VIG Newsletter July 20 Update

Tech Rotation Hurts!

July 20, 2024

Recap

Wall Street posted its worst week since mid-April, as a rotation out of tech stocks continued. It sparked by last Thursday’s consumer inflation report. For the week the Nasdaq was down 3.65%

The Vig Co. portfolio was down this week.

Performance (Weekly/YTD)

VIG Co. -7.88% / +5.53%

SPY -1.96% / +14.52%

VIG Co. Portfolio Holdings (Allocation).

VIG V4 (100%)

Notes/Charts

Here are a few things we are watching.

Symphonies. We track 8 different symphonies with live investments. Each of them has a different approach and uses different conditions. You can see all of them did poorly this week. The core reason for the underperformance was that our maximum drawdown rules did not trigger for QQQ or for bonds - as interest rates chopped around. Hence we did not move to cash (BIL).

QQQ. 60 minute chart. You can see the pullback that started on the 11th of July. We are above a short-term area of potential support. (see blue line). And we have reached oversold areas with short-term rising momentum. (see the circled areas and what happened next).

There is the potential for a bounce heading into next week.

SP500. Daily. A longer-term view. You can see the rollover in price and moving averages in early 2022 leading to a a 20% correction. And, you can see where we are now. This looks - for now - like a normal and to-be-expected drawdown coming from an extended area. Time will tell if it morphs into something more serious.

Plan

This was one of our poorest weeks since our inception. Early September of 2020 and Early January of 2022 both experienced significant drawdowns. We are not happy with it. But, it does not change our conviction regarding our approach.

We use leverage and we short the market. We have always experienced painful drawdowns and will again. We hope that over the longer term, however, we beat the market. We have done that over time.

If the volatility of our approach causes you excessive worry or anxiety, you can very easily reduce the amount of your holdings in V4 or leave altogether and seek other alternatives.

We will follow the math.

Note: Check out the updated App for Composer. (There is a link to it on the top of your Composer home page.) It works great.

Chris

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Market information from Bloomberg, ETRADE, Composer, Koyfin, and StockCharts.com.