Hello to all iFlip A.I. Circle Members,

September was not a good month for the “Market” with the SPY (S&P 500 ETF Trust) down -5.5%. October was languishing until the last two days where it abruptly rallied +2.8%. Dips are continually being bought. However, my experience tells me that resistant rallies going up are often a tall tale sign of a bear market.

Despite my own opinions, iFlip A.I. SmartFolios don’t care about what I say or think, instead what the market does. At the end of September, the iFlip SmartFolio “S&P 500” bought back into the SPY at 437. Many of you ask why?

The answer is simple. It’s because the risk-reward was favorable. Like any game of chance, it’s ok to lose as long as the bets you take are established in tested logic. The converse is true. It’s ok to take profits as long as there is some tested logic. Currently, the risk-reward on the S&P500 SmartFolio’s bet was 1.3:1. Not the best odds but adequate to allow the signal to generate and execute for those of you that have the SP500 SmartFolio, which is the majority of iFlip customers.

I continue to remain pessimistic about the market until the end of October. I believe the barriers to continued upside keep increasing. Several fears are coming out. Fear of inflation, fear that demand has risen too much, fear that supply chains will remain under pressure, and fear of losing profits. But remember, fear is an emotion and emotion has no place in a solid investment strategy. iFlip exists in many ways to manage this exact issue: To overcome the fear of executing the difficult trade.

Despite being somewhat correct on the market having problems in September, this was not the case with the Red Oil Smartfolio. See chart below.

Red Oil advanced +10% in September and has continued into October. Inflation seems to have “trumped” the administration. Despite governmental interference to dismantle the Oil industry and force it green, it appears that the 283 million cars in the USA that are NOT electric need gas for a reopening economy. Demand has increased, supply decreased, and Oil companies prospered. Again, this is the reason we allow the A.I. SmartFolios to run themselves. Over time, an organized approach will consistently outperform any emotion or even the best insights from the best prognosticators.

SPY I outperformed the market During September: it was up +0.5%, while the S&P500 (SPY) went down -5.5%

Finally, the SmartFolio “4Q Rotate” was updated on October 1st, with 10 new companies. So far, that’s up +3.5% for the quarter as of the first close of the month. So let’s all keep an eye on this very aggressive strategy that focuses on rotating every three months to own the highest directional beta stocks.

Until two weeks from now, happy investing.

Kelly and the iFlip Team

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