By Rick Lear, Lear Investment Management
This inspirational song was written by Jerry Joseph and played frequently by southern rock band Widespread Panic. The story is one of love and helping a friend to a better place. The songs comes to mind in light of recent actions in the portfolio to take risk down after a great run.
Since the 1Q19 update titled Experts Only, the S&P 500 reached all-time highs with the technology sector leading the charge. We are proud to report our conviction in select technology names led to a strong rebound for the portfolio. As of 4/25/2019, the Global Vigilance Composite was up 12.6% (gross of fees).This includes the average of 50% in defensive assets.
The experiences from significant market declines in 1999 and 2008 served our investors well in the 2018 decline and ensuing rebound. The key - not to engage in panic selling at the bottom but having cash available beforehand to buy at lower prices. Thus, tactically trimming certain holdings and rebalancing prior to declines is a vital part of our disciplined risk regime.
We recently trimmed select technology and healthcare names to lower the beta and overall risk of the portfolio. After the strong rebound and now higher valuations, we feel prudent to lower the size of the highest beta positions, but maintain exposure to these themes. In addition, we believe the market is due for increased volatility, so, last week we added a name (CBOE) that should perform well in a higher volatility environment.
To be clear, we are comfortable with the current market environment, but wait to gain further clarity from this earnings season before deploying the cash. So far, the earnings results have been encouraging.
In summary, we remain Patient and Balanced in 2019. We do not get too excited during the highs, or too down in the lows, but remain focused on our purpose of investment returns with controlled risk.
As the song goes..... "After all that I've been through, your the only one that matters"
Rick Lear is the Founder and Chief Investment Officer of Lear Investment Management. Lear is a pure investment firm founded in 2015 with focus on generating returns with measured risk. With over two decades of experience, his ability to identify global investment trends has resulted in superior outcomes for clients.
The Lear Global Vigilance Strategy is rated 5 Stars by Morningstar and ranks in the 5th percentile of managers in the Tactical Allocation category.
INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND ARE NOT GUARANTEED. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. THE PERFORMANCE ABOVE IS ESTIMATED BASED ON BLACK DIAMOND TRACKING OF LEAR GLOBAL VIGILANCE COMPOSITE. THIS IS FOR INSTITUTIONAL USE ONLY AND NOT DO DISTRIBUTION. THE LEAR GLOBAL VIGILANCE COMPOSITE IS ACOLLECTION OF SEPERATELY MANAGED ACCOUNTS MANAGED BY LEAR. THE CURRENT ALLOCATION IS APPROXIMATLEY 50% CASH, GOLD AND FIXED INCOME AND 50% EQUITIES.