DON’T SHORT THE RUSSELL!!

Takeaway: We are removing the Russell 2000 (IWM) from the short side of our intermediate-term thematic investment conclusions.

Q: What is the most appropriate risk management decision for an investor to make when presented with a security that is bearish TREND, bullish TAIL and smack-dab in the middle of its immediate-term risk range?

A: Nothing.

Indeed, doing nothing is sometimes the most appropriate investment strategy – which is exactly what we’re doing with respect to the Russell 2000 here.

DON’T SHORT THE RUSSELL!! - R2K

DON’T SHORT THE RUSSELL!! - 1 5 2015 2 27 19 PM

CLICK HERE to view the ~2min video.

Moreover, we no longer anticipate meaningful enough downside in the small-cap style factor over the intermediate term to warrant keeping the IWM on our condensed list of shorts per the thematic investment conclusions listed in our daily Macro Playbook, instead opting to replace it with the iShares TIPS Bond ETF (TIP).

We have been telegraphing this change for a few weeks now, but to the extent you’re not yet familiar with our logic, please tune in to our Q1 Macro Themes call on Thursday, January 8th at 1pm EST for more details surrounding this change and changes to our other core asset allocation recommendations.

Best of luck out there,

DD

Darius Dale

Associate: Macro Team