Balanced Risk, Balanced Portfolio

STOCKS BREAK THE 3 MONTH DOWNTREND. NOW WHAT?

We aren’t even at the end of January and we have surpassed the average Wall Street analysts 2018 year-end target for the S&P 500! This my friends is called a MELT-UP. 

Today’s post will be short and to the point. We have been in a wonderful bull market since March of 2009. We have had a few pull-backs along the way but largely, being long and “checked-out" with regard to allocations and exposures has been rewarded.

The average person in America spends $1100/year on coffee – it’s probably higher if you count coffee at home. That’s $11,000 spend over 10 years. Let’s also assume you get a muffin or some other food so your spending on “other things at Starbucks” is also $1100/yr or $11,000 over 10 years.

2017 has largely been a terrific year for equity investors. For the last few years, we at Accuvest have been pounding the table for U.S. investors to shift some U.S. exposure towards international and emerging markets. Those who took that advice have been rewarded handsomely.

With all of the computing power at our fingertips, it is natural that we should look to harness that power in creating investment strategies that allow us to evaluate huge amounts of data.  Algo X is a use case of that technology. 

While macro-economic trends point to a continuation of strength in US equities, macro-economic levels point to elevated risk.  A late cycle reduction in equity risk for portfolios must be balanced against the opportunity cost of better-than-average returns.