Market Risk Report as of March 15, 2021

From Chief Investment Officer Tom Veale,

“SignalPoint’s Market Risk Indicator (MRI) dropped a point this week to 45. The MRI Oscillator dropped to negative 3 as well, indicating reduced risk pressure. Only one of the MRI components rose in its own risk range while two declined and one remained unchanged. Overall, three remain bearish with one neutral.

Of special note this week is another statistic we follow. We’ve been hearing about rising interest rates, inflation, and other worrisome speculation. Little has been said about the yield dilution caused by rising stock prices, however. This histogram will give you an idea of how Value Line’s median dividend yield has fallen as stock prices have been rising.

In general, accumulating stocks when Value Line’s median dividend yield has been 2.3% or higher has been rewarded with better total return. When yield is below 2.0% price appreciation potential has usually been lower along with total return. Current Value Line Yield shows 1.8%, the lowest it’s been since November of 2007. This is another sign of the stock market being richly priced.”

 

Best regards,

Tom Veale