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4Q19 Model Portfolio Update

December 2019

Dear Client,

Summary. Overall, given our 2020 outlook for an acceleration in growth (particularly in Asia) tied to the Phase 1 trade deal, high expectations for that growth and low interest rates we continue to be weighted towards value dividend paying stocks vs growth stocks. During the 4Q19 our Growth models shifted allocations to EV (Electric Car) oriented stocks because they they not only match our Framework or assumptions for 2020, but of their value and dividend paying orientation. Further, given their relatively high (in some cases) exposure to Asia as well. In re-allocating our portfolios (mostly growth oriented ones) to the EV segment we reduced our Asian ETF exposure to compensate.

Details. Our assumptions on the EV market revolve around negative sentiment tied to falling Lithium prices & EV demand in China. We deem these as temporary tied to subsidy cuts and trade malaise. In addition, EV penetration at 2% globally of total car sales can potentially rise significantly in the coming years given the 5X increase in models being release by manufacturers, lower prices and better range & storage space as batteries shrink. Many of the positions added are tied to Lithium or Nickle which may see higher demand given they are key components to batter production for EVs.

In addition, to EV segment we added 2 Chinese telecom stocks to our portfolio given their potential lower volatility and high dividends. We did this as we reduced our China ETF exposure to potentially reduce risk.

We added significant exposure to a preferred dividend ETF which pays a relatively high dividend vs ST bonds to achieve higher overall yields across the portfolios. Lastly, towards the end of the quarter we began to increase cash levels & reduce stock exposure tied to high expectations of global growth acceleration tied to the Phase 1 trade deal.


Leonard Brecken

Founder/Portfolio Manager

Brecken Capital Advisors, LLC

Brecken Capital Advisors, LLC (“BCA”) is a fee only Investment Adviser registered with the State of North Carolina. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy, or the completeness of any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions. Please contact us at 917-701-5231 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend you compare any account reports from BCA with the account statements from your Custodian. Please notify us if you do not receive statements from your Custodian on at least a quarterly basis. For more insights see our website and disclosures found there at BCA.

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