Switch to active management: empower yourself with data

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It is so important to switch to active management now. And a great time to talk about the markets. The big rally in non-government bonds creates a unique selling opportunity.

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Letters, conferences and more on hedge funds in Q1 2020

Growth will continue to fall

Business growth has been on the decline for a year, with sales growth for the U.S.-based Index Average dropping from 14% at its third quarter 2018 peak to 7% in the just-ended 2019 annual period. In the third quarter of last year, gross margin fell from its highest level since 1999, indicating that a shift to defensive stocks and cash was needed.

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There is no doubt that the recent decline in growth will be more pronounced in the coming quarters, as the impact of the shutdown will show on the company’s financial statements. Over the next few weeks, the new reports will measure which businesses most and least affected by the shutdown, but it will be some time before the form of a recovery is revealed.

With business cash flow declining in recent quarters and now likely to decline at a faster rate, at a time when debt levels are very high and interest charges cannot come down. The massive injection of liquidity from the US Treasury announced this week lowers the short-term risk premium, providing an opportunity to sell all bonds.

Switch to Active? Dividends will be cut

The biggest risks now are widespread dividend cuts for stocks that have historically performed well in times of downturn. Traditionally defensive investments like corporate bonds, real estate investment trusts and banks will continue to perform poorly. Check that all of your investments have stable growth records, good financial standing, and sufficient dividend cash flow coverage.

We have already seen the unprecedented rise in unemployment as businesses seek to conserve cash as their revenues decline. Then come the widespread elimination of dividends, followed by defaults. People with cash flow issues will react the same way. Widespread defaults on mortgage payments will put stress on the financial system that the financial crisis did not create. A Fed check is unlikely to be used to pay off the mortgage, let alone taxes. This will change the status quo in ways that cannot be known.

Are you ready to switch to active management?

Otos clients are well prepared for the future with large cash positions and defensive equity portfolios. How and when to redeploy this money is the urgent question. We collected 2019 annual sales data from 275 of the 282 comparable S&P 500 record labels representing 100% of equity value. The next quarterly financial statements will be completed by May 8 and will give us some indications.

This is why it is so important to switch to active management now. Empower yourself with data and analytics that have identified every peak and trough in the market over the past 50 years.

What is Otos?

Otos is a machine learning artificial intelligence entity that supports all aspects of investment decision making. Otos has built a 20-year quarterly data record of US company fundamentals taken from financial statements filed with the SEC. Otos communicates the changing base attributes with the MoneyTree avatar. The visualization supports quick and efficient decisions on asset allocation, sector rotation and ETF / mutual fund selection. Otos supports the design, execution and management of your portfolio strategy. Register for free on Otos.io

To switch to active management


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