ALLOCATION UPDATE, COMMODITIES HIGHLIGHT
Over the past few months investors in our tactical accounts at LPL have noted new investments in U.S. energy, international, and European funds.
We have been working to position dollars into that which we believe to have a better risk reward setup, given the higher valuations in the U.S. stock market.
Below is a chart showing the result of these changes, broadly, for the month of December. The indices below represent the investments made (for example the Emerging Markets Index is generally representative of how the emerging markets investments in your portfolio performed). The categories mentioned below did better than the S&P 500 Index.
WTI Light Crude Oil Index – Continuous Contract 10.68%
MSCI Emerging Market Free Index 7.17%
NYSE Energy Index 6.26%
Dow Jones Europe Index 4.01%
S&P 500 Index 2.59%
source: stockcharts.com
I make this point in part because the U.S. financial press basically follows two indices, the S&P 500 and the Dow Jones Industrial Average. Now this is fine, but to basically give virtually all your coverage to a sliver of what is available to investors does them a disservice, in my opinion.
source: stockcharts.com
Also, please note that the U.S. stock market is trading at historically high valuations. It would be beneficial to investors to pay attention to other opportunities.
Happy New Year and all my best in 2020!
LPL 1-932673
DEFINITIONS
Dow Jones Europe Index – Is a developed Europe index diversified by country, industry, and market capitalization. The index covers the continent of Europe broadly, covering all sectors.
MSCI Emerging Markets Free Index: The MSCI Emerging Markets Free Index captures large and mid cap representation across 26 Emerging Markets (EM) countries. With 1,202constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country
NYSE Energy Index: The NYSE Energy Index comprises the market weighted value of energy companies listed on the New York Stock Exchange. The companies would be categorized as energy related using the Global Industry Classification Standard (GICS).
S&P 500 Index: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.
The index is a capitalization weighted index of the 500 large companies listed on various stock exchanges (such as the NYSE or NASDAQ). The S&P 500 was developed and continues to be maintained by S&P Dow Jones Indices, a joint venture majority-owned by S&P Global. The S&P 500 differs from the Dow Jones Industrial Average and the NASDAQ Composite index, because of its diverse constituency and weighting methodology. It is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market.
WTI Light Crude Index - Continuous Contract: The West Texas Intermediate Light Sweet Crude Oil futures contract is cash settled against the prevailing market price for US light sweet crude. It is a price in USD per barrel equal to the penultimate settlement price for WTI crude futures as made public by NYMEX for the month of production per 2005 ISDA Commodity Definitions.
IMPORTANT DISCLOSURES
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. This memorandum is being made available for educational purposes only and should not be used for any other purpose.
The information contained herein does not constitute and should not be construed as representation or solicitation for the purchase or sale of any security or related financial instruments in any jurisdiction. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Investing involves risks including possible loss of principal. Past performance does not guarantee future results. Any investment or investment strategy outlined herein are not suitable for all investors, readers should conduct their own review and exercise judgment prior to investing. Wherever there is the potential for profit there is also the possibility of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
This report expresses the opinions and views of the author as of the date indicated and are based on the author's interpretation of the concepts therein, and may be subject to change without notice. Neither Highcroft, Inc., Gerald Asplund, nor LPL Financial, has no duty or obligation to update the information contained herein.
To the extent you are receiving investment advice from a separately registered independent investment advisor or broker, please note that Highcroft, Inc., Gerald Asplund, and LPL Financial are not an affiliate of and makes no representation with respect to such entity.
Certain information contained herein concerning economic trends, Fundamentals, and/or Technical analysis, and performance is based on or derived from information provided by independent third-party sources. The economic forecasts set forth in this material may not develop as predicted.
Technical analysis is generally based on the study of price movement, volume, sentiment, and trading flows in an attempt to identify and project price trends. Technical analysis does not consider the fundamentals of the underlying corporate issuer.
The sources from which information has been obtained is assumed to be reliable; the accuracy of such information is not guaranteed and the accuracy and completeness of such information has not been independently verified.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results. Investing in the index would require investors purchase an investment product, which would involve fees and expenses.
ABOUT US
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Highcroft Investment Advisors serves as a 3(21) and 3(38) Investment Advisor and fiduciary for labor union supplemental 401(k) and pension plans and corporate 401(k) plans. Highcroft works with the union's counsel, recordkeeper, administrator, and the plan's trustees. United Association, Plumbers, Pipefitters, Steamfitters, IBEW, and Carpenters. Serving Wisconsin and Minnesota. 401(k) investment management provided through LPL Financial's corporate RIA - offering 3(21) and 3(38) services.
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