I’m pleased to share an update on recent market developments and the strategic positioning of Portfolio Shield™ for November 2026.
Over the past month, equities finished lower and bonds finished higher. In October, we held the existing intermediate- and long-term Treasury positions and noted that the sizable short position in the bond market could be vulnerable to a short-covering rally if selling pressure eased. So far, that decision has proven beneficial. Long-term Treasury prices set their low early in the month and have since recovered meaningfully.
The bond rally came alongside a decline in stocks led by large technology companies. Amazon reported third-quarter revenue and earnings below expectations and negative free cash flow for a second consecutive quarter. The results deepened concerns about how much Big Tech is spending on artificial intelligence and when that spending may pay off.
Notably, bonds rallied even though inflation remains elevated. In my view, the bond market may be focusing less on inflation and more on the risk that slower AI-related investment weighs on economic growth.
I believe stocks can rally from here, particularly if interest rates continue to decline. Lower rates have, at times in the past, supported equity prices following a sharp selloff. However, given the uncertainty surrounding technology earnings and elevated inflation, I believe remaining hedged for the next month is the more prudent course.
At the same time, the short position in the Treasury market remains large and has continued to grow. If yields continue to move lower, those positions may need to be covered. In my view, that offers potentially more upside in the short term for Treasuries than the equity market does. However, there is no assurance this will occur, and if interest rates rise again, the value of these positions could decline.
The key data point I’m watching is the October employment report, which the Bureau of Labor Statistics is scheduled to release on Friday, November 6. A softer labor market could put further downward pressure on yields, while a stronger report could test the recent bond rally.
For these reasons, the strategy will remain unchanged for November. I will monitor conditions closely and adjust as needed. A minimal cash position of approximately 0.3% will be maintained across all models.
As a reminder, all Portfolio Shield™ models are rebalanced on the first trading day of each month, and new funds received are invested according to your selected model at that time. If you wish to adjust your strategy or risk level, please contact us before the next rebalance. Accounts with a zero balance for six consecutive months may be closed, and the associated advisory agreement terminated.
We remain fully committed to your financial success. Please don’t hesitate to reach out with questions, to discuss your Portfolio Shield™ strategy, or to inform us of any changes in your financial situation or objectives so we can continue providing the most suitable guidance.
Thank you for your continued trust. We are dedicated to managing your Portfolio Shield™ with discipline and care as we work together toward your long-term financial goals.
Steven Van Metre
