by Michael Tarsala
Mark Hulbert has a wide window on the financial world, and he now sees an increased chance of a market correction.
That may point to opportunities in Covestor long/short investment models* that can still profit if the market begins to decline.
There are lots of people in the investment world with opinions, but few with Hulbert’s approach. The bulk of his analysis comes from his more than 30-year career tracking the sentiment of the newsletter writers and pointing to opportunities when their opinions reach extremes.
When his crowd of more than 160 newsletter writers gets super-bullish, that’s a sign that markets could soon correct. On the other hand, extreme bearishness is a signal to start looking for a rally.
The newsletters Hulbert tracks are now more bullish than they were at the year highs for the S&P 500 back in May. It’s one reason that he is looking for signs of a near-term market correction.
Hulbert is well respected in the industry, of course. What is more interesting is that his sentiment-based opinions have been spot-on recently.
Tracking newsletter sentiment led him to conclude that the May decline would not be a major breakdown of 10% or more. More importantly, it helped him identify a place to re-enter stocks back on June 5.
If Hulbert is again correct with his timing, that may be a reason to consider one of the 13 long-short investment options offered at Covestor, several of which only can be found only here.
All of them have the freedom to exploit markets and individual stocks that might be set to decline.
One of the unique Covestor long-short options is the Long/Short Opportunistic investment model, run by Dan Plettner. It mainly seeks to exploit inefficiencies in closed-end investment funds. Plettner identifies high quality, under-followed funds that are trading at net-asset value discounts on the long side. He also has the freedom to sell short models that he thinks will decline, which last week he did for the first time since at least May.
Another research-based long-short model is the Beta Blocker, run by Brendan Ruchert-Dixon. It uses both long and short ETF positions. What’s uncommon, though, is the portfolio’s low-volatility approach. You can check out a host of volatility metrics here.
Another that is unique, actively managed and research-based is the Flexible Long-Short investment model, run by Ruben Kuswanto. It uses both top-down and bottom-up analysis, and will hedge certain positions.
Outside of the research-based models, we have 10 others that incorporate or are mainly based on quantitative computer work, including the Crow Chaser, the Quantitative ETF model, and the Core Price Volatility Volume model.
Whether they are run by a manager or mainly by machine, being able to benefit from markets going higher – or perhaps lower – could be something to consider given the market’s current state.
Want to learn more? Talk to us. You can ask for Bhargav in our New York office. He can provide you with a lot more information and help you decide if there is an investment model that could fit your personal investment needs.
*The models discussed here carry risk scores of 4-5, and therefore may not be appropriate for all clients.
Photo by: Phillie Casablanca
