Written By: Dan Moylan, Chief Investment Officer

Happy 2021 and I hope the first month of this year has treated you well.   I would like to summarize some of the stock market strategies and changes our investment team  made to your accounts  in January to optimize your portfolio to take advantage of some of the changes ahead in 2021.  

We are still overweight Large Cap growth stocks with an emphasis on TECH, but have rotated some of your assets to small and midcap growth expecting these companies to outperform and  benefit as small business reopens in many areas with the COVID vaccine rollout ramping up and relief on the number of cases.  We had invested before the new year in the Vanguard small and midcap growth stocks.  We added the Invesco QQQJ mid cap fund to this mix in January, which gives you access to what is referred to as Nasdaq’s on deck circle, QQQJ is the Nasdaq Next Generation 100 which are the next 100 stocks after the Nasdaq 100.  The top holding in QQQJ is CrowdStrike followed by ROKU, and a couple stocks in the top 10 that you may be familiar with, AstraZeneka and Fortinet.  This trade was made after the inauguration when we felt some of the market volatility had subsided from the election.  We swapped the balance of your treasuries for this growth ETF.  This was the final phase of moving back into equities, which we started last year by incrementally moving some of your investments from 50% cash/treasuries to a higher percentage in equities when certain criteria was hit, like unemployment stabilizing, a vaccine approved and the election. 

We moved funds invested in our SECTOR model, and a smaller percentage in some other models, to IShares Global Clean Energy ETF (ICLN). We feel this will continue to be a growth space in stocks for quite some time and we are continuing to look for investments in this area.  The ETF gives exposure to a number of high profile companies and leaders in alternative energy sources.  The top two holdings include, Plug Power, which manufactures hydrogen powered fuel cells and Enphase Energy, which provides solar energy cells, monitoring equipment and microinverters.  This trade was funded in the SECTOR model by swapping Vanguard Info and Tech (VGT) and Invesco Dynamic Semiconductors (PSI) for ICLN.  At 12/31/2000 the one year return before fees,  as shown in YCharts performance data, was 36.86% for VGT and 52.52% for PSI.  Returns will vary based on market timing of buys and sells.  

Another market mover for January and likely to continue into February is the short squeeze on many stocks, the most notable being Gamestop.  This situation occurs when something positive hits the wire on a stock that has high short interest and the price is driven up.  This is accelerated when the shorts give up on their positions and have to buy the stock to offset the short.  This adds to the buying frenzy and can create high volume with wild swings in price.   During this time we took profit on iRobot (IRBT) for anyone that owned it.  We will use these funds along with funds raised when we take partial profit on INSG to buy another growth TECH company in February.  We added C3AI (AI) a growth TECH company, as a buy and took partial profit on AMD to buy shares.  So anyone that has INSG, AMD or IRBT will see some changes in these allocations in your accounts as well.  

That’s a snapshot for January from the investment team, I hope you have a great February. 

If you have any questions, please don’t hesitate to call us at 844-CARLSON (844-227-5766).