Weekly Risk Report 4/2/2010
Our market risk measure has been showing some stress with the rise in the general prices of stocks and mutual funds. While we are pleased to see our portfolios rising in value, it isn't necessarily comfortable to see the risk also rising. While still moderate, it is noteworthy that we now have one component mildly bearish (Speculation) while the others remain neutral to mildly bullish.
Price/Earnings Ratios for the major indexes are as high as they were back in 2007. The good news is the short term interest rate is still nominal. In '07 short term rates averaged 4.67% for the full year. If rates were as high right now, this would give us a very bearish Relative Valuation. So, we will be watching the 13 Week Treasury rate very closely.
The quarter ended with our portfolios well positioned relative to market risk.
