How tactical investing can maximize a bull market

John Hintz Photo - resized for HubspotYesterday’s record setting performance in the stock markets provided a prime example of how tactical investing can be used to capitalize on market momentum.

When the Dow Jones Industrial Average surpassed the 21,000 mark for the first time ever, we reaped the benefit. The S&P 500 was up 1.37% for the day. Approximately 80 – 90 percent of our client’s assets remain invested in global stocks with specific concentration in the US stock market.  (A typical allocation within our industry is 50% stocks, 40% bonds and 10% cash).  We have maintained a very bullish stance towards stocks since early fall and this positioning has benefited client accounts.

In anticipation of President Trump’s first address to the joint sessions of Congress, in which he vowed to increase infrastructure spending, we positioned our accounts to be overweight stocks that would benefit specifically from this pledge, including those related to building and maintaining new roads, bridges, railways and highways.

We reasoned that, after years of only monetary stimulus, the markets would be positively encouraged by the Trump Administration’s plan for a large fiscal stimulus plan.

President Trump also discussed the de-regulation process already in play, which had a very positive impact on the Financial Sector. Also boosting this sector were increased expectations of a Federal Reserve interest rate hike due to favorable economic data, and positive takeaways on economic growth.  We have been overweight financial stocks since the beginning of November and we continue to benefit from this positioning.

In addition to the President’s speech, the markets rose on positive economic news from three fronts:

  • China’s manufacturing PMI came in higher than expected
  • European markets closed up significantly, helped by some strong company earnings and economic data
  • The majority of yesterday morning’s earnings reports were positive

Energy stocks also got a boost from a very bullish analyst meeting held by Exxon Mobil, whose outlook for the energy industry and, specifically, shale oil assets in North America, remained positive.  We have a strategic overweight to shale oil and experienced a very positive reaction in these stocks on the heels of this meeting and the positive comments on the future for shale assets.

We have a whole team of investment professionals who track the markets and monitor portfolios. Our advisors are also closely watching client accounts and meeting with the investment team to discuss client goals and targets.

Within every department at Winch Financial, our focus remains on our clients.