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Market Update: The Top 3 Sector Portfolio

Updated: 10 hours ago

SECTOR INVESTING FOR MAXIMUM PROFITS



MARKET DASHBOARD - Friday 7/10/20 2:00 pm







MARKET SNAPSHOT FRIDAY 2:00 pm



At 2:00 pm, the Dow is rising 290 points, or .1% to 25,989,

SP500 is up .6% to 3,171, Nasdaq +.2% to 10,566 and Russell 2000 is up 1.4%. Volume is terrible, with only 30 M traded on SPY with 1.5 hours to go, one of lightest of the year. So don't read anything into today's action.


The Adv/Decline line is building, now 3-1 positive, Dollar down .2%,

Bonds -.3% with the 10 year yield at 6.2%.


Oil is improving, now up 2.5%, GDX falling 1.5% and the VIX drops to 27.85 showing lots of complacency. We think the market is over-extended here.


All the sectors weak yesterday bounce:


Strong: Banks +2.3%, Energy +2%, Airlines +2%, Defense +1.5%


Weak: China -1.4%, GDX -1.2%, Software -1%, Social Media -.8%



STOCK INDEXES YEAR TO DATE

Nasdaq QQQ +23%

S&P 500 -2%

Dow Jones -9%

Russell 2000 -15%


HIGHEST VOLUME RATIOS - ETFs and Stocks

The 'Zanger Volume Ratio' shows % above avg daily volume for that particular ETF or stock, which is much more meaningful than just total volume.


ETFs:

BOTZ Robotics +1% on 140% avg vol, KWEB -1.2% on 188%+,

Transports +1% on 158% vol.


Stocks:

ROKU continues its run, up 2% on +273% avg vol, Netflix +7.5%

on 270% vol, and Gilead (helped by Remdesivir, see story below)

is up 2.3% on 200% avg volume. Northrop up 2% on 270%, let's see if

that has legs.








Our #1 ETF in Top 3 Sector Portfolio -

QLD - 2x Nasdaq up 133% past 3 months.






STOCK MARKET UPDATE FRIDAY 7/10/20


Dow Jones Today, Futures Slip; Airlines Tumble, Coronavirus Deaths Rise; Netflix Jumps On Q2 Outlook


"Stock futures trimmed early losses Friday as rising coronavirus death rates and a surprise drop in producer prices deepened the uncertainty over U.S. economic recovery. United Airlines stock took hits from multiple directions, even as shipping names Greenbrier and Matson spiked on second-quarter strength.


Netflix jumped on a strong earnings preview. Gilead Sciences offered positive news on a Covid-19 treatment. And defense/aerospace names Boeing and United Technologies divided the Dow Jones today. Dow Jones futures and S&P 500 futures trimmed their early losses to 0.2% below fair value, while Nasdaq 100 futures also pared back to a 0.2% decline on the stock market today. China markets fell hard Friday, ending an eight-day rally for the Shanghai Composite but leaving it and Hong Kong's Hang Seng index sharply higher for the week.


Europe's market reversed early declines and rose into afternoon trade, with benchmarks in London, Frankfurt and Paris all up about 0.6%.


Netflix (NFLX) clocked an early 2% advance, leading the S&P 500 and Nasdaq 100.  Goldman Sachs raised its price target on Netflix to 670, from 540. The note pointed to above-forecast second-quarter results, and said growth in downloads was sharply higher during the quarter. Netflix, an IBD Leaderboard stock, is extended after clearing a flat base in June. Netflix reports results next Thursday.


Cloudflare (NET) shot up more than 3%, after Piper Sandler boosted its target on the stock to 41, from 29. The report pointed to strong demand, and called CloudFlare a juggernaut in web content delivery network and cloud security. Cloudflare shares are extended, in a profit-taking zone after clearing a three-weeks tight pattern in June.

On the IBD 50 list, medical products maker Zynex (ZYXI) rattled off a 5% gain. H.C. Wainwright raised its price target on the stock to 30, from 20, after the company raised its second-quarter and full-year revenue guidance on Thursday. United Airlines (UAL) dived to the bottom of the S&P 500 and Nasdaq 100, down more than 3%, after Wednesday's warnings of deep layoffs were followed by a cancellation of all flights to Hong Kong, due to China quarantine issues, and a downgrade of its debt from Standard & Poor's. Other airlines also dived, with American Airlines (AAL) down 2%, and Delta Air Lines (DAL) and Jetblue Airways (JBLU) off 1.5% apiece.

Specialty chemicals maker Linde (LIN) popped 1.3% in early action. Shares ended Thursday just below a 224.42 buy point in a deep cup-with-handle base.

But transports were set for a mixed day, as shipping and equipment companies Matson (MATX) and Greenbrier (GBX) spiked in early trade. Greenbrier surged 13% after reporting a broad fiscal third-quarter earnings and revenue beat. Matson rocketed 20% higher, after revising its second-quarter earnings guidance well above analyst targets.

Gilead Sciences (GILD) popped 2.7% after its remdesivir drug showed positive trial results as a treatment for Covid-19 patients. The company reported a 62% in mortality risk compared with standard care.

Germany based biotech BioNTech (BNTX) also jumped on coronavirus news, trading up 3%. The company said it expects its coronavirus vaccine to be ready for approval by December, and expects to produce 1 billion doses of the vaccine in 2021.


Producer Prices Post Surprise Drop

Producer prices dipped in June, the Labor Department reported Friday, sending the Producer Price Index down 0.2% for the month. Economists had projected a 0.4% rise, continuing the 0.4% bounce from May. Year over year, prices were down 0.8%. Core prices, minus energy and food, fell 0.3% month over month. Consensus views had projected a 0.1% rise.


Gold Nears Highs, Miners Shape Bases

Gold futures edged up 0.6%, trading well off the week's highs and around $1,814 an ounce. The precious metal is still up more than 2% for the week, and tracking toward a fifth-straight advance. On Friday, it was trading up almost 20% since the start of the year, and less than 5% below its record high, set in September 2011.

Among gold-related stocks, Kirkland Lake Gold (KL) broke out of a cup base on Wednesday, quickly moving out of the buy range. The stock remained extended, despite a pullback on Thursday. Kirkland Lake shares were up 0.5% early Friday.

Newmont (NEM) ended Thursday 10% below a 69.23 buy point in an eight-week cup base. Barrick Gold (GOLD) was less than 4% below a 28.60 buy point in an 11-week cup pattern. Franco Nevada (FNV) was 6% from a 152.80 buy point in an eight-week, base-on-base cup. Kirkland Lake and Franco Nevada are IBD 50 stocks.

CORONAVIRUS UPDATE

A critical week for the coronavirus pandemic has seen the number of cases in Brazil rise to outstrip all of the countries in Europe, active cases in the U.S. continue to push to new record highs, and death rates rise in California and Texas.

Coronavirus cases worldwide rose more than 224,000 in the 24 hours to Friday morning, up 1.8% and putting the total number of cases recorded since the beginning of the outbreak just above 12.414 million. The total number of deaths rose more than 5,400, a 1% rise, to 557,923, according to Worldometer data.

Total cases rose above 61,000 on Thursday, a new record.

Deaths in the U.S. have so far been the largest of any single country, 24.3% of the total. Brazil has reported 12.4% of total deaths, and Mexico has 6%.

Total cases in the U.S. increased by nearly 61,000, a 1% gain, to more than 3.22 million. Another 955 persons died, lifting the death toll to 135,828. Meanwhile, California and Texas saw deaths jump to their highest single-day counts since the start of the pandemic, rising 2% in California and 3.5% in Texas. Florida reported more than 20% of its hospital intensive care units had reached capacity, with 95 hospitals in the state at least 90% full. California said it has been building hospital capacity, preparing for a surge, and placing counties on tighter restrictions as cases rise and hospital capacities decrease.


The Dow continues to bob in its range bound box, with its 50-day moving average marking the bottom and the 200-day line marking the top of the range. Volume on Thursday remained light, which has been the general trend, picking up only in sessions when the index tests its boundaries, such as on June 19 and June 26.

Dow Jones stocks head into Friday's session down 0.5% so far for the week. Meanwhile, the S&P 500 is up 0.7%, and the Nasdaq has rattled off a 3.3% gain. The Nasdaq is home to a strong population of companies benefiting from or adapting to the coronavirus economy.

The Dow also has coronavirus beneficiaries. Microsoft (MSFT), UnitedHealth Group (UNH), Johnson & Johnson (JNJ), Home Depot (HD) and Walmart (WMT) have all shown strength during the pandemic. Apple (AAPL) stock has climbed as if no one had ever heard the word coronavirus.

But there is also Boeing (BA) and Walt Disney (DIS), both slammed by the lockdown economy. McDonald's (MCD), Caterpillar (CAT), Chevron (CVX) and Exxon Mobil (XOM) have all felt deep doses of pain.

Thursday's deep earnings miss from Walgreens Boost Alliance (WBA), a potential beneficiary of the Covid-19 breakout, triggered a sell-off across a broad range of blue chips to which investors had assigned some optimism ahead of second-quarter results.

The Nasdaq, meanwhile, "once again enjoyed strength in tech, medical and internet companies with either blistering profit growth, eye-popping sales increases, or both. A surge off its session low on Thursday is just what you desire in a confirmed uptrend," according to Thursday's Big Picture.

But next week could potentially dislodge the Dow Jones index from its recent stasis, up or down, with UnitedHealth, JPMorgan (JPM), Goldman Sachs (GS) and Johnson & Johnson (JNJ) all set to report results." Alan Elliott, Investors.com 7/10/20



STOCKS IN THE NEWS


United Airlines (UAL) — The airline reached a deal with a pilot union representing about 13,000 pilots regarding early retirements and voluntary furloughs as the industry faces massive headwinds from the coronavirus pandemic.  United shares traded more than 2% lower in the premarket.


Foot Locker (FL) — An analyst at Susquehanna upgraded Foot Locker to positive from neutral and hiked his price target on the stock to $34 per share from $25 per share. The new price target implies an upside of 21.5% over the next 12 months. The upgrade reflects young customers “heading to Foot Locker Inc.’s store banners and websites to spend the newfound money in their pockets to a greater degree than what was reflected in our prior estimates,” the analyst said.


Redfin (RDFN) — RBC Capital Markets downgraded Redfin to sector perform from outperform, citing a high valuation after the stock skyrocketed 400% from its mid-March low. “Valuation has crept up to an extent we see the risk-reward reasonably balanced, given larger macro uncertainties,” RBC said.


Wells Fargo (WFC) — The banking giant was upgraded to outperform from hold by an analyst at Baird, who said the stock’s decline this year is an opportunity “to add bank exposure.” The analyst also said Wells Fargo has a “highly attractive” valuation when looking at a number of metrics.


Beyond Meat (BYND) — Citigroup initiated Beyond Meat with a sell rating and a price target of $123 per share, which implies a downside of 12% from Thursday’s close of $141.22 per share. Citi expects the meatless meat maker to face long-term pressure as competition in the space grows as well as near-term struggles “as a result of its exposure to the foodservice segment.” Shares of Beyond Meat dropped 2.6%.


BioNTech  (BNTX) — BioNTech’s U.S.-listed shares rose 2% in the premarket after CEO Dr. Ugur Sahin told The Wall Street Journal its coronavirus vaccine candidate could be ready for approval by December.


Nvidia (NVDA) — An analyst at Rosenblatt Securities hiked his price target on the chipmaker to $500 per share from $400, implying an upside of 18.9% from Thursday’s close. The analyst said a “secular shift” into data-processing units and the company’s “entrance into new markets” will drive revenue growth for Nvidia in the years ahead.


Amazon (AMZN) — Citigroup raised its price target on Amazon to a Street high of $3,550 per share from $2,700. The new price target implies an upside of more than 11% from Thursday’s close of $3,182.63. The analyst said Amazon’s share price will keep rising as the e-commerce market continues to grow.


Sector ETF Performance Friday 7/10/20 11:10 am


Sectors/Indexes Up:

Banks +2%, Energy +2%, Airlines +2%, Defense, Mat'ls, Builders,

Utilities, Transports all +1.2%


Sectors Down:

All of them. Banks -4%, Energy -4%, Airlines -3.5%, Builders -2.5%,

etc....





Select Stock Performance Friday 11:10 am


STOCKS UP

Roku +5.5%, AAL +4.3%, KB Homes 3.8%, NFLX +3%


STOCKS DOWN

SNAP -2.8%, TSM -2.4%, PYPL -2.4%, REGN -2.2%




*This list of "Select Stocks" represents key companies in each sector we track. They are meant to be bellwether indicators. 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 unusual volume.





FOUR HOT CHARTS


Note: the horizontal blue lines on the chart show support/resistance areas - they can be used as possible sell stops.



ROKU - Climbing up, now +160% past 3 months:






Tesla soaring past 1400... Remember 420?






Alibaba straight up on China strength:





NETFLIX - JUST A ROCKET LATELY...







NEWS LINKS

FRIDAY MARKET ACTION


GILEAD’S REMDESIVIR REPORTS 65% LESS MORBITY IN TRIAL


WHY IS GOLD GOING UP WITH STOCKS?


MICROSOFT DOMINATES ALL THE ACTION


BIDEN WIN COULD BE POSITIVE FOR STOCKS: JP MORGAN, TRUMP POLLS SLUMP NOT HURTING STOCK MARKETS


DR. GOTTLIEB: 1 IN 150 AMERICANS HAVE THE COVID VIRUS



TOP 3 SECTOR PORTFOLIO UPDATE

As of 7/10/20 the Top 3 Sector Portfolio is UP 127% from the 12/24/18 market low (1.5 years). The SP500 is up 34% same time frame. We are beating the SP500 benchmark by 93%.

Our #1 holding is QLD - 2x Nasdaq etf, now up 181%, #2 ARKK +129% and #3 is Biotech XBI up 77%.


On 7/10/20 we sold 100% of TWM.

Buy/Sells


New Buys: TWM on 7/7/20 @ 10.41



New Sells:

SDIV - S. 100% ON 7/9/20 @ 11.18 (1.4% Gain)

TWM - S. 100% on 7/10/20 @ 10.62 (1.7% gain)

Sell Stops:


TWM - S. 100% @ 10.63 (Triggered @ 10.62 on 7/10/20)

TOP 3 SECTOR PORTFOLIO

Gain from 12/24/18 to 7/10/20

ETF SECTOR PRICE 12/24/18 % Gain

Index Allocation 34%

QLD (28%) Nasdaq 2x 58.52 181%

IVW (6%) SP500 Growth 140.49 53%


Index Subtotal: 163%

Sector 57%

ARKK Ark Innovation 35.34 129%

XBI Biotech 65.42 77%

FDN Internet 107.21 70%

SOCL Social Media 26.60 77%

BOTZ Robotics 16.33 B. 12/26/18 52%

IGV Software 214.22 10/30/19 39%

Sector Subtotal: +87%

Dividend Stock 9%

VIG Divid Apprec 2% Div* 90.55 B. 12/26/18 31%


Dividend Stock Subtotal: 31%

International 0%

International Subtotal: 0%


TOTAL RETURN: +127% SP500 +34%

from 12/24/18 low Beating SP500 by 93%


TOP 7 STOCK PORTFOLIO

From 12/24/18 Low as of 7/10/20

Stock Company Price on 12/24/18 % Gain

AMZN Amazon 1343.96 +137%

SBUX Starbucks 60.56 21%

MA Mastercard 174.65 68%

MSFT Microsoft 94.13 126%

BLK Blackrock 436.33 B. 3/30/20 26%

Total Return +106% SP500 +34%

from 12/24/18 low Beating SP500 by 72%


TOP 7 STOCK PORTFOLIO UPDATE

Note:

We recently sold AMT, and now Verisign, but will wait until the current downtrend is completed before selecting two new stocks to bring the total to our namesake. So for now it's the "Top 5 Stock Portfolio" Will advise when we add them.


New Sells:


VRSN - S. 100% on 6/25/20 @ 199.20 (13% gain)


New Buys:

Sell Stops:


BLK - S. 100% @ 540.35









HOT CHARTS TO WATCH -Updated 7/3/20


Featuring: QLD 2x Nasdaq, Biotech etf XBI, LULU, DATA DOG, NFLX, ARKK, WMT, SDIV, BOTZ, JETS, BOEING


Chart Key:


Green line: 21 Day Moving average (or weekly depending on chart)

Orange: 50 DMA

Purple: 100 DMA

Red: 200 DMA


Blue horizontal lines represent support or resistance, can also be used for incremental sell stops.






QLD - Up 112% in the past 3 months. Our #1 holding in Top 3 Sector

Portfolio, and up +234% past 3 years. Made a new high on Thursday 7/2/20.








XBI BIOTECH etf: up 81% now off the 3/23/20 low - breaking out:






SDIV pulls back off that 100 DMA (purple line)






ROBOTICS ETF - BOTZ






AIRLINE ETF - JETS HAD A GREAT RUN, BUT....






BOEING PULLING BACK:







LONG AND SHORT TERM RETURNS -

TOP 3 SECTOR/TOP 7 STOCK PORTFOLIOS



Let's look at how the Top 3 Sector Portfolio and Top 7 Stock Portfolios have done in the short term and long term periods.


Recent studies on stock performance have shown that looking

at both 12 month and 3 month (or 6 month) returns reveals the best candidates for future price appreciation.


Link: Seeking Alpha: 12 month and 3 month momentum strategy performs best


The first time period is short term from the 3/23/20 most recent low (3 months), the 2nd - longer term - from the 12/24/18 low

(1.5 yrs) to today (6/13/20).




SHORT TERM RETURN



SECTOR PERFORMANCE FROM 3/23/20 (3 months)

(as of 7/3/20)



#1 ARKK +115%, #2 QLD 112%, #3 Builders ITB +90%,

#4 GDX +76%, #5 SOCL +68%.


The SPY is up 40% from the 3/23/20 low.








STOCK PERFORMANCE FROM 3/23/20 (3 months)


#1 PENN +216%, #2 Datadog +207%, #3 Square +183%


Clearly the Builders were kings of the last 3 months, with KB Homes up 159%, Toll +129%, Casinos - IGT 124%, Digital payments -Square +183%, PYPL +108%.







LONG TERM RETURN - From 12/24/18


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 6/19/20.


The QLD is #1 up 163% for past 1.5 years. #2 ARKK +112%, #3 Semis

SMH +89%, #4 Software IGV +82%, #5 XBI +73%.


Worst: Airlines -38%, Energy -31%, and Banks -14%. Airlines now

trail the SP500 by 71% in past 1.5 years. That is BAD.


The SP500 is now up 33% from the 12/24/18 low.







Best Performing Sector ETFs Past 3 Years


ETF Rating* 3 Yr Avg (% per yr)


QLD 589 48% avg gain per yr

ARKK 524 42%

IGV 363 30%


SMH 299 32%

FDN 278 21%

XBI 238 21%

SOCL 253 22%


ITB 161 26%


*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


Leading:

#1 Roku +326%, #2 Tesla +309%, #3 AMD +214%, #4 NVDA +203%


Lagging:

Macy's -75%, UAL -59%, HAL -50%, Boeing -44%.


SP500 is up 33% 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 588 26% Avg Gain per Year

SQ 300 76%


NVDA 284 43%

AMD 240 73%

PYPL 238 43%

AAPL 210 44%


TEAM 192 73%

FTNT 174 53%

MSFT 172 39%

AMZN 167 36%

ADBE 160 48%


FB 146 28%

VRTX 135 49%

ATVI 130 26%

MA 122 44%

NFLX 128 39%










HERE ARE ALL THE ETFs IN TOP 3 SECTOR PORTFOLIO

Updated 7/3/20


Note: We use the same moving averages on all of our charts. They are as follows, for both weekly and daily charts:

Green line: 21 Day Moving average (or weekly depending on chart)

Orange: 50 DMA

Purple: 100 DMA

Red: 200 DMA


The blue horizontal lines on each chart show areas of support

and/or resistance. They can also function as sell stop levels depending on the stock or ETF.


Click on chart to enlarge:



QLD - 2x Nasdaq ETF - a favorite in the Top 3 Sector Portfolio:







IVW - SP500 Growth etf, the best of the SP500 Growth stocks,

and beating the SPY by 4%, up 36% off the March 23 low.






Ark Innovation - ARKK






Software - IGV:







Biotech XBI:







Internet etf - FDN - The FANG






Social Media SOCL -







DIVIDEND APPRECIATION ETF - VIG:





SUPER DIVIDEND STOCK ETF - SDIV - 12% DIVIDEND:









LONGER TIME FRAME - BONDS VERSUS STOCKS -

WHO WINS IN PAST 10 YEARS?


For the last 10 years, the SP500 is up 11.5% per year, and

+13.5% per year with reinvested dividends.


The SP500 has risen +193% in the last decade, but is up 255% with re-invested dividends.


Even more impressive: From the March 2009 market bottom to today (2/17/20), the SPY is up 335%, but up 438% with reinvested dividends. It's had a 17% annual return in the past 10 years.


20 year treasury bonds (TLT) have given you a 6.5% avg return

per year (including its 2.3% yrly yield).


TLT is up 39% in price for 10 years, and up 25% in yield, for a total return of 64%. The SP500 is up 438% in the same time frame with reinvested dividends.


We'll take the SP500 return over any bond, any time frame.

And it is the U.S. market has been the place to invest, rising 13.5% a year for the past 10 years, versus the world index (EFA) up 5.5% and Emerging Mkts' dismal 3% gain per year.






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 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 market bottom to today, 1/26/20, roughly 12 months.


The second period is the past 6 months (8/5/19 to 1/26/20). August 5, 2019 was the summer low.


Past 12 months





Past 6 months





Let's look at the first chart (12/24/18 to 1/26/20) the past 12 months:

Best 3 ETFs past 12 months:

2x Nasdaq QLD +128%, Semi's SMH 82%, Builders ITB +70%

When you look at Table 2 - (past 6 months) we see:​

Best 3 ETFs past 6 months:

2x Nasd QLD +47%, Semi's SMH +36%, Builders ITB +25%


Note the QLD, Semi SMH and ITB builders are in the top 3 for both time frames.

Point being, that the Top 3 that emerged in the longer 1 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 12 months are up an average of 93%, but the average of the next tier of 3 drops to 56%.

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.

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 (49%).

For instance, as seen above, as of 1/26/20 the SP500 is up +39% for 2019. But the Semi etf SMH is up 82%, with Home Bldrs ITB +69%.

Yes, sectors always outperform indexes.

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 (Europe and Emerg Mkts - only IEMG now)

As of 6/14/20 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 25% the past month, with a dividend of 2%.

Divends are taxed at only 15%, as opposed to interest, which is taxed at your current income level.

The power of re-invested dividends for total return is simply amazing.

From January 1990 to today (2/18/20 as of this writing), the SP500 is up 869%. Not too bad for a 30 year return.


But wait, add in dividends reinvested, and that SP500 return rises to an astonishing +1,691%!

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 6/14/20:


#1 SDIV - Super Global Dividend Stock etf up 40% with a 12% yield.

#2 NOBL - Dividend Aristocrat, yld 2.3% up 36%

#3 SCHD - Schwab Dividend Equity, yld 3.5% up 32%













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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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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