This update provides some insight to the markets and our portfolios, and given the large losses over the past several days, we think it is an important one. We have some great news for our clients that may help you sleep a little better at night:)
The video below is an update for our clients and friends on how our portfolios have been positioned over the past few months including the last several days. After the S&P 500 fell 3.19% on Friday, 3.94% on Monday, and is now down 11.15% from its all-time-high on May 21st 2015, this may be a good time to do a quick refresher on how the portfolios are managed. The last thing we want to do is panic (you will see why in the video) or chase the latest hot market trend (never wise).
Each portfolio strategy relies on smart, yet simple rules that take the emotion out of the investment decisions. The result of these rules has caused our growth oriented portfolio strategies to become defensive over the past few months–less growth exposure and larger cash positions. At times, this may have been frustrating as the markets may have gone up three percent and your portfolio may have only went up two percent. Or the markets went up two percent and your portfolio may have only went up 1 percent. But as many market metrics have been indicating warning signs over the past several months, or portfolios have become more defensive. This better protects each portfolio from bear market conditions, as seen over the past several days. With less growth exposure and being cash heavy, our growth portfolios have been more insulated from recent market drops.
When investment strategies are based on sound math and statistics, we are not going to be right all the time, but we can better avoid the bigger market drops that happen every several years.
The video below is by Jason Wenk, the Chief Investment Strategies at FormulaFolios, and it further details our portfolio strategies. Enjoy!