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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 Death of 60:40 & TINA— “55:35:10”
September 27, 2022

Normal is nebulous. The 2000-2019 Normal was much worse than the 20th Century Normal! 

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 reviews 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.

Since Jan 2020, Arrow Insights has affirmed this statement in InFocus:

“Arrow Insights favors global assets, moderate risk asset allocations, and managed futures. Our rationale is Investors should hold high-quality securities and significant cash while employing macro investment strategies. Arrow strategies tend to perform best when macroeconomic factors are volatile and more uncertain, which causes asset return dispersions to rise. Arrow Insights favors global assets, moderate risk asset allocations, and managed futures. Tactical global macro portfolios, which include managed futures strategies, are expected to best a traditional 60% S&P 500 and 40% domestic bond portfolio (Trad6040).”

We might as well have pronounced the Trad6040 dead! It isn’t dead. It will shine again someday, but for the foreseeable future, we would retool 60:40 by taking 5% away from the S&P 500 and 5% from domestic bonds; and then redeploying 10% to the Dunn Managed Futures Strategy (DWMA) to construct 55:35: 10 DWMA or allocate 10% to the Dorsey Wright Tactical Global Model (DWTA). Figures 1 and 2 compare the Arrow 55:35:10 solutions for retooling Trad6040 for a future that Arrow Insights expects the past year and the historic stagflation periods than the past 10- and 20-year periods.

 

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