The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model remains with a fully invested equity allocation recommendation as the composite score improved toward month-end.

The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high-risk periods for the equity market. The model remains with a fully invested equity allocation recommendation, as the composite score improved toward month-end.

The risk management model seeks to reduce exposure to fixed income sectors most sensitive to equity drawdowns. The risk management model improved from last month and entered February recommending full model exposure to areas most sensitive to equity markets: U.S. High Yield, Emerging Markets, U.S. Investment Grade, and Floating Rate Notes.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future. Using our consistent and differentiated investment approach, the DH Smart Value Portfolio is focused on outperformance, seeking higher total returns with lower volatility.

The NDR Catastrophic Sell Stop model combines time-tested, objective indicators designed to identify high risk periods for the equity market. The model deteriorated in December but remains with a fully invested equity allocation recommendation.

The sector allocation strategy continues to be influenced by the rising rate environment which will likely lead to an economic recession, resulting in more Value and defensive sector leadership. Energy, Materials, Financials, Utilities, and Health Care are overweight, while Communication Services, Consumer Discretionary, Real Estate, and Industrials are underweight.

The risk management model seeks to reduce exposure to fixed income sectors most sensitive to equity drawdowns. While the risk management model deteriorated from last month, it entered January recommending full model exposure to areas most sensitive to equity markets: U.S. High Yield, Emerging Markets, U.S. Investment Grade, and Floating Rate Notes.

We note that 2022 was a year for the record books. For example: 1) U.S. financial markets were buffeted by the most aggressive monetary tightening cycle in 40 years. 2) It was the worst year on record for the Bloomberg Barclays U.S. Aggregate Bond Index (down -13.1%). 3) Long-term U.S. Treasurys declined -29.3%. 4) It was only the sixth time since 1926 that both stocks & bonds declined same year.