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Interest Rates Moving Higher: What Alternatives do Your Clients Have?

The Federal Reserve raised rates last Wednesday by a quarter percent or 25 basis points. Some advisors recently have expressed concerns for clients sitting in bond funds. Others have asked about alternatives that would provide bond like returns. First, let’s review why some clients might be worried about a rising rate regime in their portfolios.

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HIPOS Weekly Update: Down the Middle

With 8 days until expiration our current HIPOS primary trade, the underlying index is in the middle range of both our short call and short put strikes. As of the close Tuesday, the Russell 2000 Index sits 8.35% below the short call strike and 10.54% above the short put strike. The index level is benefiting both sides of the positions currently.

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What a difference a year makes: Part II

Back on February 13th, we wrote about the new highs our IAS Best Equity picks strategy was making. We focused on it because of the irony that we were making all time highs exactly one year after making all-time lows in the strategy – TO THE DAY!

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HIPOS Weekly Update: Adding Some Iron to the HIPOS Diet

Late in yesterday’s trading session as the Russell 2000 moved lower, we legged into an Iron Condor position within our primary HIPOS trade. After initially establishing a short call spread position for the first time in nearly 4 years, we added a short put spread below the market. When an account holds both a short call spread and a short put spread at the same time it is called an Iron Condor. This is something most advisors utilizing our HIPOS strategy have never seen before.

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Stock Correlations at Decade Lows: Will Active Managers Finally Outperform ETFs?

A Market Watch article recently highlighted BMO Capital Markets chart showing that 126-Day Intra-Stock Correlations within the S&P 500 index. The correlations are at decade lows. Shown above, we can see that the last time correlations fell this low was in early 2006. This matters because for quite some time, active managers have fallen on tough times trying to outperform indexes. Reason being, if everything is all moving together picking the best names won’t necessarily produce any alpha.

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HIPOS Weekly Update: Bend but Don’t Break

After entering our latest HIPOS trade the underlying Russell 2000 Index has traded higher. Since we are short a call spread, we want the market to remain well below our purple roll curve. While ideally the Russell 2000 Index moves down, a benefit of the HIPOS strategy is markets can move adversely against us. Provided that move is not too far and fast.

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HIPOS Weekly Update: Calls Introduce Themselves

On Wednesday, we entered a new HIPOS primary trade. If you looked at our normal graph above, you probably wondered if we posted it upside down. Well actually this trade uses a tactic many may not have seen in the strategy – or at least advisors who have employed our HIPOS strategy after April of 2013. That was the last time we used a call spread instead of a put spread to generate premium.

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What a difference a year makes!

Friday was February 10th and on that date exactly one year ago in 2016, our Internet Advantage Strategy – Best Equity Picks reached its all time low in performance. That was a day before the S&P 500 reached its low point in 2016 also.

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