Weekly Risk Report 8/4/2009
With the healthy rise in market indexes has come a moderate rise in our measure of market risk. While only “average risk” we know this means something other than no risk. The SignalPoint Process recognizes this and has been making small incremental adjustments to the holdings in most of our portfolios. We’ve seen more selling activity in our stock market portfolios than in our income portfolios, but both have been participating.
Partially because volatility is higher in the portfolios with stock funds in them we’ve seen the greater activity. The income portfolios, however, are following the trend even if not at the same exact pace. The cash reserve levels have risen just since the end of the second quarter with selling across many business sectors. We’ve seen selling in all three areas of our income portfolios including government funds, real estate funds and corporate funds.
Relative Valuation (RV) is increasing at the most rapid pace of the four components. This is because of the rise in the Price/Earnings ratio shown. As prices rise the P/E rises, too. The overall RV outlook is still bullish as short term interest rates remain very low by historical comparison. The other components remained mostly unchanged for the week.
