Thesis: Federal Reserve announcements move markets. These days around Fed announcements are associated with hugely increased stock market volatility compared to normal days. This portfolio attempts to take advantage of this volatility by using a proprietary model to predict the market direction on and around Fed announcement days.

Portfolio Construction: This portfolio generally will hold SPY, an ETF which tracks the S&P 500 index. Near Federal Reserve announcements, the portfolio may tactically transition to leveraged ETFs, such as SPXL, to take advantage of anticipated higher-than-average returns. Post-announcement, the portfolio will promptly rebalance back into holding into SPY until the next Fed announcement is near.

Risks: This portfolio maintains continuous exposure to the stock market and is therefore susceptible to the inherent volatility and potential declines associated with equities. Additionally, this portfolio utilizes ETFs with high amounts of leverage on Fed announcement days, on which stock market is exceptionally volatile. The ETFs’ leverage magnifies this volatility, leaving the portfolio exposed to extremely high gains or losses on Fed announcement days, including the possibility of complete loss of invested capital.