As per The Alpha Momentum Strategy:
The intermediate trend of the S&P 500 is down
The long term trend of the S&P 500 is up
We will be making no changes to the portfolio for this rebalance.
Recall that, as of 12/3, half the portfolio was invested and half the portfolio was in cash/equivalents. While we never like to lose money, the fact that we have been only half invested throughout December has kept losses relatively contained. With the S&P 500 -7.8% for the month, the Alpha Momentum Portfolio is -3.5% on the month.
Drawdowns happen even to good trading strategies. Having a strategy that is rooted in evidence-based analysis, is robust, and is quantitative (no guesswork or predictions needed), makes sticking with the strategy and making good decisions in difficult times easier. While the talking heads on TV banter back and forth about what the future will bring, we just run our system and let the cards fall where they may - over the long term, we have a significant edge, and we are happy to let that play out over time.
We will check the system again at the beginning of January and make any changes as necessary.
Until then, have a happy and healthy holiday season!