Current Positions:
High Conviction Tactical Models*1:
Developed International Stocks: 100% Cash Equivalents
High Yield Bonds: 100% Cash Equivalents
US Stocks: 100% Cash Equivalents
Investment Grade Bonds: 100% Cash Equivalents
Managed Risk: The LEAP Put Price is 0.80% in the money (at the close)
Equity Portion of Defensive Alpha Models*:
100% Defensive Posture†
Recent Trades
We recently completed our move to a defensive posture in US and International Stocks. We completed our move defensive in International Stocks on September 2nd, and completed move to a fully defensive posture in US Stocks on Tuesday the 6th.
Market Environment
Bitcoin and the 10 year treasuries may be keys to market direction moving forward. Both may be suggesting further drawdowns with a looming bitcoin crash below this year’s lows and the 10-year yield threatening to pierce it’s yearly high.
What investors are not thinking about is that if we break to new lows, there’s an increasing probability that hidden weaknesses are revealed that potentially cause an orderly decline to become disorderly. For a preview, just look at the carnage in crypto world as values drop. One firm collapses and three others wake up to broken balance sheets, and so on. We don’t have the same systemic weaknesses in the system that we did in 2008, but cascading failures are a natural part of lethal downward momentum, and tend to be what causes volatility to spike.
If we break through this year’s lows and negative momentum lurches higher, investors could be shocked, especially if bonds continue to move lower in tandem. The key, or course, it not making the market call, but preparing for the contingency of the effects of war, inflation, and falling markets.
Use rallies to sell into hedged equity strategies, and move out of conventional fixed income positions into unconstrained bond strategies constructed to attempt to get out of the way of bond principal losses.
We’ll keep you updated as our models react to market moves.
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