Michael A. Gayed's  Instablog

"Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing." - Denis Waitley

There were a number of notable things happening on the global front last week which resulted in some added volatility, albeit within the context of a relatively flat week of performance for most market indices. Risk assets pulled back strongly on Tuesday, and then bounced back as if nothing happened. The initial volatility was sparked by events occurring in China and Russia. China announced that it wanted to lower its overall growth to 7.5%, while Russia angst over Putin's recent election sent markets down strongly in emerging economies. Countering this was central bank easing in Brazil, which cut rates by 75 basis points, and monetary action by India cutting reserve requirements. And of course, the Greece deal finally got done with bondholders accepting the proposed debt swap, clearing the way for the next bailout.

Next week likely will be an important one from the standpoint of seeing now how markets digest all of last week's global news. U.S. stocks performed better than emerging markets, as large-cap indices led other areas of the equity landscape. Our ATAC models we use for managing client accounts kept us in risk-on mode, with some rotation out of international markets given that last week's China and Russia news appears to have altered near-term momentum overseas. Still, it remains a positive sign to have continued "risk-on" conditions as we remain broadly in equities since the first week of January.

Important to watch going forward will be if emerging markets can resume leadership, and if the weakness in small-cap stocks here in the U.S. reverses course. There was some encouraging strength getting priced in towards the end of the week, but it remains to be seen if small-cap companies return back to leadership. Keep in mind that in the 1990s there were several years where on average small-cap stocks underperformed larger indices within the context of a then broad bull market. In other words, weakness in small-cap stocks alone is not an indication that a bear market is being foreseen by investors.

While our ATAC models are run on a week by week basis and adjust to changing underlying conditions based on various price inputs, our longer-term outlook for 2012 remains more positive than most on the Street. I was invited onto CNBC last Wednesday and made the case for a 40+% move in stocks by the end of 2012. The segment can be viewed at http://video.cnbc.com/gallery/?video=3000077302. For those that have been actively following my writings, such a "bold call" should not come as a surprise. I have stressed time and time again that the conditions are reminiscent of 2003 and 2009, which resulted in massive moves in stocks as bull markets began. Predictions don't mean much unless one understands the conditions one is operating in, and global liquidity is likely leaving a lot more room for stocks to run higher than most think.

As I mentioned in the prior Week in Review, our Global Investment Performance Standards (GIPS) annual verification is now complete, and we're just waiting on an update to the hedge fund database we use for our product profiles to update our results on the homepage. This likely will be done by the end of the coming week. In addition, we added some new functionality on our website such that there is now a "Live Chat" button for those interested in reaching out to us regarding our ATAC strategies. Ed Dempsey, Chief Investment Officer, will likely be interviewed on Bloomberg later this week, and I will be on discussing various charts Wednesday.

One final note - feel free to connect to me on LinkedIn for another way of tracking our work and strategies. We are actively building our track record and reputation, and continue to provide a true alternative to buy and hold investing.

Sincerely,
Michael A. Gayed, CFA
Chief Investment Strategist
Pension Partners, LLC
www.pensionpartners.com
Twitter: @pensionpartners
YouTube: youtube.com/pensionpartners

Advantages of Pension Partners, LLC Managing Your Portfolio:

1) ATAC - strategy designed to buy and rotate, not buy and hold

2) Performance comparable to hedge funds without being one and with lower fees

3) Liquidity and transparency through the use of ETFs

4) Ease and security of using Fidelity

Summary of Writings Published Last Week:
Retailers Signal that High Oil Prices Don't Matter -
http://www.minyanville.com/trading-and-investing/commodities-and-options/articles/XRT-IVV-s2526p-500-retail-index/3/5/2012/id/39721

The Lead-Lag Report: How Big Will the Market Correction Be? -http://www.minyanville.com/business-news/markets/articles/XLF-XLY-XLP-XLI-IEF-TIP/3/6/2012/id/39761

Investing: Real Estate, Yes…REITs, Not So Much -http://www.minyanville.com/sectors/real-estate/articles/IYR-IVV-ishares-real-estate-etf/3/8/2012/id/39803

Is the Stock Market Correction Here? -
http://www.marketwatch.com/story/is-the-correction-here-2012-03-05

Will 2012 See 40%+ Move in Stocks? -
http://www.marketwatch.com/story/will-2012-see-a-40-move-in-stocks-2012-03-09

Betting Against Energy By Going Long Airlines -
seekingalpha.com/article/410611-betting-...

Defense Stocks Inconsistent With Military Action Rhetoric -seekingalpha.com/article/414871-defense-...

Small-Cap Message and Revisiting the Winter Resolution Redux -
seekingalpha.com/article/420651-small-ca...

This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.