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John Serrapere publishes a weekly newsletter which includes in-depth research, charts & graphs and insights into current and past markets. Click the below links to view a preview of what the weekly inFocus newsletter has to offer. To view this week's entire newsletter as well as all past newsletters, you must create an account. 

Highlights

Inflation Risk Dominates
November 9, 2021
This week, three alternative versions of the S&P 500 Index (SPX) are InFocus: the traditional capitalization (Cap)-weighted SPX, the equal-weighted, and the reverse-cap-weighted version.

Volatility Will Rise
September 21, 2021
For the rest of 2021 and beyond, markets are going to be very volatile. The Fed is going to make money worth less. How do we hedge? When stocks are at a reasonable value, they are a hedge against high inflation.

The FED Is Complacent or Clueless on Inflation Risk!
February 18, 2021
Arrow Insights favors global assets, moderate risk asset allocations and managed futures. Our investment rationale is based upon sustained weakness in the U.S. Dollar ($USD) attributable to yield repression policies enforced by the U.S. Federal Reserve (Fed) and excessive money supply growth due to money printing.


InFocus

The Equity Risk Premium
& Value Stocks

January 31, 2023

Introduction

Arrow Insights (A.I.) conducts research for the weekly InFocus. A.I. reviews economic and market factors relevant to specific financial markets. Each InFocus examines asset classes and index performance within an asset allocation context. The primary or secondary objectives are hedging Inflation, deflation, or both. Each InFocus reviews a portfolio strategy model or index relevant to this process.

The Reverse Cap Weight S&P 500 (RCWI) is InFocus. The S&P 500 (SPX) weights each stock in proportion to its market capitalization. RCWI provides investors with more exposure to small-cap and mid-cap firms within SPX by weighting each stock reciprocally to its market cap. As a result, small- to mid-cap stocks have more representation within RCWI relative to SPX, while large-cap stocks have less representation. The S&P 500 Equal Weight (SPXEW) equal weights each stock in SPX. Returns for each index in various periods are shown in Figure 1. Figure 2 displays performance metrics for an equal allocation (rebalanced annually) to each index (Alt-SPX_EqWt, RCWITR, and SPXEWTR on a total return basis since Jan 1, 1997). 

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