SUMMARY. From the prior week little has changed in our thesis. The trends in financial markets continued as "Growth" ie technology continues to outperform "Value" ie cyclicals (which we are overweight in our model portfolios). Courtesy of Bloomberg (thru August 2020) this trend is almost at unprecedented levels with the last time this occurred was the tech bubble of 2000. Valuations of the 2 sectors HAVE NEVER BEEN WIDER IN RECENT DECADES.
INVESTMENT IMPACT. In our prior note we outlined 2 possible scenarios in regards to money flows this Fall. In light of the above, we reinitiated "hedge" positions to protect models against downside risk as we enter September. Although this has cost short term performance we deem it warranted given the above until better clarity on vaccine timing & elections. Overall, we remain overweight high conviction companies & sectors (cyclicals & Brazil) that would benefit from successful vaccine trials leading to a broader reopening of the economy.
Our model portfolio performance has been updated on our website as of 7/31/20.
For more insights see our website and disclosures found there at BCA. As always contact us for further explanation of how these events can affect your finances. To unsubscribe from our newsletters & website please email us with "unsubscribe" in the subject.