Strategic Adjustment: Increasing Market Exposure

On October 8th, we made the decision to increase market exposure across all managed portfolios. Our assessment indicates that the risk of a deeper market downturn has diminished, suggesting that the correction lows are likely behind us. In response, we’ve added exposure to domestic equities, the Shanghai market, and fixed income. The allocation to U.S. equities reflects a combination of technical and fundamental indicators that support a more favorable outlook.

Several factors contributed to this shift:

• Our exposure model recommended increased equity allocation.

• Extreme bearish sentiment reached in August, often a contrary indicator.

• Positive signals from market breadth and expanding confirmation across the tape.

• A noticeable rotation out of defensive sectors and other risk-off areas.

• Rebounds in commodities and China—both of which were key drivers of global weakness earlier in the year.

These developments collectively suggest that markets may be positioned for a year-end rally.

Rate Hike Uncertainty Supports Near-Term Stability

Another factor in our decision is the evolving outlook for Federal Reserve interest rate policy. While a December rate hike remains on the table, Chair Janet Yellen’s criteria for liftoff, as laid out in her September 24th speech, have not yet been met. Unless the weak September payroll report is significantly revised upward or deemed an anomaly, we believe rate increases will likely be deferred into 2016. This delay in tightening provides additional runway for risk assets in the short term.

Cautiously Optimistic Positioning

While we are positioning portfolios for a potential year-end rally, we remain aware of the limitations in the current environment. Valuations are still elevated, and without an improvement in earnings, any market upside may be capped. We believe the U.S. equity market is in the midst of a bottoming process, not the start of a new bull market. Therefore, while our exposure is higher, we continue to apply tight risk controls and remain ready to adjust allocations as market conditions evolve.

This website commentary reflects the personal opinions and analyses of Gainplan LLC employees. It does not describe Gainplan LLC’s advisory services or client investment performance. Views in the commentary may change anytime without notice. Nothing here constitutes investment advice, performance data, or recommendations for specific securities, transactions, or strategies. Mentioning a security or its performance is not a buy or sell recommendation. Gainplan LLC uses various investment strategies, not all discussed here. Investing in securities carries risks, including loss. Past performance does not guarantee future results.

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