While most US equity managers are likely looking at US stock markets and “off the shelf” tools like moving averages, stochastics, valuations, PE ratios, earnings per share, etc., our systems are monitoring logical, statistically significant patterns in the S&P 500 and other markets/asset classes around the globe. I refer to this as the “global-relay race” that begins in Asia, as the first markets to open, then spreads to Europe, and ends in the US as the last markets to open. Understanding how global markets influence each other and provide clues to the price activity in the S&P 500, gives 3D Capital our edge.
Our thesis is that the world is one big global macro flow-chart, and that the global markets can provide valuable information and identify the daily direction of the S&P 500. Days make up weeks, months and years and the data make it abundantly clear that, in managing equity market risk, every day matters.
Hortz: Any other thoughts or recommendations you would like to offer advisors on the benefits of this focused downside protection approach?
Dugan: Investors are hungry for returns and with interest rates at historic lows, investors are being “forced” into the stock market. The world is more connected now than ever, the stock market is higher now than ever, and, by some metrics, more overvalued now than ever. That means the stock market and investors are more vulnerable now than ever.
Stock market declines are inevitable. Investors need a logical solution specifically built to help them protect their historic gains and profit from stock market declines. Other asset classes might go up when the stock market goes down, but logic dictates that the best way to protect your stock market portfolio is with the stock market itself. For buy-and-hold stock market investors our proven logical solution to their problem is 3D Defender, which only invests in the S&P 500 and is built to profit from intraday weakness in the S&P 500 and step aside during rallies.
Recognizing that there is a lot of money on the sidelines not participating in these historic stock market rallies, we recently decided to provide our clients with complete coverage by adding a long S&P 500 exposure - thru a tailored strategy. We are excited to launch the availability of this new 3D Hedged Equity strategy, which will allow our clients to benefit from both the up and down moves of the stock market. Please contact us to learn more.
If you are responsible for managing risk in your clients’ portfolios and you do not have anything in your portfolio construction that is built to seek profits directly from stock market declines, we welcome the opportunity to begin a dialogue. One thing we can all agree on is the stock market is going to move up and down forever…being prepared for both outcomes is prudent.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation, and unique client/community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - NASDAQ, Ultimus Fund Solutions, Pershing, Fidelity, Voya Financial, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).