Market Risk Report as of January 3, 2023

From Chief Investment Officer Tom Veale,

Happy New Year to all. 2022 proved to be a challenging year for investors and advisors. We, at SignalPoint, have a motto, “Buy from the Scared, Sell to the Greedy” as an abbreviated description of our portfolio management process. When markets are in distress we use reserves of cash put aside during more generous times to rebuild share inventories. That sums up 2022 fairly well. Our Portfolio Strategies did have some bright spots as the Energy sector surged last year. It generated 5 inventory reductions with just two inventory expansions. Early in the year the Basic Materials sector rose enough to trigger a 5% reduction in share inventory but then dropped in price enough to offer two buying opportunities. Most other sectors were net buyers for the year. Here’s how our U.S. Domestic Strategy looked at the close of the year.

We start 2023 with a lower risk profile than last year.

The MRI comes in “neutral” at this point but above its median value. Troublesome Price to Earnings valuations combined with rising short term interest rates defines current market index ceilings. To start 2023 we expect some sectors to do better than others until earnings growth resumes.
Best regards,
Tom Veale
The MRI’s view of risk dropped by one point to 32 this week. The MRI Oscillator shows a +2 or low upward risk pressure currently. Three components moved up slightly in risk posture while one declined. Relative Valuation Index remains stubbornly above its neutral zone while our New Issues/IPO Index is currently a full standard deviation below its median value. Our Speculation and Divergence indexes are in their own neutral territories.

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