Market Risk Report as of May 27, 2019

From Chief Investment Officer Tom Veale,

“As uncomfortable as last week’s market activity was it really didn’t shift our MRI or its components very much. In fact the MRI Oscillator came in at Zero, indicating no upward or downward pressure on risk. The MRI itself stays at a suggested 28% cash reserve level this week. Only the Divergence Index remains bearish indicating investor confusion is still high.”

“Even as the S&P500 has backed off of recent highs the MRI suggests we’ve not seen reason to lower the risk threshold recommendation as of yet. The high Divergence Index level could quickly fall if we see any progress on the tariff and trade fronts. In the meantime we see our Speculation Index dropping slowly and closing in on its own bullish territory.”

The Market Risk Indicator is an assessment tool that serves as a guide through all markets as to the prudent use of a liquid cash cushion. It helps determine an approximation of the amount of cash reserve relative to a diversified equity portfolio. (this is depicted by the graph above)

At times of high risk in the market, the MRI will suggest a higher level of cash reserve. At times of low market risk, the MRI will suggest a lower level of cash reserve. This investment process helps to measure and manage market risk.

Because of this, the fear associated with the uncertainty of the market can be replaced by the security of a sound investment strategy.

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