the Top 3 Sector Portfolio is up 190% from the 3/23/20

March low. The SP500 is up 74% same time frame.


Our #1 holding is ARKK, up 288% since the March lows, #2 QLD up 227%,

#3 is Social Media SOCL +192%.


The Top 3 Sector portfolio is beating the SP500 benchmark by 116% from the

from the March lows. It's up 252% in the past 2 years and +271% past 4 yrs.


New action in Top 3 Sector Portfolio:

We sold out of our QID position on 3/1/21 (see below for more details)


New action in Top 7 Stock Portfolio:


New Buys

B. TWM on 2/11/21 @ 14.48

B. QID on 2/22/21 @ 25.65


Added to ARKK on 2/23/21. Added to QID 2/24/21.



New Sells **


QID - S 100% @ 26.48 Triggered 3/1/21 (Gain: 3%)


XBI- S. 1/4 @ 152.07 Triggered 2/23/21 @ 151.97 (Gain: 66%)

ARKK - S. 1/4 @ 143.54 Triggered 2/23/21 @ 136.22 (Gain: 279%)

QLD - S. 1/4 @ 122.35 Triggered 2/22/21 @ 122.25 (Gain: 319%)

SOCL - S. 1/3 @ 73.22 Triggered 2/23/21 @ 72.07 (Gain: 173%)

FDN - S. 1/3 @ 228.63 Triggered 2/23/21 @ 224.28 (Gain: 109%)

BOTZ - S. 1/4 @ 34.65 Triggered 2/23/21 @ 34.44 (Gain: 111%)

IGV - S. 1/3 @ 368.54 Triggered 2/23/21 @ 362.33 (Gain: 124%)


Sell Stops




** Note that our reported Gains/Losses are based on when we began tracking

positions (and when we purchased) in the Top 3 Sector Portfolio from the 12/24/18 Xmas Eve low, unless otherwise indicated (i.e. bought at later date).



Measuring Performance:

We are now tracking the Top 3 Sector Portfolio performance from

the 3/23/20 March low, in order to show the most recent activity in the

last 11.5 months.



TOP 3 SECTOR PORTFOLIO

Gain from 3/23/20 low to 3/2/21 (past 12 months)

ETF SECTOR PRICE 3/23/20 % Gain


Index Allocation 31%

QLD (26%) Nasdaq 2x 36.54 229%

IVW (5%) SP500 Growth 144.56 80%


Index Subtotal: 213%


Sector Allocation 63%

ARKK Ark Innovation (18%) 34.78 B 3/18/20 289%

SOCL Social Media (12%) 25.19 192%

XBI Biotech (4%) 68.57 116%

BOTZ Robotics (10%) 15.47 122%

FDN Internet ( 7%) 111.72 105%

IGV Software (8%) 190.47 91%

KBE Banking (2%) 34.08 B. 11/6/20 52%


Sector Subtotal: 183%


Dividend Stock Allocation 6%

VIG Divid Apprec 2% Div 89.24 58%


Dividend Stock Subtotal: 58%


International 0%

International Subtotal: 0%

TOTAL RETURN: +192% SP500 +74%

from 3/23/20 low Beating SP500 benchmark by 118%



TOP 7 STOCK PORTFOLIO

From 3/23/20 low as of 3/2/21 (Past 12 months)


Stock Company Price on 3/23/20 % Gain


BLK BlackRock 327.43 +118%

AMZN Amazon 1902.83 64%

SBUX Starbucks 56.55 92%

MA Mastercard 203.30 79%

MSFT Microsoft 135.98 74%

AAPL Apple 104.66 B. 9/21/20 21%

LRCX Lam Research 331.52 B. 9/28/20 78%

Total Return +85% SP500 +74%

from 3/23/20 low Beating SP500 by 11%




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. We sold out

100% of our Alibaba position on 2/25/21 as the China market continued to weaken.


New Buys

AAPL - B. 1/3 position on 9/21 @ 104.66 (we have added 1/3 to both AAPL and LRCX)

LRCX - B. 1/2 position on 9/28/20 @ 331.52

BABA - B. 1/2 position on 12/30/20 @ 235.24


New Sells

Sell Stops


BABA - S. 1/2 (last 1/2) @ 245 (Triggered 2/25/21 @ 244.83 (Gain 4%)

BLK - S. 1/3 @ 698.23 Triggered 2/23/21 @ 697.55 (Gain: 59%)

AAPL - S. 1/3 @ 126.11 Triggered 2/22/21 @ 126.04 (Gain 21%)

LRCX - S. 1/3 @ 565.38 Triggered 2/23/21 @ 558.39 (Gain: 68%)

MSFT - S. 1/3 @ 235.25 Triggered 2/22/21 @ 235.21 (Gain: 148%)









TOP 3 SECTOR PORTFOLIO - HISTORIC PERFORMANCE

Updated 2/19/21


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. The first is short term - 11 months since 3/23/20 pandemic low. Second is

past 2 years, and 3rd time period is previous 4 years.


Note how ARKK, QLD, IGV, SOCL, FDN and XBI stayed consistently in the Top 6-7 for

every time period. Robotics etf BOTZ also had very strong returns.



Short Term -Last 11 months - 3/23/20 to 2/19/21

Total Return: +214%

# 1 ARKK +341% SP500 +76%





Last 2 Years - 12/24/18 low to 2/19/21


Total Return: +264%

#1 QLD +343% SP500 +64%






Last 4 Years - 1/3/17 low to 2/19/21


Total Return: +284%

#1 ARKK +665% SP500 +89%






LONG TERM TOP 3 SECTOR PORTFOLIO PERFORMANCE - 2 YEAR RETURN


Here's how Top 3 Sector portfolio has done longer term

from the 12/24/18 low, approximately 2 years:



TOP 3 SECTOR PORTFOLIO From 12/24/18 low

Gain from 12/24/18 low to 2/27/21 (2 years)

ETF SECTOR PRICE 12/24/18 % Gain


Index Allocation 34%

QLD (28%) Nasdaq 2x 29.18 292%

IVW (6%) SP500 Growth 140.58 78%


Index Subtotal: 277%

Sector 57%


ARKK Ark Innovation 35.34 265%

SOCL Social Media 26.60 169%

IGV Software 214.22 136%

FDN Internet 107.21 120%

BOTZ Robotics 16.33 106%

XBI Biotech 65.42 68%

Sector Subtotal: +221%


Dividend Stock 9%


VIG Divid Apprec 2% Div* 90.55 54%

Dividend Stock Subtotal: 54%


International 0%

International Subtotal: 0%

TOTAL RETURN: +221% SP500 +59%

from 12/24/18 low Beating SP500 by 162% past 2 yrs






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 low, tend to outperform for longer time frames in the future.

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 8/24/20, roughly 1 1/2 years. The 12/24/18 low 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 Covid 19 3/23/20 low to today, 8/24/20.


Past 1.5 years (from 12/24/28 to 8/24/20:

Table 1



Past 5 months (from 3/23/20 to 8/24/20):

Table 2





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.


We have observed this effect over the course of nearly 20 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:


https://alphaarchitect.com/2016/10/14/how-to-measure-momentum/

https://seekingalpha.com/article/4240540-optimal-lookback-period-for-momentum-strategies

https://www.anderson.ucla.edu/faculty-and-research/anderson-review/momentum



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.


SECTORS OUTPERFORM

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:

Index: 34%

Sector: 57%

Dividend Stock: 9% ​

International: 0%​

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%.









NUALOLO VALLEY, KAUAI






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The information and material contained within the posts and articles appearing at this site are the opinions of the Authors alone and do not constitute a recommendation of any securities, investment strategy or investment transaction. The information and articles appearing at this site are not intended to be and should not be considered investment advice or a recommendation to any user regarding their personal investment needs or economic circumstances. None of the content provided is intended as investment advice regarding any specific security, portfolio of securities, market strategy or investment transaction.


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