Current Positions:
High Conviction Tactical Models*1:
Developed International Stocks: 100% Invested
High Yield Bonds: 100% Defensive
US Stocks: 100% Defensive
Investment Grade Bonds: 100% Cash Equivalents
Managed Risk: Approximately 1.1% in the money (LEAP Put strike price)
Equity Portion of Defensive Alpha Models*:
33% Bullish Posture†
Recent Trades
If you’d like to set an appointment to evaluate the risk mitigation preparedness of your clients’ portfolios, set a time for a quick review with our Behavioral Investing team by clicking the Calendly link here.
We began moving our High Yield Bond Positions defensive on Wednesday of last week. On Friday we completed those trades and started the year fully defensive in High Yield Bonds. This trade follows our exit a week earlier from US stocks. Currently, we are fully defensive except for our International Developed Stock positions, which have been advancing despite the recent downturn here in the US.
Our Managed Risk model began the week approximately 1.1% above its put strike price (we rolled the leap lower at year end)
Market Environment
A decent number of market strategists are predicting a recession in many parts of the world in 2023. It is worth remembering, however, that capital markets tend to lead the economy. Often markets can turn higher even as the economy and the labor market deteriorate. As we mentioned in last week’s update, however, stock valuations suggest that the market decline has further to go.
Our advice, regardless of market direction moving forward remains:
- Leave conventional bonds in favor of unconstrained bond strategies that can move to ultra-short duration bond positions, TIPS, or High Yield Bonds to attempt to minimize principal losses.
Our specific advice regardless of market direction moving forward remains:
- Move at least half of stock portfolios to hedged equity strategies that attempts to shift from market falls but have the ability to attempt to capture the rebound once the market bottoms.
- Leave conventional bonds in favor of unconstrained bond strategies that can move to ultra-short duration bond positions, TIPS, or High Yield Bonds to attempt to minimize principal losses.
We’ll keep you updated as our models react to market moves coming into the new year.
Happy New Year!
Toews Management Team
All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.
This commentary is intended to provide general information only and should not be construed as an offer of specifically-tailored individualized advice, and no representation is being made as to whether the information provided herein would be beneficial for any or for a specific Employer Benefit Plan or investor.
For additional information about Toews, including fees and services, send for our disclosure statement as set forth on Form ADV by contacting Toews at Toews Corporation, 1750 Zion Road, Suite 201, Northfield, NJ 08225-1844 or (877) 863-9726.
(1)These include the Toews Capital Preservation, Balanced, Balanced Income, Balanced Growth, Growth, and All Equity, High Income, Balanced Income, and Conservative Income portfolios. They do not reflect the allocations of these strategies that are not allocated to Toews Funds.
(*)Exposure to vehicles invested in the listed asset classes
(†)Approximate Defensive Allocation