One Trick Pony
Volatility is great on the way up…
Since the October 2023 lows, Nvidia’s stock price has tripled, and AI-themed stocks have been chiefly responsible for powering the market's rise from those October lows into the first half of this year. The Nasdaq 100 ETF QQQ rose 54% in 2023 and, into the July 2024 highs, was up another 20%. Then tech hit a wall on valuation concerns and underperformed the S&P 500 significantly into early September.
There was a defensive rotation as capital has shifted to sectors with steady sales that are far less exposed to business downturns, such as consumer staples. As we approached the September Federal Reserve rate decision, technology stocks were back to their old ways, outperforming the S&P, and led by the magnificent 7 mega caps.
If you think the U.S. economy responds to the oversized 50 basis point rate cut and continues to grow into 2025, you may want to hop back on the tech momentum train.
With Pave Pro, advisors can do exactly that and produce a portfolio that overweights mega-cap tech stocks. Here is a potential roadmap for an advisor looking to create portfolios like this:
Advisors can edit investment preferences to reflect a Nasdaq 100 benchmark to position for an economic growth rebound as the magnificent 7 mega-cap tech stocks have the highest weighting in that index.
They can choose to limit the Target Asset Count of portfolios (we suggest 34), and under Factor Tilts, select Momentum under the Volatility Preference Dropdown. Advisors can also maintain the default setting of a balanced outlook in Volatility as well, depending on how heavily they want to weight the major tech companies.
As a final test, advisors can run both portfolios under each assumption and compare the weightings to see what they or their client prefer.
Welcome to Pave Pro, where portfolio management is the easy part.
To learn more, please reach out by emailing sales@pavefinance.com or pressing the button below. We look forward to speaking with you.
“Pave Pro has the potential to save my firm millions each year by replacing our 3rd party managers.” - RIA, $500M AUM1
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1. Testimonial provided by Josh Allen in April of 2024. Josh is a current client of Pave Finance, Inc. No compensation was provided in exchange for this testimonial.
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