Spectrum developed a propriety indicator that shows us when to step to the sidelines to reduce equity exposure. This methodology is designed to capture many technical indicators and consolidate them to illustrate bullish and bearish environments.
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The lower section charts this methodology and provides “buy” and “sell” points indicated by the yellow circles. This macro view of the general market can be used not only in equity positioning but also in our bond models. Risk management is at the forefront of our investment philosophy and preserving principal is extremely important for our clients.
InvestTech says it best in its November 17, 2017 issue.
If the S&P 500 closes high in November, it will have posted a positive total return for 13 consecutive months, surpassed only once in 90 years – 1959. The next year (1960) the economy entered a recession.
We’re not sharing these insights because we have turned bearish in our market outlook. We haven’t. Most technical evidence and virtually all macroeconomic data still point to new bull market highs immediately ahead. However, it is becoming increasingly important to remember that trees do not grow to the sky, and bull markets do not last forever. And don’t forget that virtually every bear market except one (1956) has repossessed or taken back roughly one-half or more of the previous bull market’s gain. www.investTech.com
it is becoming increasingly important to remember that trees do not grow to the sky, and bull markets do not last forever.
Spectrum agrees. Our models also indicate a bullish market environment for equities so until our indicators reveal elevated risk we will participate, but our exposure is watched closely on a daily, hourly, even minute by minute basis. We will act quickly to reduce exposure when our indicators reveal elevated equity risk.
Equally important to remember – just like all bull markets come to an end, bear markets end as well. Spectrum’s philosophy, investment methods, and analysis tools allow us to position our client’s preserved principal to take advantage of the next market opportunity.