Stocks were flat this morning as investors processed a bevy of economic data. With optimism fading that the Federal Reserve will be able to tame inflation without causing a significant slowdown to the economy, market expectations for the rest of the year remain unclear.
Today we’ll discuss the risk-on/risk-off strategy that allows investors to maintain exposure to equities when the environment is positive and mitigate the extent of drawdowns while remaining invested as much as possible.
Bezos, Musk, and Yellen Planning Behind the Scenes [$150 Trillion]
While most Americans were distracted by mainstream media headlines predicting a stock market crash…
PhD Investigative Journalist Nomi Prins found evidence that shows the elites are spending trillions of dollars to “transform” the economy.
Jeff Bezos and Elon Musk have pledged billions of dollars to make it happen…
And Treasury Secretary Janet Yellen is working with 131 countries, 234 cities, and 695 of the world’s biggest companies –including Bank of America, Nike, and Exxon Mobil –to overhaul everything about the American way of life.
Go here right now to see what it means for your family and your money
Global X Adaptive U.S. Risk Management ETF (ONOF) is designed to maintain exposure to the equity markets when the environment is positive, and then move to a risk-off position when that trend reverses. The passively-managed portfolio provides exposure to the S&P 500 when conditions look favorable, but rotates into 1-3 year Treasuries when market conditions look bad. The strategy seeks to mitigate the extent of drawdowns while remaining invested in equities as much as possible.
The methodology for this fund is a little more complicated than what you find in the typical ETF. The idea is that it looks at various technical indicators to make an allocation decision. The index is based on historical data from two short-term indicators: Moving Average Convergence Divergence (MACD) and the level of the CBOE Volatility Index (VIX), as well as two long-term indicators: 200-day Simple Moving Average (SMA) and market drawdown percentage.
The trigger threshold for each signal is based on a predetermined Z-score. If the portfolio is in equities, it takes three negative indicators to switch the exposure to Treasuries. Once in Treasuries, it takes two positive indicators to switch to equities, thus, creating a higher hurdle to get out of the market than it is to enter. Based on the strategy, turnover in the portfolio should be higher than a buy-and-hold approach.
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“Card-Sized” Battery Set to Blow Lid off the Electric Vehicle Industry
This tech company’s new EV battery is so small and light, experts predict it may spur 1,000% growth in EV sales. Watch this stock.