Worry less | Enjoy more
We invite you to call us to discuss how this data informs our strategy and how a ZENdex Portfolio could be a powerful addition to your overall investment mix. We weigh the data below heavily when developing our portfolio strategy, in which we aim to maximize the relationship between performance and protection while minimizing taxation.
ULTRA-CONSERVATIVE | BOND REPLACEMENT | GROWTH | MANAGED OPTIONS
S&P 500 RELATIVE TO ITS ALL-TIME HIGH
On February 24th, the S&P 500 had declined 14.61% from its all-time high. As of March 1st, it was 10.63% below its all-time high. The current correction has endured for 56 days.
When the market is down, liquidating protective hedges that have increased in value in exchange for less expensive ones is an action that both generates cash and simulates buying additional shares at lower prices.
This can make a “spring-loaded” rebound possible while simultaneously producing distributable income to clients without selling shares.
For our ZENdex portfolios, this is the picture of opportunity.
S&P 500 RELATIVE TO ITS MOVING AVERAGES
The S&P 500 is below its daily and weekly averages1. These conditions have presented our ZENdex portfolios with some nice tactical opportunities.
The S&P 500 remains about 21% above its monthly moving average, where a reversion to the mean would represent a significant opportunity.
TREASURY YIELD CURVE VS CONSUMER PRICE INDEX
Risk-free rates of return2 are much lower than the rate of inflation3. The real rate of return is therefore negative across the entire yield curve.
Negative real interest rates render fixed income unattractive as an asset class for money seeking a return.
A ZENdex portfolio can address the prevailing problems associated with fixed income.
THE PHILLIPS CURVE
Compared to January, the unemployment rate has ticked up from 3.9% to 4.0%, while inflation has jumped from 7.0% to 7.5%6.
Historically, fighting inflation has increased the risk of recession and put downward pressure on the stock market.
A ZENdex portfolio may position you well to take advantage of this.
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To find out more about how Thomas Financial can help position your portfolio to take advantage of market volatility, please email firstname.lastname@example.org or call us at (813) 273-9416.
- Source: thinkorswim desktop trading platform.
- Source: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/textview.aspx?data=yield
- The measure of inflation is the year-over-year change in the Consumer Price Index (CPI). Source: https://www.bloomberg.com/markets/economic-calendar
- We are displaying inflation as measured by the Consumer Price Index (CPI). It’s worth noting, however, that the Federal Reserve states its goal for inflation in terms of the Personal Consumption Expenditures (PCE), which is highly correlated to CPI but can generate different readings. The PCE can be found here: https://www.bloomberg.com/markets/economic-calendar. For more information on how CPI and PCE differ, you can go to: https://www.clevelandfed.org/newsroom-and-events/publications/economic-trends/2014-economic-trends/et-20140417-pce-and-cpi-inflation-whats-the-difference.aspx
- https://fred.stlouisfed.org/series/UNRATE. For our purposes, we are considering full employment to have been when the unemployment rate was at 3.5% just prior to the pandemic. Because the Federal Reserve considers many variables in arriving at what it ultimately deems to be “full employment,” the unemployment rate that represents full employment can, itself, be a moving target.
- Source: https://www.bloomberg.com/markets/economic-calendar