Trade Alert For Equity & ETF Models
As we head into earnings season, we are rebalancing equity risk in the portfolio models. While we like the growth-oriented side of our portfolio allocation heading into a slower economic environment, we realize there may be an earnings-related risk to those companies short term. Importantly, the markets have not been kind to short-falls as witnessed by the recent clubbing of NFLX.
As such we are reducing our specific earnings risk exposure in AAPL, AMD, and NVDA and replacing that reduction with a holding in the S&P 500 ETF (SPY). This keeps our equity weighting roughly the same but reduces some of the potential risks of a specific earnings miss. If that event does NOT occur, we will simply add back to those holdings.
We are also just reducing our holding in PSA (Public Storage) back to the target weight and taking profits.
In the ETF model we are reducing Technology (XLK) and Real Estate (XLRE) for the same related risks. We are also rebalancing Staples (XLP) and Utilities (XLU) back to model weights to take profits.
Equity Model
- Sell 1% of NVDA and AMD
- Reduce AAPL by 1%
- Reduce PSA to 2% of the portfolio
- Initiate a 3% position of SPY
ETF Model
- Reduce XLRE by 1/2% of the portfolio.
- Sell 1% of the portfolio weight in XLK
- Reduce XLP to 5% of the portfolio weight.
- Reduce XLU to 4% of the portfolio weight.
Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube
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