Internet Advantage Strategy: Updating the Risk Posture

August 18, 2017

UPDATE: Our Internet Advantage Strategy moved to a defensive posture for both products on Friday August 11th.

What does that mean? It means that our systems identified a signal that implies there is an increased probability that a shallow market sell-off is on the near-term horizon. Specifically, it means our systems saw that money was rotating OUT of weaker digital performers and INTO stronger digital performers. This implies that market participants were becoming more discriminating in what they were willing to own.

Market sell-offs are, by definition, the reflection of the market deciding to become more discriminating about stock ownership.

In the Equity Long/Short portfolio, the portfolios are now fully market neutral. Every investor is positioned in our bullish picks and owns bearish options on market indexes that is close to the same notional value of the bullish portfolio.

In the Best Equity Picks strategy, the portfolio is roughly 75% invested in the bullish picks. The remaining 25% is invested in inverse market ETFs on the S&P and Russell 2000. Those ETFs appreciate in value if the market goes down so they act as a hedge in the even the market retracts.

Our YTD performance numbers are current through the end of July and are reflected on the tear sheets that are online thru the end of July. The Equity Long/Short strategy is up +9.6% net YTD and the Best Equity PIcks is up +16.1% net YTD.

If you have any questions about these strategies or the posture change, please reach out to me at Wayne.Ferbert@alphaDNAim.com. Or call 443-288-6444.