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Two distinct strategies -price momentum along with asset allocation- are employed in managing aggressive-equity portfolios. The price-momentum strategy focuses on those stocks that are performing the best relative to the rest of the market. The objective is to be invested in those stocks which are exhibiting rapid increases in price. Specifically, a 10-stock list is selected from the S&P 500 on the basis of price momentum over a rolling 12-month period of time. The stock which has appreciated the greatest percentage amount over that 12-month time frame would be ranked #1, the second greatest amount would be #2, and so forth to the bottom of the list (#500). This list is adjusted quarterly, with a stock becoming a candidate for sale once it has fallen below the median point of the universe (#251) at the end of a calendar quarter.
A technical composite comprised of 10 equally weighted indicators is utilized to assess favorable and unfavorable market environments. These indicators represent four complimentary areas. Momentum, Breadth, Valuation & Interest Rate Conditions. If 6 or 10 are positive, full investment is indicated ( own all 10 S&P Stocks). Conversely, is 6 or 10 are graded as negative, and unfavorable market environment is indicated, In this case, all S&P Momentum stocks sold with proceeds held in cash-equivalent funds. The technical composite is evaluated on a monthly basis.
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