Time for Active Management
We have reached the end game for passive investment management.
Despite record valuations and the portfolio drawdowns and volatility we saw just this last April, passive (buy-and-hold) continues to be the default strategy for most investors, financial academics, and the Wall Street giants. The paradigm has been hard-wired into the system. After all, it's worked for forty-five years.
Monitoring the
Magnificent 7
The mechanical implementation of passive strategies creates poorly understood feedback loops that are today significantly distorting the valuations of a handfull of very large companies.
The growing disconnect between price and value for these issues is becoming a threat to the viability of the financial system. Your portfolio needs to be able to manage threat . . .
The KP Trend Model identifies the current trend regime of US equities markets.
Effective November 21, 2025, the Model shifted to a Yellow status, having previously been fully-invested in a Green status since last May.
The Yellow condition has characterized the US market environment for one-third (34%) of all trading days over the past quarter century.
It has generated an annualized return of +10.4%, but with double the volatility of the Green condition . . .
Identifying Market Trends
The performance of a portfolio of equities is dominated by market trends, not by selections of individual invest-ments.
Forecasting these trends is very challenging, yet even a partially successful effort to manage market risk can significantly reduce portfolio volatility and drawdown . . .
