Look Forward (Not Backward) When Investing

Jun. 26, 2020 12:37 PM ET
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Quant | Cross Asset Research, ETF investing, Macro, ETF Model Portfolios

Contributor Since 2017

Astoria Portfolio Advisors LLC ("Astoria") specializes in the construction, management, and sub-advising of ETF Managed Portfolios. When constructing our portfolios, Astoria utilizes a quantitative and cross asset investment framework. We stress test our models through various quantitative risk models in order to understand our portfolio risks and to help determine when risk budgets should be expanded or minimized. Astoria's founder, John Davi, has 18 years of experience spanning across Macro ETF Strategy, Quantitative Research and Equity Derivatives. John was Head of Morgan Stanley’s Institutional ETF Content where he produced hundreds of strategic content pieces over an 8-year period. It was a Multi-Asset job and involved developing investment ideas to add alpha to investors’ portfolios. For more information on Astoria, as well as important disclaimers, visit our website: www.astoriaadvisors.com/disclaimer

Astoria Portfolio Advisors appeared on CNBC (click here) earlier this week to discuss:

  1. Inflection point in macro-economic / earnings data (see below)

  2. How to strategically position ETF portfolios on a forward-looking basis

Moreover, we recently produced a blog (click here) where we talked about:

  1. Strong momentum

  2. Behavior of retail investors

  3. Exceptional liquidity provided by the Fed

  4. Election risk (which markets are currently ignoring)

Below are a few macro-economic indicators that Astoria is closely monitoring.

As you can see, 2020 earnings trends appear to have troughed.

Source: ETFAction

The most important takeaway from the below macro-economic charts is that several key indicators have stopped falling. Of course, we are nowhere near prior COVID-19 levels. However, stocks are forward-looking/long duration assets (arguably with no expiration as they don’t mature), so any marginal improvement (i.e. a positive rate of change), will lead to an improvement in risk asset sentiment. Coupled with the Fed anchoring rates near 0% and purchasing financial assets, it’s no surprise stocks are materially off the lows.

Data source for the above charts is FRED ST. LOUIS FED. Data accessed on June 19, 2020. Charts compiled by Nick Cerbone from Astoria Portfolio Advisors.

We will be releasing our Quarterly Investment Committee Insights in the coming weeks.

Best, Nick Cerbone

For full disclosure, please refer to our website: https://www.astoriaadvisors.com/disclaimer

Click here for Photo Source

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