Tactical Asset Preservation

This year, 2011, is presenting some interesting predicaments for many investors.  Bonds, which have seen massive inflows over the last couple of years, in spite of hitorically low yields, are now seeing yields creep up.  And now, bond investors face the quandry of not only still earning low yields on their recent purchases, but the prices of their bonds are also falling.

But it is not just bonds that are causing investors heart burn.  According to fund flow analysis, many investors cashed out of all or at least a portion of their equity investments during 2008 or 2009.  Yet, since the bottom of the market in March 2009, the S&P 500 Total Return Index is up over 100%.  For those investors that cashed out or moved to bonds, what should they do now?  Should they leave their money in low yielding bonds or a money market account earning 1%, or should they opt for the higher potential return of equities in spite of the fact that the market is up so much since the March bottom?

In 2009, we began to develop a new investment discipline with this type of investor in mind.  An investor that is concerned about the potential risk in the stock market but that needs to earn more on their money than bonds or a money market account will currently deliver.  And the Tactical Asset Preservation (TAP) portfolios, which are an actively managed ETF strategy that use diversification across less correlated asset classes combined with the Hays Market Trend Analyzers and Asset Allocation Model to reduce risk in the portfolio, were the answer in our search. 

The goal of these new TAP portfolios is to provide more protection against market downside, while delivering solid upside returns.  So with this goal in mind, these portfolios can go to 100% cash in any asset class if our indicators detect excessive risk.  To learn more about the new Hays TAP portfolios, click here.

To view today's complete Market Comment, click here.

Jeff Hays

Please see important disclosures at the bottom of this page.