19 Aug Market Risk Report as of August 19, 2019
From Chief Investment Officer Tom Veale,
“Another confusing week of trading left the MRI unchanged showing 28% suggested cash for diversified stock accounts. The MRI Oscillator move to +1 with three components rising slightly in their own ranges for risk. Just the Divergence Index remains bearish while two more components are still close to their own bullish ranges.”
“It’s my feeling this is going to work out to a modest consolidation and somewhat sector driven. Energy continues to be sluggish while recent trading has pumped up priced in the more defensive sectors and precious metals. Further, we’re seeing long maturity bond funds at levels and 12 month gains not seen in a long time. Some profit opportunities have occurred with these shifts in prices.”
The Market Risk Indicator is an assessment tool that serves as a guide through all markets as to the prudent use of a liquid cash cushion. It helps determine an approximation of the amount of cash reserve relative to a diversified equity portfolio. (this is depicted by the graph above)
At times of high risk in the market, the MRI will suggest a higher level of cash reserve. At times of low market risk, the MRI will suggest a lower level of cash reserve. This investment process helps to measure and manage market risk.
Because of this, the fear associated with the uncertainty of the market can be replaced by the security of a sound investment strategy.