09 Dec Market Risk Report as of December 9, 2019
From Chief Investment Officer Tom Veale,
“Again this week the SignalPoint Market Risk Indicator (MRI) is unchanged with a suggested cash reserve for diversified stock portfolios of 27%. The MRI Oscillator is +2 again suggesting only modest upside risk pressure.”
“All four MRI components remain neutral this week with equal numbers rising and falling in risk.
The Yield Curve now has a slight upward slope indicating longer maturity instruments are giving slightly better yield than shorter ones. Even so, the 10 Year Treasury note is still yielding less than 2% and shorter yields are all crowded together.”
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.