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As we close out the month of July, the LPAM Tactical Opportunity has advanced 49.69% in 2020 vs. +0.86% for the S&P 500 and a decline of 7.00% for the Dow Jones Industrial Average. 

If one wants to know what direction the market is likely to take, simply think of the move that is likely to cause investors the most pain, and you’re likely looking in the right direction. The logic to this approach is that asset prices are impacted by flow of funds, which means that prices often bottom when sellers are exhausted, while prices often fall when supply overtakes demand. Today, investors remain defensive, sitting on cash, with overall positioning remaining net short, which suggests that the pain trade for asset prices may be higher.

After a two-week price consolidation, our portfolio of long term secular growth stocks broke out higher this week. In this week’s portfolio review, we will discuss the path stocks take when they are in a long term uptrend and why patience is often rewarded for those invested in companies that are on a path of going from good to great. Second, we are going to review investor positioning data and how we use that data to position client portfolios. Lastly, we will review the health of the high yield and investment-grade credit markets, along with a quick discussion on whether election risks are being priced into the market.