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This month's edition is now available in the Members Area.

The Historical Record and spreadsheet will be updated later once Opening Prices are available.

Market Review 2018

It's important to understand what happened in the final quarter of 2018 before we close that chapter.

In December, for the first time in our publishing history, we had to issue multiple market updates during the month, some to adjust the portfolio and others to review the market conditions. The unusually ferocious decline that the market encountered was highly rare, making it the worst December in stock market history since 1931. There have been only 9 instances since 1928 when the S&P 500 fell more than 10% in 6-weeks - two such instances were in the fourth quarter of 2018 when it fell 11% in October and 16% in December. The drawdown in the model portfolios was quite substantial. Even though on a full year basis, the positive performance of the model portfolios well exceeded the negative returns of all key benchmark indexes, the drawdown wiped out months of gains as well as the performance associated with subscribers who joined during the second half of the year.

The systematic methodology operates on rules which kick in on an incremental basis. As the market conditions improved during November it appeared like another normal correction. The last days of November and the first day of December were incredibly positive for the stock market conditions when the Federal Reserve Chairperson walked back his comments to the rates now being very near the neutral, and thereafter President Trump announced a 90-day detente on trade tariffs with China. This moved the model portfolio from a 50% invested position in November to a 90% invested position in December, and that made for a very difficult month. In hindsight, this was a bull trap as the market descended rapidly in a matter of days.

Although the uniqueness and the uncommon nature of such a market decline are clear, we are making adjustments to the models with the intent to close positions more rapidly in a hostile environment. 

At this time we are in a bear market. Consequently, patience is required. After such a massive technical breakdown, it is quite typical for the markets to consolidate and even retest the prior lows to see if they will hold. However, what is never clear is if this retest will happen in days, weeks or months.

We are 50% invested in the model portfolios at this time and will adjust this exposure downwards if market conditions warrant. 

We wish you a very Happy New Year!

For any questions, kindly contact us at support@GraycellAdvisors.com or simply use the website Contact form.

Sincerely,
Tarun
Graycell Advisors

Graycell Advisors, and its affiliates, officers, employees, families, and all other related parties, collectively referred to as ‘Graycell’ and/or ‘we,’ is a publisher of financial information, such as the Prudent Biotech and Smallcap newsletters. Historical performance figures provided are hypothetical and unaudited, and based on our proprietary analysis and system performance, back-tested over an extended period of time. The performance results obtained are intended for illustrative purposes only. Past performance is not indicative of future results, which may vary. All stock and related investments have a degree of risk, which can result in a significant or total loss. In addition, smallcap segment is characterized by much higher risk and volatility than the general stock market. The Information contained herein does not constitute a personal recommendation or takes into account the particular investment objectives, financial situations, or needs of individual investors. If you decide to invest in any of the stocks of the companies mentioned in the newsletters, samples, alerts, etc., sent to you or available on our websites, you can and may lose some or all of your investment. You alone are responsible for your own investment decisions. We are not liable nor do we assume any responsibility for losses incurred as a result of any information provided or not provided or not made available in a timely manner, herein or on our website or using any other medium.  We also cannot guarantee the accuracy and completeness of any information furnished by us. Graycell is not a registered investment advisor and nothing contained in any materials should be construed as a recommendation to buy or sell securities. We may or may not already have existing positions in the stocks mentioned in our reports. Our models are proprietary and/or licensed and can be changed or revised based on our discretion at any time without any notification. Subscribers and investors should always conduct their own due diligence with any potential investment and consider obtaining professional advice before making an investment decision.