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Week In Review – February 12, 2012

|Includes: EEM, EFA, iShares Russell 2000 ETF (IWM), SPY

"Life was always a matter of waiting for the right moment to act." - Paulo Coelho

Markets fell moderately last week as investors and traders began to reassess whether or not Greece would be able to pull through and pass another round of austerity measures to secure its next round of bailout payments. Images of riots and protests in Greece, coupled with rhetoric showing the frustration of Germany resulted in a notable increase in the VIX index, which goes up in value when fear returns to markets. Markets despite these developments still acted fairly resiliently to the surprise of many commentators. While such news only a few months ago would likely have sent markets tumbling, stronger than expected jobs data and low interest rates continue to provide some kind of a floor to prices.

The primary news regarding Greece really hit on Friday during market hours, and interestingly enough markets did not close on the lows of the day. Quite the opposite - there was an initial sell off and then buying which resulted in equities closing down only slightly. In addition, while Treasury prices did rise as yields fell, the magnitude of the move was relatively muted compared to prior periods of "risk-off" days in markets, suggesting that there is growing confidence that Greece will get resolved one way or another in a non-disruptive way. The market can certainly be wrong about this, but the point is that sentiment even on a negative week remains quite positive.

Our ATAC (Accelerated Time And Capital) models which we use for managing client accounts and which allowed us to take advantage of the move higher in equities following the first week of January remain positive on the conditions which favor risk taking (inflation expectations rising). The quantitative metrics that go into the model have not yet signaled a change to crowd expectations independent of Greece. This is why I continue to stress in my writings that I remain bullish while recognizing that things could get bumpy for risk assets in the weeks ahead.

As I stated in the prior Week in Review, we are currently undergoing GIPS (Global Investment Performance Standards) year-end verification and will update the performance of our three ATAC Composites on our website when that is completed. In the meantime, if you're interested in learning more about our strategies and performance year-to-date, please feel free to reach out to us any time.

We're quite excited about the potential for markets to surprise on the upside, and are receiving much recognition from the media due to the Summer Crash, Fall Melt-Up, and Winter Resolution writings. I will be appearing on CCTV and NASDAQ Live this week discussing markets and stressing the idea that there are times in life and in investing when the "risk is to not take the risk." The most important thing about that statement is to recognize that not all risk-taking yields the same results. One still needs to have a strategy which can dynamically buy and rotate and adjust to changing conditions as they express themselves.


Michael A. Gayed, CFA
Chief Investment Strategist
Pension Partners, LLC
Twitter: @pensionpartners

Why Pension Partners, LLC to Manage Your Portfolio?

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

2) Performance comparable to hedge funds without being one

3) Liquidity, transparency, and lower fees

4) Comfort and security of using Fidelity

Summary of Writings Published Last Week:

The Lead-Lag Report: Strong Economic Data Boosts Bullishness -

Broker-Dealers Anticipate Return to Stocks -

National Bank of Greece: "Its All Good" -

2012: A Repeat of '03 and '09 -

Clint Eastwood is Right -

Greece Says Greece Doesn't Matter Anymore -

International Financials Having a March 2009 Moment? -

The Bond Market Questions Itself -

Sovereign Debt Poised to Outperform U.S.? -

Italy Leadership Pausing or Endings? -

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.