SUMMARY. In the prior month we began explaining the significant historical differences between "growth" sector valuations vs "value" sector. This week we saw the significant correction in technology which is a large component of the growth sector. In part that correction may have been valuation related while other factors are the anticipation of vaccine availability which will reopen economy potentially benefiting those companies in the value segment. Those value names are primarily tied to economic growth thus deemed "cyclicals".
INVESTMENT IMPACT. Overall, we continue to remain overweight high conviction companies & sectors (cyclicals & Brazil) that would benefit from successful vaccine trials leading to a broader reopening of the economy. During the week we removed some "hedges" against a drop in technology or growth names and added to our "value" oriented holdings. Our decision was predicated on better economic news (payrolls to name a few) and the proximity to vaccine availability as well as valuations.
Our model portfolio performance has been updated on our website as of 9/04/20.
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