Optimizer Update | June 13, 2023

As you know, we had trailing stops on some of our Optimizer B positions trigger a few weeks ago.

Since then, our Optimizer A portfolio has been holding up. On June 12th we put half of the cash from our Optimizer B portfolio sales into a similar allocation as the A. However, we are using different ETFs (Vanguard) so we don’t violate wash sale rules as we continue to work through the year.

The addition of ETFs in the same sectors of the A with half of the cash is a way of building a portfolio with some better up/down capture and lower standard deviation/volatility of the market while trying to get a little lift.

We don’t want to put all the cash to work as we think individual stocks will have even more current volatility versus the overall sector. It will be higher than what we have seen as historical normal volatility of systematic versus unsystematic risk.

We conferred with ITR several times over the last week. We still see headwinds coming as the year progresses. ITR has done some analysis looking at various other periods of time in the last 30 years where we had similar market and economic conditions. However, there is currently enough liquidity in the market to continue to drive up stocks.

We see the weighted index converging with the equal weighted index, which is more of a sign that the sectors are rotating over inside the weighted S&P.

Invesco investments put out a piece that has followed the equal weighted index vs the S&P 500. Invesco has found that periods of large underperformance in the equal weighted index have been followed by periods of outperformance in the next 6 months. We have seen a similar pattern in the Optimizer process as we navigated between sectors of the S&P 500 that performed differently during the business cycle.

As always, if you have any questions or concerns, please reach out to me at cbellin@bellww.com.

Clark S. Bellin, CIMA®, CPWA®, CEPA

President & Financial Advisor

Phone: 402-476-8844

E-mail: cbellin@bellww.com