WealthProtect Status Update: January 2014
- Regi Armstrong
- Jan 8, 2014
- 3 min read
by Reginald A.T. Armstrong, CPWA®
We email the status of our WealthProtect System* monthly and give the probability (Low, Mid, High) of a change in status within the next two months. We also include a commentary on actions taken this month.
Asset Class Status Probability of
Status Change
US Equities In Low
Developed Foreign Equities In Low
Emerging Foreign Equities In Mid
Real Estate Investment Trusts Out High
Natural Resource Equities In High
Commodities Out High
Energy MLPs In Low
Commentary
In our WealthProtect System this month REITs triggered back out, natural resource equities came very close to triggering out, and commodities came close to triggering in. 2013 ended with US Stocks being the only game in town. The S&P 500 was up 32.3% while small caps (as measured by the Russell 2000) was up 38.8%. International equities by contrast were up only 23.2% (as measured by MSCI EAFE). The NAREIT index which measures REITs was up barely 2%, Commodities (as measured by S&P GSCI) were down 1% and emerging markets (as measured by MSCI Emerging Markets Free) were down by 2.3%. Most troubling for conservative investors were bonds (as measured by Barclays Capital Aggregate Bond Index) losing 2% as the 10 year Treasury yield rose from 1.76% in January to over 3% at year-end.
So after over a year where diversification and risk reduction strategies like our WealthProtect System have trailed a plain vanilla approach of just buying US Stocks, where does this leave us? The answer, in my opinion, is to stick to our discipline. Despite what some might say, it isn't different this time. At some point other asset classes will take the lead, and market correction and even bear markets will come to pass. The time to stick to your strategy is when it seems most out of favor.
Thanks for your trust.
*The Armstrong Wealth Management Group WealthProtect System is an investment risk control system designed (but not guaranteed) to limit significant losses in major bear markets (excess of 30% loss from market peak to market trough). It is NOT designed to prevent normal market losses (under 20%). No strategy can assure a profit or protect from a loss. Occasional false signals can reduce returns.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts may not develop as predicted.
Stock investing involves risk including loss of principal.
International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
Investing is Real Estate Investment Trusts (REITs) involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investments objectives of this program will be attained.
The fast price swings in commodities will result in significant volatility in an investor's holdings.
Investing in MLPs involves additional risks as compared to the risks of investing in common stock, including risks related to cash flow, dilution and voting rights. MLPs may trade less frequently than larger companies due to their smaller capitalizations which may result in erratic price movement or difficulty in buying or selling. MLPs are subject to significant regulation and may be adversely affected by changes in the regulatory environment including the risk that an MLP could lose its tax status as a partnership. Additional management fees and other expenses are associated with investing in MLPs.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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