Active portfolio management

Active portfolio management is about adjusting investment allocation based on the balance of power between various market macroeconomic forces on a short term and long term basis. When done correctly, it results in a potent and very profitable return, often better the market regardless of the market direction.

Here is an example of foreseeing the market bounce and taking a contrarian position to make a higher return. The US market (DOW, NASDAQ, S&P) were all down at the open because of weaker ISM service data; then, within 15 minutes, all indexes started climbing higher.

The main reason for the turn around was because the S&P500 yields relative to the ten years treasury went up above 0.044 %. When ten years treasury dropped to 1.56%, it has triggered a shift of more significant portfolio allocation from the treasury to S&P500 equity that offered a better dividend yield of 2%. We have seen the same pattern in the past months and have profited from it. My main point is, spotting a trend in the market movement is more complicated than just looking at the narrative news.