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Active Management Update Print PDF

Welcome to our active management update on the market

October and November of last year proved to be a very bad period for Treasury-bond prices. In the recent edition of “The McClellan Market Report,” Tom McClellan had an interesting graphic comparing the recent drawdown with prior drawdown periods going back over 30 years. This illustration points out that Treasury bonds are approaching the level where previous drawdowns have concluded. It also points out that these types of drawdowns within an 18-month period are not rare and are most often associated with an event that impacts the credit markets. Note, these events cannot be foreseen or predicted because there are many events that affect the credit markets that do not result in large drawdowns in bond prices. Also, a decline in bond prices is not always bad for a bond strategy if the strategy is designed to be price-driven and nimble, and can go to cash or go inverse.

I do not mention alternatives often, but an analyst whose work I follow recently brought an interesting point to my attention. The following is a 10-year graph by FastTrack of one of the popular commodity indexes. The analyst pointed out that raw commodity prices (as an asset class) have been declining since 2008. Recently there have been technical signs in the graphs of commodity prices that are beginning to improve. Whether this is a sign of a new long-term trend or not, we will not know for some time.


What we do know is that we have strategy solutions focused on alternatives. There are six listed in the Research Reports section of our website. Remember, alternatives play a key role in our strategic diversification approach to portfolio construction.

Note: These opinions and comments are mine and not those of Flexible Plan Investments, Ltd.

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To our In My Opinion readers:
Everything in the newsletter pertains to strategies available on our Strategic Solutions platform at Trust Company of America. The same strategies are implemented on many other products: mutual funds, variable annuity, variable life and retirement platforms. Therefore, we expect the strategic discussion may be of interest to you. Note, however, that since these products have their own subaccount and fund universes and different internal expenses, the results and trading of the same strategy on other platforms may differ substantially from those described herein.

In My Opinion: Managed Retirement Plan Participants:
Most of you are managed using Lifetime Evolution and our sub-advised funds, so those topics will be most applicable to your account. But, more and more of you are in plans using Market Leaders. If so, that newsletter section may interest you