The Elevate Momentum Strategy

Objective: The Elevate Momentum Strategy is designed to generate long-term appreciation.

Goal: The goal of this strategy is to beat/outperform the benchmark (S&P 500) return over the course of a full market cycle.

A full market cycle is measured either from the peak of one bull (up) market to the peak of the next bull market after experiencing a bear (down) market in between. Alternatively, a full market cycle could be measured from the low of one bear market to the low of the next bear market after experiencing a bull market in between. We consider and evaluate our performance using both measurements.

We do not endeavor to make judgements of our performance over any other “man-made” timeframes such as years, year-to-date, quarters, or months.

The Elevate Momentum Strategy has the exact same objective and goal as the Elevate Capital Strategy. The difference is in how the strategies seek to achieve these results. While the Elevate Capital Strategy focuses more on fundamental bottom-up, individual company analysis, the Elevate Momentum Strategy focuses solely on technical analysis and invests primarily in exchange traded funds (ETFs), many with leverage.

There are times when markets rise seemingly without any regard for the fundamental economic environment. Most notably, this happened during and after COVID-19 when stocks like GameStop and AMC Theaters were market leaders despite both being fundamentally insolvent and teetering on the verge of bankruptcy. Another such period is unfolding in 2023, where only 7 stocks that are for the most part fundamentally unattractive are responsible for more than 100% of the US Stock Market’s year-to-date gain. The Elevate Momentum Strategy exists to make sure our clients have a vehicle to stay long and capture upside in these types of situations.

Other times, like in 2022, pretty much nothing is working and the best thing to do is hold cash. There were times in 2022 when zero (or very few) of our markets were in “buy mode.” The Momentum Strategy invests virtually all of its available cash into US Treasuries maturing at the end of the calendar month. This way, at the beginning of the next month when we get our buy and sell signals, we will have cash available to deploy. If no buy signals are triggered, we will buy another T-bill expiring at the end of the new month.

There is no minimum amount that must be invested in our target markets. If none of our markets are in buy mode, the strategy will be 100% in cash and US Treasuries that mature in less than one month.

Elevate relies on third party sources for buy and sell signals for the following markets:

• Geographic Markets: United States, World ex-US, Emerging Markets, BRICs, Brazil, China, China A-Shares, India, Mexico, Singapore, South Africa, South Korea, Hong Kong, Italy, Spain, Greece, Japan, and Europe.

• Sectors: Clean Energy, Homebuilders, Semiconductors, Transportation, Water, Biotechnology, Financials, Healthcare, Technology, Telecommunications, Utilities, Regional Banks, Retail, and Consumer Staples.

• Commodities: Gold, Silver, Oil, Diversified Commodities, Energy Stocks, Oil Services Stocks, Steel Stocks, Gold Miners, Junior Gold Miners, and Natural Gas Stocks.

• Income: Mortgage REITs, Equity REITs, and High-Yield Bonds

We may add or remove other markets as necessary.

We use our discretion as to which buy signals we will act on, but once we add a position to the strategy, we will follow sell signals when they trigger.

Buy and sell signals are triggered at the end of each calendar month and we receive those signals from the provider(s) within the first 7 days of each new month. We prefer monthly signals rather than shorter term signals because we aim to capture the overall market moves and reduce “noise,” or false signals.

We use the historical volatility of each market and a max loss per position limit to determine our maximum allocations. For example, if a given market has a historical volatility of 50%, and our maximum loss per position limit is 2%, the maximum allocation we can have to that market is 4%. But if the historical volatility of another market is only 20%, with the same maximum loss per position limit of 2%, we could allocate up to 10% to that market.

We aim to allocate our risk, not our capital, evenly across open positions. However, we also use a maximum position size of 20%, regardless of the historical volatility profile. The maximum does not apply to US Treasury Securities.