January 25, 2022 Investment Strategy Update

Whenever markets are transitioning, what had been working well will no longer be. This will generally cause losses. The goal is to determine whether it is a minor transition that could cause small losses or a major move that could cause larger ones.

In stocks, it looks like we might be entering a period where the losses to a buy and hold stock strategy could be more substantial. On the close of Friday, our two intermediate U.S. Stock indicators turned negative; so, our tactical stock strategies are moving from cautious to defensive. We are in the process of reducing equity exposure in those strategies.

In bonds, we remain cautious. Bond yields have been rising this year, which has put downward pressure on intermediate and long-term bonds. This could be changing if the economy is slowing down. We currently have reduced exposure to intermediate and longer-term bonds and are overweighting short-term and variable rate fixed income securities. If it looks like bond yields will stabilize or possibly move lower, we will look at increasing the bond strategy’s maturity because intermediate and long-term bonds pay a higher yield.

On a weekly or monthly basis, in risk-managed strategies, we expect account values to stabilize around current levels. Portfolios that have a higher level of constant stock holdings will track the movements of the stock market more than portfolios that have minimal constant stock holdings. When the stock indicators turn positive, the portfolios will move back to their fully invested stock allocations.

For more detailed information, we invite you to read our investment summary update using the link below. It is hard to walk the fine line of providing relevant information and not information overload, especially with a diverse group of people. We know that some clients just want to make sure we are keeping an eye on things and others want more detailed information. If you would like more information than what is provided in the update, just let us know.

If you would like to review your account and its investment strategy, don’t hesitate to CONTACT US. If your investment objectives or financial situation has changed, it is important to let us know, and we encourage you to CONTACT US. We appreciate the trust you have placed in us and are working hard to help you achieve your financial goals so that you are better able to achieve your life goals.