We have just seen the worst December stock market since 1931 and the best January since 1987. Those words make life managing investment money a little difficult, at least it is hard on your emotions.
This is why we have a rules-based, quantitative process that we follow with discipline. On Christmas Eve, it was nice to be in a defensive position and enjoying time with our families. Then 2019 came out swinging and the market was seemingly off to the races.
However, two months does not make a market and we should never base a strategy on such a short period of time.
Therefore, we look to our framework. What is the market and economic data telling us? In our measurements, 3 of our 4 indicators are negative and the 4this neutral. This is similar to the indication in October of 2018. Market sentiment, valuations, and economic activity are negative. While the Federal Reserve activity is neutral.
Currently, at the writing of this report, we are taking a defensive position in our advisory accounts. As always, we are letting the reported data coupled with our rules-based approach guides our decision- making process.
The following report is from our investment team.
Thank you for the trust that you put into us. If you have any question please contact your Sound advisor and schedule time to meet.