The Sentiment Strategy is based on our proprietary Sentiment Strategy Indicator, which is derived from 20 different sentiment metrics. This strategy focuses on selecting between two ETFs: the SPDR S&P 500 ETF Trust (SPY) and the ProShares Ultra S&P500 (SSO). The SSO ETF offers 2x daily long leverage to the S&P 500 Index.

The strategy operates as follows:

• When the Sentiment Strategy Indicator falls below 50, the portfolio is fully allocated to the SSO ETF.

• When the indicator rises above 50, the portfolio is fully allocated to the SPY ETF.

This approach is based on two main ideas:

1. Over the long term, the stock market tends to rise.

2. Periods of fear and low sentiment in the market can present favorable buying opportunities.

Performance Characteristics:

• During bull markets, the Sentiment Strategy may deliver lower returns than the SSO ETF, but typically outperforms the SPY ETF.

• In bear markets, the strategy tends to experience smaller losses than the SSO ETF, while potentially declining more than the SPY ETF.

• Over time, by identifying favorable moments to increase risk, the strategy has delivered higher returns than both the SSO ETF and the SPY ETF.

Risk Considerations:
This is a high-risk strategy because it remains fully invested in equities at all times and periodically allocates to a leveraged ETF. Such an approach can lead to significant and rapid drawdowns. Allocating only a small portion of a broader portfolio, such as 1–5%, could be a way to manage potential risks.

Portfolio Updates:
The Sentiment Strategy Indicator is updated, and the portfolio is rebalanced once a week on Mondays.
Historical portfolio compositions are available on this page, while the current portfolio can be accessed at Patreon.com/SmartModelPortfolio or https://www.smartmodelportfolio.com/current-portfolios