Updated fact sheets through January available for review

View in browser

Hi,

Market Correction Update: 2/27/2020

Coronavirus Watch: Hoping and praying the top chart keeps rolling over and the bottom completely flattens out. This human tragedy is truly heartbreaking.

(Source: Worldometer)

Thankfully, as of mid-day 2/27/2020, the US has not had one infected person die from the virus. Of course, this can change quickly, but our health care professionals are the best in the world and we’re confident they will do whatever it takes to minimize human suffering.

Looking for a bounce

The market is nearing the extremely oversold levels we typically see near short-term bottoms, but this time around we may be in for very high volatility. Here we see the % of S&P 500 stocks that are above their 40-day moving average. You can see how we’re nearing the lows set near the end of 2018.

Our downside risk management processes are functioning as expected

Here’s a quick look at our three most popular strategies, listed in order of sensitivity to corrections:

Tactical Bond: On Tuesday (2/25/2020), we sold all high yield bonds and took up a 50% position in Long-Term Treasuries. The strategy continues to perform extremely well, especially in this environment. It was up over 0.50% today.
Hedged Equity: We were short the Dow today for a good portion of the strategy, so that provided a strong cushion against the long equity holdings.
Dynamic Equity: The strategy tries to keep investors in as long as possible, so it is still fully invested. If the market falls a bit further, the downside risk management will trigger its second line of defense and sell all its holdings (the first line of defense is to move some or all holdings into lower risk equity ETFs. We’re currently 25% in low volatility and will be doing our monthly rotational changes on Monday, which will probably push more money into lower volatility ETFs).

Year-to-date results (gross):

Tactical Bond is up nearly 1.0%
Hedged Equity is down less than two-thirds of the market
Dynamic Equity is down slightly less than the market

The market was up over +40% since Christmas Eve 2018. That rise is extremely fast and was just waiting for a catalyst to drop it back. The coronavirus served as that catalyst.

Since WWII, we’ve averaged one 5-10% drop once per year, while 10%-20% drops have happened about once every three years.

The market is like that – Three steps forward, one step back. It’s always gut-wrenching during the “one step back” part, but we think the best way to make solid returns over the long haul is to be invested as much time as possible…with downside risk management processes in place.

We’ll continue to monitor the situation throughout each day and will keep you posted on any important developments.

Click here to visit our website

For more information, please contact us via email, phone or chat.

Optimus Advisory Group manages liquid tactical and alternative investment strategies that meet the needs of our clients. We use a disciplined, quantitative methodology to build and manage our portfolios.

Over a full market cycle, these strategies are designed to provide superior risk-adjusted returns while maintaining a low-correlation to traditional market indices.

All strategies are net results after subtracting a 1.50% annualized fee.

Contact Us

(877) 885-7468

info@optimusadvisory.com

Disclosures

The performance results shown include the reinvestment of dividends and other earnings. Comparison of the Optimus Advisory Group Programs to any other indices is for illustrative purposes only and the volatility of the indices used for comparison may be materially different from the volatility of the Optimus Advisory Group Programs due to varying degrees of diversification and/or other factors. Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. Optimus Advisory Group does not make any representation that the Optimus Advisory Group Programs will or are likely to achieve returns similar to those shown in the performance results in this presentation. Optimus Advisory Group reserves the right to trade different funds within their models.

The historical S&P performance results (and those of all other indices and index funds used as proxies for indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual client or prospective client in determining whether the performance of the Optimus' portfolio meets, or continues to meet, his/her investment objective(s). It should not be assumed that any Optimus portfolio holdings will correspond directly to any such comparative index.

Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy (including the investment strategies devised or undertaken by Optimus Advisory Group) will be profitable for a client's or prospective client's portfolio. All performance results have been compiled solely by Optimus Advisory Group and have not been independently verified.

Performance results reflect hypothetical results that were achieved by means of the retroactive application of a back-tested model and, as such, the corresponding results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of each of the above referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually manage client assets; (3) for various reasons (including the reasons indicated above), clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model.

The Optimus performance results do not reflect the impact of taxes.

Advisory Services offered through Optimus Advisory Group, a Registered Investment Advisor.

Twitter