During the recent pull back, we received a lot of questions on our Market Trend Analyzer asking why it had not triggered. It appeared to us that there were some misperceptions on how this indicator works, and we decided it would be a good time to reiterate our objectives as a money manager and discuss how the Market Trend Analyzer fits into that objective.
As a money manager, our first objective is to outperform the stock market for the long-term. Our goal is to have more of our client’s assets exposed to equity when there is less risk, and less exposed when there is more risk. We do not try to avoid all downside; instead, we aim to limit that downside by using investor psychology, monetary conditions and market valuation to measure when risk is extreme in the market.
The Market Trend Analyzer is not a replacement for Psychology, Monetary and Valuation, but, instead, it is a trigger beyond the normal market cycle. As you will see, the MTA usually triggers at the point just beyond where normal bear markets end, not where they begin.
To read more, click here.