Depending on where you live and what you and your family decided, in all likelihood you’ve been in some version of “quarantine” for around a month. Despite some promising signs around potentially effective therapies for Covid-19, based on what we’ve seen thus far, I’m guessing that we’ll be pretty limited in “normal” movement for quite some time. What have you been doing with your time? Maybe, if you’re like me, you squandered the first two weeks of this quarantine, glued to the TV, horrified by the numbers and paralyzed by the market action. It’s easy to sit around and do nothing, especially when gripped by fear and uncertainty. Hopefully though, you decided to move; to get active. Personally, I dug up some old boxing gloves and sparring mitts and started working with my son, getting a sweat in. I took out some dusty dumbbells and a kettlebell rusting in the basement and started doing some circuit training. My brother and a number of friends of mine bought Peloton bikes and are utilizing this new tool to get fit during these bizarrely dystopian times. Maybe I need a new platform to get fit. Get active and come out of this stronger.
As a mutual fund portfolio manager for over two decades, I had a professional obligation to stay involved and make active market decisions. As an advisor, you probably feel the same way as you reach out to clients. Now is the time to Get Active. While I am a believer that passive investments, particularly inexpensive index funds, have a valuable place in every investment portfolio, nothing will replace your involvement in client success by staying active in your process. Differentiate yourself in this market with your clients and use tools and resources to improve your process and come out of this stronger. That’s one of the reasons we launched PortfolioWise, to help you make better active decisions around ETFs with your clients and communicate those ideas. My colleague Dan Russo blogged last week on a simple sector switching strategy that brings an active approach to managing client assets, and a great, easy to communicate message for your clients. Here is the post, Why Own What’s Not Bullish? Now is the time to get active and sell those old mutual funds with high fees and 1099 tax consequences every year. Replace those mutual funds with great ETFs you have researched and screened for. If you are already using ETFs, sell the ones that have underperformed, or tax harvest those with losses, work with your clients and buy the best ETFs that have strong future performance potential. I used our own system to screen for liquid, high AUM, bullish and very bullish, US Large-Cap Growth ETFs:
I quickly found four potential ETFs about which to call a client and discuss if I saw they had something to swap out of for tax or performance reasons. Even though SPYG is a passively run ETF (as are most of the assets in the ETF world), your active involvement is a differentiating factor with your clients. This is the time to engage and communicate with your clients, who are all looking for your leadership in what to do in this market. None of us should take more risk than we feel comfortable with, and I certainly would not advocate getting overly aggressive in this market. However, being active means taking initiative to find better alternatives to current holdings. We know that this forced shutdown of our economy will create a number of winners and losers. We all can see that Amazon is at all time record highs, whereas several energy companies will probably go bankrupt. The May WTI contract closed in negative territory yesterday. Not as in, “it was down on the day,” as in the price of delivering a May barrel of crude oil in West Texas someone would pay you to take the oil away. The price of WTI is quite literally negative for a barrel of oil (at least the May futures). On the other hand, the price of gold has been rising, and gold miners are benefitting from both the higher price of gold and the low price of oil. Diesel fuel is a large input in the mining of gold. As a tactical, and arguably even strategic idea, given the massive increase in money supply and stimulus by the Fed, I screened for gold miner ETFs:
Several names game up, but RING caught my attention as the #1 ranked fund in the materials space, with good relative strength against the S&P 500 and a Very Bullish rating in our system. There are opportunities and dangers everywhere, if you get active you can find them and thrive along with your clients. Why not try a new platform, get active, and come out of this more financially fit? Come check out PortfolioWise, you can use it after your Peloton ride.