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Concentration vs. Dilution
If you own a plethora of broad index funds, you own 500 to 3,000 stocks. While that provides ‘diversification’, history proves that a narrow decile of leadership drives the vast majority of market returns—the remaining thousands tend to simply underperform the index as a whole.
The Sword is our research tool designed in attempt to identify this leadership. Each month, our M5 Algorithm filters the market to find five names exhibiting the highest relative strength, overlayed by quality. When the Shield is Green (Above the Red Line), our model focuses on these leaders in attempt to capture the “Momentum Factor”.
⚔️ January | Executive Summary
The Theme: “Sector Rotation.”
The Signal: The M5 Algorithm has identified a clear rotation for January. We are seeing continued leadership in Mega-Cap Tech paired with a constructive rotation into Healthcare.
⚔️ The Top 5 Leaders (January)
These five names represent the current Sword Rankings
