Nothing’s changed, yet so much has. The Value of Evolution. Taxi or Uber? Investment management meets Perfect Day.

October 2016 was a pivotal time—for you and for me. And, yes for markets.

In the wake of the Flash Crash & Chinese Currency Devaluation in the Fall of 2015 followed by Q1 2016’s precarious teeter-tottering of indicators and markets that smelled an awful lot like 2008 I recognized that having tripled a practice in 7 glorious years I had a a growing responsibility on my two shoulders and a decision to make: Staff up or merge were my choices.

Q4 2016 I took the plunge and merged with WEP/Wealth Enhancement, a larger firm in Atlanta. I chose to merge because ultimately I’d rather manage my clients, their expectations, and their needs than that of a growing staff.

Change is inevitable—and as we see daily in our lives and in the lives of industry and commerce around us, evolve or die feels true to me. Evolve, or die–fiscally and spiritually, perhaps.

Fresh off a trip to the Big Apple taxis come to mind. A WHAT? A Taxi? Why? The value of a NYC taxicab medallion has plummeted from $1.3M in 2014 to foreclosure sales of $150- $450k. The reason? You guessed it—UBER. Evolve or die.

“I worked hard,’’ he said. “I achieved my American dream and it turned into a nightmare.” This from a NYC yellow cab driver as shared by Winnie Hu of the New York Times. Hard work is not good enough. Evolve or die–it also feels true to me that a dream turning into a nightmare may be worse than death.

Amazon Prime. How many pick up lanes can you spot at Walmart, Target, or Harris Teeter? Evolve or die.

Kodak, VCRs, landlines. Done. Wall Street with its feet on the desk waiting for the phone to ring. DONE.

Retirement planning for a day in the future that may never come. DONE.

Strategic financial planning–seeking more financial assets today, without regard for Victor Frankl’s “mans search for meaning,” is a doomed exercise in futility:

“Don’t aim at success. The more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side effect of one’s personal dedication to a cause greater than oneself or as the by-product of one’s surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long-run—in the long-run, I say!—success will follow you precisely because you had forgotten to think about it” 

So WEP/Wealth Enhancement & Preservation meets Ms. Perfect Day. Me. EVOLUTION.

From an investment committee of one to merging with a larger team allowing me to operate in my sweet spot of shepherding those seeking something greater than the next best investment return. Together we have achieved:

• Navigating the wicked volatility (VIX +81% YTD!) we’ve seen in 2018
• A full-time portfolio manager who has off-loaded “button-pushing” from my daily and weekly routine
• A Bond Strategy that offers strategic and tactical advantages for a precarious rising interest rate environment
• 3 locations that support me in my life’s message of “Perfect Day” a get it done office (Atlanta), a home office (Charleston) and a lifestyle office (Silverton, CO).

Where are you? Let’s play. Lets grow. Lets Evolve. Evolution – albeit scary – looks good from where I sit.

Market Talking Points:

• Indicators – “Bullish Percent for NYSE” (the mother-load, for me, of all indicators) is near the middle of the field but is in “Bear Confirmed” status, which has led our team to weed weak names out of our models/portfolios. It also tells us that we have approached a red light. Those seeking to put new money to work need to be more selective as the market narrows here.
• Trend – Long Term Trend for US Equities is still positive. “Percent Positive Trend for NYSE” is still north of 50% at 58%. The 50 point chart for the S&P 500 remains on a buy signal and in a positive trend, as well. It hasn’t been on a sell signal since it completed the “shakeout” in July 2016. Although the long term indicators are still positive, we still need to pay attention to the short to intermediate indicators, which suggest more defensive postures, especially for shorter term investments.
• Leadership – US Equities continues to lead DALI and are ranked high the Group Scores Ranking. Three out of the top four Macro Groups are US Equity related – All US Small Cap, Cap Weighted Asset, and S&P 500 Index Funds. Emerging Markets Diversified is in first place.
• Cash – The Money Market Percentile Rank continues to float around 12% and primarily Fixed Income assets rank below Money Market here. One change we have seen is the strength of International Fixed Income over Domestic Fixed Income. That said, there was a flight to quality on Monday, as yields came down and US Treasuries rose in price, which means we are seeing a little flight to quality that we didn’t see in the February sell off. It’s still early and the rankings haven’t shifted, but we’ll continue to monitor this relationship and area going forward.
• Volatility – With volatility back in the market place for the first time in years, the benefits of diversification have increased. With yesterday’s market action, most areas of equities (both international and domestic) were in the red, yet certain pockets of Fixed Income and Alternatives held up. While these areas are not leading asset classes, they may serve to help reduce the impact of equity volatility in a portfolio going forward. If emotion is creeping in the door, take a step back and remember your discipline. Your rules based process will guide you as to what actions are necessary to help remove any potential emotional selling, or buying. Take advantage of some in-classroom learning in Vegas at the broker institute! It’s a month away making it a timely opportunity to review (or learn) about the Dorsey Wright methodology. See here for more details.

DWA Sector Performance Review – Q1 2018

Q1 2018 is in the books. Although it was a volatile one, there were still some sectors that exhibited positive performance, but the majority of the market was down. In Q1 2018, the S&P 500 Index SPX  fell -1.22%, which is the first down quarter for the SPX since 2015. The S&P 500 Equal Weighted Index SPXEWI fell -1.46%. Only three sectors managed to outperform the SPX and SPXEWI; Technology DWAECTECH, Healthcare DWAECHEALTH, and Financials DWAECFINL. Technology was the strongest, up 4.83%, while Healthcare was in second, up 4.22%. Financials was up 0.38%. Two out of the three sectors that outperformed the market (Financials and Technology) are ranked in the top of the DALI Sector Tally Ranking.  Out of the 11 sectors, eight underperformed both benchmarks, which meant that not only did they trail the market, they were also in the red. The worst performing sector was Energy DWAECENERGY, down -8.65%. Real Estate DWAECREALEST and Utility DWAECUTILITY, two interest rate sensitive sectors, were down -7.79% and -4.82%, respectively.