I was profiled today in Dow Jones Newswires for some portfolio moves we made before the major crash:
DJ WEALTH ADVISER: Tuttle Shifts To Safety After Rally Fizzles
–An adviser shifts to safety after “relief” rally disappoints
–Clients now have 50% to 80% in cash
–Automated-selling programs and value investors battle
By Daisy Maxey
A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)–Many financial advisers urge clients to stay the course when markets show signs of trouble, as they have in recent days. Not Matthew Tuttle.
When an expected rally failed to materialize from the debt-ceiling agreement, Tuttle, chief executive of Tuttle Wealth Management LLC in Stamford, Conn., began selling off exchange-traded funds and headed for safety.
“Once the relief rally fizzled and we broke down, that kind of positioned us on Tuesday morning to sell a whole lot of stuff, and get into cash and Treasury bonds,” said Tuttle, whose firm oversees about $100 million in assets.
Tuttle sold off ETFs that invest in the Standard & Poor’s 500 index and real-estate investment trusts as well as international ETFs. He maintained his investments in the Nasdaq-100 Index through the PowerShares QQQ Trust (QQQ) ETF and invested in Treasurys through the iShares Barclays 20+ Treasury Bond ETF (TLT). Smaller accounts are invested in two mutual funds, the Rydex Government Long Bond 1.2x Strategy (RYADX) and Rydex Nasdaq-100 (RYAOX).
Tuttle’s clients generally entrust all their assets with him, and understand that he’s a tactical investor, he says. “Buy-and-hold does not work,” he says. “We’re 100% tactical, so if the sky is falling I will get to 100% cash if that’s what I need to do.”
Last week, U.S. stocks, international stocks, REITs and commodities each accounted for 10% to 25% of his client assets.
That’s shifted dramatically. Depending on the portfolio, Tuttle now has 10% to 20% of client portfolios invested in the Nasdaq through ETFs, another 10% to 20% in Treasury bonds and between 50% to 80% in cash.
At the time, making the move scared him, Tuttle said, because the stock market had initially moved up on news that a debt-ceiling agreement was in the offing. But the shift quickly saved his clients from a loss, he said.
As soon as the S&P 500 broke through the 1250-point range, automated-selling programs kicked in and the index fell to the 1230s, then value investors began buying and moved it up to the 1240s, Tuttle said. Now, he said, there’s a battle going on between automated sellers and value investors.
“I wouldn’t be surprised if we end up with a 20% decline,” he said. “There’s a ton of technical damage that we’ve done to this market, so for us to rally back from here, there’s a lot of stuff we’ve got to fix.”
At some point, there will be a bounce, perhaps if Friday’s job numbers are better than expected, Tuttle said. But he’s not ready to jump back into the market unless he sees a rally he can believe in, he said.
“I’d have to see sectors or areas of the market that are feeling strength,” he said. “A one-day rally isn’t going to do it. I need to see some momentum going somewhere.”
(Daisy Maxey is a columnist who writes about personal finance. She covers topics including advisory firms, annuities, closed-end funds and new trends in mutual funds, and can be reached at 212-416-2237 or at [email protected])