Leuthold Core Investment (LCORX) uses measures of market trends and technical factors to shift positions among all the major investment assets based on valuations and momentum. It’s a solid play in this bearish market environment, says Bob Carlson, editor of Retirement Watch.

Stock investors should be concerned about profit margins and earnings here. Slower economic growth should lead to further declines in the revenues and earnings of most publicly traded companies. Also likely to cause profit margins to shrink are higher wages, lower productivity, the end of fiscal stimulus, higher commodity prices, reduced global trade and other factors.

Recent stock market prices don’t reflect these factors and the potential for sustained lower revenues, earnings and profit margins. As some analysts say, the market is priced for perfection and does not have a margin of safety that allows for sticky inflation, higher interest rates and slower growth.

With markets at or approaching another turning point, your portfolio needs to be prepared. The mainstay of our portfolios for most of the last year has been a collection of four flexible, multi-asset, tactically managed funds. They’ve lagged during the market rally because all are cautious about the market indexes, but that should change along with market conditions.

Over 40 years, the Leuthold firm developed many of the indicators it uses. In its stock positions, the LCORX fund can overweight and underweight individual sectors and stocks. So, the fund can have a high stock allocation when it is bearish on the market indexes but bullish on select sectors or stocks.

Leuthold Core Investment (LCORX)

Source: Stockcharts.com

The fund began 2022 very bearish about both stocks and bonds and had a high cash position. It became less pessimistic during the year but still isn’t bullish. Recently, the fund was 54% invested in U.S. equities, but 17% of the fund also was in short positions.

The bond allocation still was very low, and more of the fund was in non-U.S. bonds than U.S. bonds. Only 4% of the fund was in cash. LCORX was recently down 2.83% over four weeks, 1.09% over three months, 0.50% for the year to date, and 2.69% over 12 months.

Recommended Action: Buy LCORX.

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