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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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How to Help Your Clients Invest Comfortably with Markets at All-Time High

In talking to advisors recently, many have relayed client concerns about the markets – which is keeping money on the sidelines. Many just think they have missed the big up move with the markets near all time highs. You have to be invested to grow with the markets. The statistics show that missing out on the 5 or 10 best days of the year will harm your long term returns. Often fear prevents individuals from investing. Instead, they might try to time the market or wait for a pullback. Sometimes that never happens and they miss out on a nice bull run higher. Or they decide to sell and go to cash – only to have to buy back in later at a higher price.

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HIPOS Weekly Update: Wire to Wire Winner

Last week saw our primary HIPOS trade expire worthless – which is our targeted outcome! This generated the full profit for the clients in the strategy. Since we are short the spread, we take in premium then want it to erode to worthless. To get this entry in early January, we capitalized on a small window of opportunity to enter when volatility spiked. Shortly afterwards, the market moved higher and sideways. Thus, never threatening our defensive exit zone.

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HIPOS Weekly Update: Running Out the Clock

This week the primary HIPOS trade is set to expire. While the market gapped down this morning with a small volatility increase, the market remains safely above the purple defensive exit curve. Your clients shouldn’t expect much change in the value of the positions unless the S&P 500 Index were to dramatically move lower. As of the open this morning, the index remained over 16% above our short strikes.

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