The Sizemore Capital Tactical ETF portfolio is a global macro portfolio with a strong contrarian value focus. I utilize all major asset classes - including the U.S. and broad international equities, emerging market equities, bonds, currency, and commodity ETFs - as market conditions warrant. The portfolio seeks to generate returns that are less volatile than those of the S&P 500 Index. It allocates capital to the asset classes my research indicates are undervalued and it either avoids or sells the asset classes I personally believe are overvalued.
While this portfolio does not intend to trade on margin (i.e. borrowing money from broker-dealer to purchase securities), having a margin account enables me to act quickly when opportunities arise rather than waiting for trades to settle.
I attempt to identify powerful macro trends that are driving the global economy, then make investments to profit from those trends. My strategy also involves taking advantage of short-term mispricings as part of my effort to generate higher returns with less risk. Like Warren Buffett, I attempt to be greedy when others are fearful and fearful when others are greedy. And like legendary speculator George Soros, I attempt to identify trends with false premises and potentially bet against them.
In taking a "Big Picture" approach to portfolio management, I augment my traditional investment analysis by considering such factors as geopolitical developments, historical precedents and demographic trends.
My research involves studies of many data sources, including but not limited to company financial statements, research reports, financial periodicals, academic papers, security screeners and databases.
Though the Tactical ETF portfolio may have concentrated allocations to stock market sectors, countries, currencies, or commodities, I always attempt to keep the portfolio prudently diversified. Only under rare circumstances would I expect the portfolio to have more than 10% of its assets targeted to any single non-diversified position. Well-diversified positions (i.e. those that cover a broad segment of the market) may have higher allocations. The portfolio generally holds 7-10 positions.
I use stop-loss orders or trailing stops as a risk management technique, though other methods may also be used. (Note: the Covestor replication process does not consider stop-loss orders.)
My sell discipline varies from position to position based on the risks and characteristics of the investment (i.e. certain investments may have wider stops than others). I will take profits on successful investments when I believe our investments are fairly valued or I see better opportunities elsewhere.
Given the strategy’s global macro mandate, I will change the focus of the Tactical ETF portfolio’s investments as conditions warrant and new opportunities present themselves. The asset mix will potentially vary substantially from year to year, but the basic risk profile of the portfolio should remain unchanged.