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We have detected a shift in market leadership since the last major market downturn in May 2006. During the past 12 months, Large Caps are out performing Small Caps. Since the Feb 2007 downturn, the performance of Large Cap indexes such as the S&P and Dow have been very strong compared to the rest of the market.
During the last several weeks, the Kinetic Financial model portfolios have lagged the overall market. The Model Portfolios will tend to under perform when there is a shift in market leadership. However, as we readjust our portfolios in funds with high alpha, we will tend to catch up and surpass the indexes.
The big question is whether this shift in market leadership will be sustained. In the coming weeks and months ahead, we will closely monitor the shift in market leadership and prune our portfolios accordingly. We don't try to predict the future. Instead, we incrementally react to shifts in market leadership by buying and selling the appropriate funds.
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posted by Ramesh Agarwal & Team @
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