Blitz Index Update
What is it?
The blitz index is a tool based on the book by legendary investor Martin Zweig. There he outlines his Combined Super Model that helped him navigate markets and outperform on a consistent basis.* We took parts of that and updated it for more recent conditions like current average interest rates as opposed to the 8% interest rate that was relevant in the 80s and 90s. Using the blitz index, we look at market performance and economic conditions which gives us a score. That score provides an idea of how bullish (+) or bearish (-) the markets may be.
Why does it matter?
In September, the Blitz Index moved from 50% invested to 0% invested as market performance was down a considerable amount, and economic conditions have not improved. This is in line with our viewpoint on the market reflecting the cash equivalent positions we are maintaining.
Cheap Gets Cheaper
What is it?
Over the last few weeks, investors that tried buying the broader stock market ETFs have not seen positive returns as markets continued lower. Some markets across the world have been down nearly 50% from their all-time highs such as the iShares MSCI South Korea ETF (EWY) shown below.
**Yahoo Finance
While some people bought in with the hope of a rebound long term, they could be stock holding losing positions longer than expected as broad markets continued down further.
Why does it matter?
While some assets have appeared cheap relative to all time highs, they seemingly have gotten cheaper. The market environment is still contracting, and we have not seen a noticeable rally that would show positive market sentiment. We are not trying to “catch a falling knife” as some investors may say when the market is declining.
Our approach has led us to hold more cash and avoid some of the total decline that markets have seen in recent weeks. We have also seen positive returns on some positions that are more tactical such as individual stocks, sectors, or securities that are not correlated with the overall market.
Other articles we found interesting this week:
Stocks plunge after relief rally falters
Is the market correction over already?
Mortgage rates race toward 7%, hit 15-year high
Current 401(k) portfolio
Our last portfolio reallocation: 5/19/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
Click here for more details about our investment management
Sources:
*Martin Zweig. “Winning on Wall Street”. 12/12/1970. Grand Central Publishing.
**Yahoo Finance. “EWY Chart”. 9/29/2022. Yahoo Finance. https://finance.yahoo.com/quote/EWY?p=EWY
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