Tech Talk for Friday January 3rd 2020

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Pre-opening Comments for Friday January 3rd

U.S. equity index futures were lower this morning following news that a U.S. airstrike killed an Iranian general and a top Iraqi commander. S&P 500 futures were down 36 points to 3,222.75.

Iran warned retaliation for the U.S. airstrike. Commodity markets responded. WTI Crude Oil jumped $2.27 to $63.45 per barrel. Energy stocks are expected to open higher. . Gold jumped $36.00 to $1,548.30 per ounce. Gold stocks are expected to respond.

Crude oil moved above $63.38 per barrel extending an intermediate uptrend.

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Gold is testing a previous high at $1,566.20 per ounce.

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Air Canada (AC $50.00) is expected to open lower after Cowen downgraded the stock to Market Perform from Outperform.

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EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2020/01/02/stock-market-outlook-for-january-3-2020/

Note seasonality charts on U.S. International Imports and Exports.

StockTwits released yesterday @EquityClock

Align Technology $ALGN, a NASDAQ 100 stock moved above $281.57 extending an intermediate uptrend.

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KLA Tencor $KLAC, a NASDAQ 100 stock moved above $179.95 to an all-time high extending an intermediate uptrend.

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Hong Kong iShares $EWH moved above $24.72 extending an intermediate uptrend.

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BCE $BCE.CA, a TSX 60 stock moved below $59.89 completing a double top pattern.

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Grain ETN $JJGTF moved above $22.25 setting an intermediate uptrend

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Energy SPDRs $XLE moved above $60.65 extending an intermediate uptrend

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Industrial SPDRs $XLI moved above $82.24 to an all-time high extending an intermediate uptrend.

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Chile iShares $ECH are responding to higher copper prices. Nice breakout above $34.26 setting an intermediate uptrend.

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Israel iShares $EIS moved above $57.96 to an all-time high extending an intermediate uptrend.

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Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for January 2nd 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for January 2nd 2019

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for January 2nd 2019

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Green: Increase from previous day

Red: Decrease from previous day

S&P 500 Momentum Barometer

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The Barometer added 0.60 to 79.76 yesterday. It remains intermediate overbought.

 

TSX Momentum Barometer

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The Barometer slipped 0.77 to 67.58 yesterday. It remains intermediate overbought.

 

Disclaimer: Seasonality and technical ratings offered in this report and at

www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed

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26 Responses to “Tech Talk for Friday January 3rd 2020”

  1. Ron/BC Says:

    Here are a bunch of major ETFs or Indexes with the $SPX overlaid on very long term charts. Can’t help but notice just how smooth the $SPX has traded over a decade or two compared to these other markets. One can see why so many buy soaring prices on these major ETFs and then exit these positions when they plunge again for a long time before stabilizing. Sticking to an $SPX type ETF seems to be a good bet unless you want the thrills of a wild ride up and down with many other major ETFs and would be even more volatile for stocks. Good for those that want a “rush” it seems. These charts show why it has been said many times that individual investors and even the Mutual Funds can’t outperform the $SPX. I was surprised to see how smooth and consistent the $SPX was compared to other ETFs and Indexes and especially individual stocks.

    https://stockcharts.com/h-sc/ui?s=XEG.TO&p=D&yr=18&mn=0&dy=0&id=p91219591960&a=710434178

    https://stockcharts.com/h-sc/ui?s=XME&p=D&yr=14&mn=0&dy=0&id=p25055065034&a=710436179

    https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=14&mn=0&dy=0&id=p29440894730&a=710437427

    https://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=12&mn=0&dy=0&id=p84000172008&a=710438103

    https://stockcharts.com/h-sc/ui?s=XLF&p=D&yr=15&mn=0&dy=0&id=p46575251407&a=710441271

    https://stockcharts.com/h-sc/ui?s=XLK&p=D&yr=15&mn=0&dy=0&id=p81216202512&a=710443338

    https://stockcharts.com/h-sc/ui?s=%24COMPQ&p=D&yr=20&mn=0&dy=0&id=p34547144247&a=710560786

  2. Rol Lew Says:

    Five Year “past performance” 2015-2019 . XLK all the way.

    http://www.sectorspdr.com/sectorspdr/tools/sector-tracker

    For 2020 – 2024 which one will it be?

  3. Larry/ON Says:

    Rol Lew – The long-term growth in the tech sector cannot be found anywhere else.

  4. Ron/BC Says:

    Rol Lew

    I’d prefer the $SPX ETFs over the XLK due to its diversification. The XLK is just one sector. And the XLK chart in #1 post with the $SPX overlay shows the $SPX had higher highs and higher lows all along as well as being diversified. Hard to beat that combination for a smoother ride with reduced risk.

  5. Paula Says:

    Ron/BC,
    Re #1. These charts are great for long term (15 year) hind sight perspective. BUT who would have held through that time period with all the drawdowns? I am sure that some did, probably more through not knowing what else to do and of course, over the long term they would have done very well. But you did not and can you see yourself buying and holding for the next 5- 10 years?

    When you look at such a long time period, the jagged peaks and troughs are smoothed out but living through them is another matter. Where do you draw the trend lines? I like to look at these for perspective but really I am much more short term focused.
    It is also interesting that bonds did just as well as stocks over this time period. Of course that is due to interest rates going down and after an almost 40 year bull market for bonds, that is not likely to happen over the next 40 years. (We should all live that long!) And over that time period, bonds were more volatile, not less, as they are touted to be.

    Tech stocks make up around 26% of the SPX. So the diversification benefit may be an illusion. I think that getting into sectors that are outperforming SPX and staying with them until that changes would be better. Of course, it would involve more active trading.

  6. bruce Says:

    paula
    you make some excellent points….if a person just bought and naively held through thick and thin they emerged a huge winner….but we’re all too smart to do that….i’ve thought that most of us are too close to the horses afraid of every nasty forecast or news event……as Ron has said he tunes into BNN but with the volume muted….good advice….

  7. Ron/BC Says:

    Paula
    I agree with most of your post but my point in posted a bunch of ETFs with the $SPX overlaid was to show how the $SPX type ETFs were less volatile than most of the other ETFs that would shake out most investors. The bad news alone on most Sector ETFs while falling would rattle most investors. So with the diversity and steady and even out performance and world recognition as the best Index in the world I would most likely invest in the $SPX ETFs rather than the others “””IF”””” I was investing in the long term. I have always been a short term trader as that’s the way I’m hardwired. But I’d like to have a percentage of my money invested in the $SPX ETFs and just forget about it. The peaks and troughs are not as large as most other sector ETFs. And one can make up a set of rules for themselves to exit on roll overs and buy back on recoveries. I wouldn’t mind being in cash during questionable periods. Watching Weekly charts would help one stay in a trade without the Daily noise too. So yes, I didn’t do this but would like to at some major selloff price point with some money and let it ride. It struck me about how most investors and fund managers historically don’t beat the $SPX and after playing around with some charts I can see why. Trying to hold investments through those multi week and multi month selloffs with most other specific ETFs would drive me crazy and I just wouldn’t do it. One would need blind faith which is something I just don’t have when dealing with the stock market. I’ve just heard too many sob stories over many decades to be a believer. And many of those sob stories were from highly intelligent, successful people that were well financed and well connected. But most of those stories were not from buying and holding the $SPX but from going “all in” on what seemed like “ONE” sure thing. So meanwhile I’ll likely look for short term trades until the $SPX is looking like it’s bottomed out. (Plus keep working on my condo to increase its value)

  8. rick Says:

    Ron/BC

    With all my respect your chart is wrong .
    Actually from 2005 XLK outperform SPX big time .
    http://schrts.co/sPrxuyAf
    from 2005 XLK = 435 % and SPX = 166 %

    When you want to compare XLK and SPX you have to use :
    in TYPE = performance
    and in indicators = price-performance

    If you use price instead of performance your chart will show the same level of SPX and XLK in the present( upper right side ) and not in the past ( lower left side )
    So it will shows that you need in 2005 an upper price of SPX than XLK to reach the same level in 2020
    Or you can use this :http://www.tickertech.com/cgi/returns.mpl?symbol=SPX&smonth=12&sday=31&syear=2004&emonth=01&eday=04&eyear=2020&compareto=other&other=xlk

    10.000 $ invested in SPX in 3 January 2005 will be today 26.888 $
    10.000 $ invested in XLK in 3 January 2005 will be today 54.017 $ with dividends re-invested

  9. rick Says:

    Better to compare SPY ( not SPX ) with XLK :
    http://schrts.co/nRCBfdFc

    http://www.tickertech.com/cgi/returns.mpl?symbol=SPY&smonth=12&sday=31&syear=2004&emonth=01&eday=03&eyear=2020&compareto=other&other=xlk

    10.000 $ invested in SPY in 2005 will be 35.869 $ in 2020 with dividends re-invested
    10.000 $ invested in XLK in 2005 will be 54.017 $ in 2020 with dividends re-invested

  10. rick Says:

    But I agree with your point at #7 :
    diversification is reducing the volatility ( at least in part ).

    Some investors are reducing the volatility even more by adding TLT .
    The usual mix is 60 % SPY and 40 % TLT .
    http://schrts.co/pPGRVkuW

    http://www.tickertech.com/cgi/returns.mpl?symbol=SPY&smonth=12&sday=31&syear=2004&emonth=01&eday=03&eyear=2020&compareto=other&other=tlt

    We can see in 2008 , August 2011 and January 2016 : when SPY goes down = TLT is going up.

    That reduce the volatility .

    But some investors have strong stomachs and they do not care about volatility .

    GLD = Another investment that goes up when SPY is going down

    Maybe 60 % SPY , 30 % TLT and 10 % GLD ?
    Or 50 % SPY , 40 % TLT and 10 % GLD ?

    CPP = canadian pension plan = 40 % in stocks , 40 % in bonds , 20 % in real estate , infrastructure and private investments .

    So the question for an investor is : how strong your stomach is ?
    And keep in mind that at 60 you have a different stomach than at 30 ( years )

  11. rick Says:

    Another good investment that we should not forget is real estate .
    2 ways to invest :
    A. using REITs or ETFs of real estate ( for example XRE.ca )
    advantage = less work
    disadvantage = 1. you have to pay capital gains taxes and dividend taxes sometimes .
    2. no leverage in almost all situations
    B. buying a house ( or two or three if you have kids for example )
    advantage = 1.no capital gains for primary residence
    2. huge leverage 5:1 = at 20 % downpayment
    disadvantage =1.more work
    2. you have to pay property taxes and repairs

    http://www.tickertech.com/cgi/returns.mpl?symbol=SPY&smonth=12&sday=31&syear=2004&emonth=01&eday=12&eyear=2020&compareto=other&other=xre.ca

    You can see this : when FED is raising fed funds until it inverts the yield curve , both real estate and stocks will go down . 2008 != we need a smart FED !
    So real estate does not reduce the volatility in stocks !
    We just think the real estate is safer because we do not know the price of our house in real time (https://www.bcassessment.ca show in January 2020 the assessment for 1 July 2019 , 6 months later and is an approximation anyway)
    Comparative with that , we do know the price of our stocks every minute and we are influenced by that and our stomach and our level of happiness is going up and down like crazy !

  12. Ron/BC Says:

    Rick

    Trends that used to be just haven’t consistently acted the same over the years. It has been said everything now is ass backwards and you can’t count on these relationships that used to always be the same. Even the TLT chart in post #1 you can see the $SPX often trades along with it in the same direction. And note Copper has been in a downtrend since 2011 despite a strong stock market and economy. And interest rates are still very low even with a strong housing market and heavy borrowing. My point is you just can’t assume that many of the relationships once seen in the past that were normal will continue anymore. Nothing is normal anymore…………

  13. Rol Lew Says:

    BIGCHARTS shows daily options charts

    bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=SPY%23C2020C320000&insttype=Option

    http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=AAPL%23C2020C260000&insttype=Option

    (Above Charts are HISTORY…. Who knows what comes next?)

    Also intraday……. spotty for low volume traders

    http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=AAPL%23C2020C260000&insttype=&freq=6&show=&time=2

  14. Ron/BC Says:

    Here is a 20 year chart of $GOLD. Price has reached major resistance at $1560 and needs to clear this price level and hold to suggest further gains. A breakout with this chart pattern that holds suggests a run to the $1800 to $1900 price points. The two above ratio charts show nothing much has changed in the relationship of the big $GOLD Stock ETF:GDX to $GOLD as it continues to be flat. And the relationship between $Silver and $GOLD continues to be weak. Both the $GOLD stocks and $Silver historically outperform the metals when in confirmed uptrends. So no cigars yet as resistance is just that but definitely worth watching closely.

    https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=20&mn=0&dy=0&id=p57380836676&a=673066105

  15. Rol Lew Says:

    … From JP, one year ago

    ” ” JP/BC Says:
    January 3rd, 2019 at 4:48 pm
    Re #3. Option Straddles and Strangles???? Is that a type of BDSM ? Just kidding. I hadn’t heard that term as so looked it up.

    I see on your chart the term “concrete ceiling”. It doesn’t look good. It will be interesting to see if the December low holds.

    Gold and gold stocks are looking interesting. They are moving contrary to the general market. If the sale of the markets becomes a waterfall I expect the gold stock will reverse direction. Bullion may still rise.” ”

    Last year 2018 to move in GLD started in October. $13. 10%.
    For 2019, it started in December. $7 so far. 5%.

  16. Rol Lew Says:

    https://seekingalpha.com/article/4315149-silver-lots-of-action-in-2020

    ” The rise in open interest is a validation of the bullish trend as market participants continued to expect higher gold prices in the new decade that began on Wednesday, January 1, 2020. Central banks continue to be buyers of gold, adding to their reserves. The higher gold rises, the more upward pressure it will put on the silver market.”

  17. Bernie Says:

    rick & Ron/BC,

    Yes history never repeats but it often rhymes. What else do we have to go on?
    How often have we heard “this time its going to be different?

    Rick,
    The richest investors have traditionally made the bulk of their money from holding a diversifed portfolio over the long term. Its not for everyone but I find most investors do better, and sleep better, when they put a well diversified portfolio and then turn off the news and let it ride without making any wholesale changes. You know the saying “an investment portfolio is like a bar of soap, the more you handle it the smaller it gets”. Diversifying simply means covering the bases by hedging with dissimilar assets with a heslty mix of negatively correlated securities. Thats my take.

    I know you like to use tickertech because you’re famoliar with it. I thnk you would find “Portfolio Analyzer” to be a much superior tool in your comparisons and research. Its a free site too with much to offer. So far I’ve just used the Backtest Portfolio fearure but I have used it often with my what ic scenarios and love it. Try it out. A brief overview of the site follows and link below that.

    Portfolio Visualizer is an online software platform for portfolio and investment analytics to help you make informed decisions when comparing and analyzing portfolios and investment products. Our suite of quantitative tools covers portfolio modeling and backtesting, Monte Carlo simulations, portfolio optimization, factor models, and tactical asset allocation models.

    http://Www.portfoliovisualyzer.com

  18. Bernie Says:

    I made a few typos above and began by naming Portfolio Visualyzer incorrectly. I’ll blame it all on the smart phone my wife gave me when she updated? An another phone. Ha! Hope you get the gist of what I’m saying. Next time I post I’ll use my desktop so I can type with 3 fingers instead of one pinky.

  19. Ron/BC Says:

    Bernie

    I’ve thought more about longer term investing than ever before. Don’t know why as in the long term we are all dead and I’m definitely a long ways down that road. I’ve recently spent some time on comparing many sector ETFs or Indexes with the $SPX. My intention was not to see which one had the best percentage returns as I feel most investors get far too caught up in percentages rather than actual dollars and safety & consistency through diversification and comparative volatility. And each factor is enough to trash a single investment. And most assume everything will repeat in a similar pattern each time up and down and that is the problem as there is not the same correlation there once was with the markets. Recall the old and valid saying, “A chain is only as strong as its weakest link.” You only need one factor to trip you up. And all my adult life I’ve read a thousand times that investors and fund managers rarely ever beat or match the $SPX. I don’t care if some other ETF beats the $SPX at times or not as that is not the point. The world watches and treats the $SPX as the best U.S. market in the world and if a stock within it is doing poorly they’ll replace it with a better one. And it pays a dividend for those that focus on that. It is human nature to try to outsmart the broad market but history has shown an investor would be wise to invest in a $SPX type ETF rather than the latest and hottest markets or a complex group of single stocks. I’ve known a lot of very successful people and despite their successes they all have a bad story about major stock market losses. And it only took one odd thing to occur that cost them so much. Most everything they did worked great. The latest was a successful business woman I know that lost a fortune on what looked like a sure think. I still can’t get over that. But each time the problem was with one stock or Industry. But it does make you look in a mirror and get serious about what you are doing with your money and with extreme caution and an exit strategy. But we all see things differently so to each their own. I’m sure you and many others have a way to accomplish the same thing as the $SPX does or better but from my experience I’ve found to try to keep things as simple as possible in money matters and to choose simplicity over complicated strategies or hot markets.

    By the way it has been pounding down rain here in Victoria for days on end to the point many of us wouldn’t mind some snow instead. At least it’s dryer. But I guess mother nature needs to fill up the water reserves and soak down the ground for all the growth here. Just wish it would all occur at night. But there is still golfers out there in the rain. Unfortunately my partner wont golf in the rain.

  20. Paula Says:

    Ron/BC,
    It does seem that you are becoming more interested in long term investing but I wonder if you will actually do it. As you say, you are hard wired to be a short term trader and I think that I have the same tendency.The way I am trying to deal with this is to have different baskets/accounts that have different objectives: short(er) term trading, long(er) term trading, income investing. I tend to do the short term trading in my USD account, since there are more opportunities and liquidity there. The long term trading (still can’t call it investing) is in the registered, non-taxable accounts. The income investing is all in a taxable Canadian account using a small number of select Canadian stocks to take advantage of the dividend tax credit. This is how I am trying to overcome the biases I (we all) have when dealing with money. I know I have tendencies to like to take profits too soon and have trouble staying with a trend. If I try to fight these tendencies too much, I usually lose money, so I have to satisfy them to some extent but still grow and learn to improve. One big step for me was to close my margin accounts and stop trading options: less trading = less trading costs and less screen time = less stress and more time for healthier activities.

    Bernie, Rol Lew, Good to see some more discussion going on and not just about individual stocks. I like these more general topics to do with asset allocation, portfolio management, psychology…

    Rick- thanks for the performance charts. I have saved them and will refer to them. I have often wondered how to use the performance features in stockcharts. (And have been too lazy to figure it out from their chart school. LOL) I have tended to use ratio charts with a 20day EMA below the main chart:

    https://stockcharts.com/h-sc/ui?s=XLK&p=W&b=5&g=0&id=p76962193664&a=711255406

    The other day when I was talking about diversification through asset classes I realized I forgot the big one of real estate. I thought you summarized very well the pros and cons of physical vs REITS/ETFs. I remember bringing this up years ago when Ron/BC was talking about his real estate adventures. I personally much prefer the non-physical route (aside from principal residence) but each to his own…

  21. Paula Says:

    Bruce,

    Re #6: thanks. Yes, watching too closely can be bad for our financial health. Someone recently said something about a bar of soap and handling it too much makes it smaller…
    I always have the tv on mute. PVR and then play back on fast forward, and only listen to a few select people.

  22. bruce Says:

    paula
    i only record programs on BNN also….i find it hard to believe the amount of advertising they have………..repeated over and over the same ads….they obviously aren;t charging these advertisers enough…that guy praising the past record of mortgages was on twice an hour every hour for 2 years….i figure 50,000 spots at maybe $10 a pop….do advertisers not realize we record everything?…

  23. Ron/BC Says:

    Paula

    Here is a site I like to listen to weekly. HoweStreet.com called “This Week in Money”. Ross Clark is a well known technical analyst that also studies cycles etc. His subscription site is Charts and Markets as well but I generally just listen to his comments and ignore the rest of the guests. I don’t like too much info from too many analysts. Just click on LISTEN NOW and then scroll down to the podcast horizontal bar arrow and he tends to start the program after the mediator welcome. He doesn’t have a big ego like so many others jumping up and down with wild predictions. We all have to realize they are all just making a living.

    https://wm-no.glb.shawcable.net/zimbra/mail#2

  24. Paula Says:

    Bruce, yes, most of their programming is advertising and the shows are often repeated. I have never understood how/why advertising works but it must or why would they bother?

    Ron/BC – thank for the link!

    Here is Civacco’s weekly podcast which I like to listen to. This was given to us by Tawni years ago.

    https://www.ccmmarketmodel.com/short-takes

  25. Ron/BC Says:

    Paula

    So did that link take you to Howestreet.com : THIS WEEK IN MONEY??? With the podcast bar below to start with Ross Clark? Thanks for your link. I recall Tawni’s post suggesting Civacco’s Weekly link.

  26. Ron/BC Says:

    Paula
    The only type of trading that ever really kicked my ass was trading Options. I know an expert Option dealer can prove to you that it is the best thing since sliced bread and one can come up with Option Strategies that keep your money safe and growing. From what I have experience and learned is that is B.S.theory that in reality just isn’t so. I don’t touch them anymore and don’t read or listen to the bullish stories about them.

    But as far as long term investing goes I have done that over the years. The 33 month 4% GIC from Coast Capital was one and 60% of it was TFSA money so not taxable. It does bother me that I can’t touch that money until January 2021. So far that is a great interest rate and rate of return guaranteed but I didn’t know that when I bought it so have just been fortunate,so far. Rates ‘could have’ been much higher now. Not sure what I’ll do when it’s cashable. Always nice to have a bunch of cash handy for peace of mind and opportunities that come up. Even buying real estate if you make a cash offer on a place with no questions asked even their realtor will encourage the owner to take the offer as you don’t need appraisals and bank approvals or anything else. Meanwhile you will have read the depreciation report and know exactly what you’re buying. That is a real money saver. And as far as selling a stock position too soon I’ve never had a problem doing that as you’ll never go broke taking a profit. And “IF” the stock breaks out again after then buy it back again as you have a profit for a cushion and can keep doing that without riding it down through a major selloff. Sell it then buy a new high in it and hold it. This isn’t a marriage. Those are my thoughts on things but everyone has their own strategies and risk tolerance.

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