Market Risk Report as of September 23, 2019

From Chief Investment Officer Tom Veale,
“There’s not change this week in the Market Risk Indicator as it holds at 24% suggested cash be held in reserve for future buying in diversified stock portfolios. The MRI Oscillator is a mild +1 indicating only modest upward risk pressure.”

“Three components moved downward slightly in risk profile while the Relative Valuation Index rose slightly with the median P/E. All components are in their respective neutral ranges.

 The market’s absolute breadth wasn’t as good last week as a week earlier but some consolidation was expected. It would appear that investor consensus is again better than a month ago as trade tensions seem to be less of a focal point. While interest rates dropped slightly last week the 13 Week Treasury Coupon rate is still slightly above inflation.”

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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