Market Risk Report as of December 5, 2022

From Chief Investment Officer Tom Veale,

Continued strain caused by rising interest rates and inflation has kept the Market Risk Indicator’s “Relative Valuation Index” component in cautionary territory. Confusion over the next turn in markets continues to show in the MRI’s Divergence Index as well. Overall this has kept risk pressure higher than we’d like to see:

There are plenty of political risks around beyond the reach of the MRI’s scrutiny. Those do get reflected in the MRI but only by referral. We don’t attempt to quantify political risk, either domestic or global.
With the current conditions it is feeling more like we might be in for a range bound market for some time. Until the FED corrects for some of its mistakes relative to money supply and cost it would appear price to earnings of stocks are higher than is healthy. Even so, our various portfolio strategies have been rising slowly and have done well against broad indexes.
Best regards,
Tom Veale
Two of the MRI’s components were unchanged this week with two rising. Relative Valuation and Divergence both are in cautionary territory while the remaining two are neutral and below median value. Overall the Market Risk Indicator comes in one point higher this week at 34. The MRI Oscillator rose to +5 showing increased upward market risk pressure.

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