Wealth Protect Status Update: January 2017

This is the monthly WealthProtect System* status update and includes the probability (Low, Mid, High) of a change in status within the next two months. Below is a commentary on actions taken this month as well as changes in overall asset allocation.

Commentary

Happy New Year everyone. There are no trades in our WealthProtect System this month; we remain fully invested in equities in our broad allocation. Over the past 30 days the "hot hands" of the Trump Rally-US stocks in general and small caps in particular-cooled off a bit. Other asset classes such as foreign securities, energy infrastructure securities, and bonds had a bit more strength. The biggest challenge we see right now in the markets is investor psychology. Investors seemed convinced that with Trump coming in the markets can do no wrong. Their mantra seems to be "It is different this time." While I agree that Trump's likely policies are potentially beneficial for the economy and thereby US stocks, this doesn't change the math that exists at present. We have a US stock market that is overvalued by all valuation methods with reliable historical records. We have tightening monetary conditions (although still easy historically) combined with very low velocity of money. Historically this is not conducive for bull markets. We have investor psychology by a number of measures at levels that are closer to market tops than anything else. The only thing that the market seems to have going for it is that the trend is still bullish. I hope the up market continues, but remember that eventually the market will take a serious breather. It is never "different this time." That being said, our indicators do have us fully invested, even if I am a bit nervous about it. Until next time...

*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.

Stock investing involves risk including loss of principal. The prices of small and mid-cap stocks are generally more volatile than large cap stocks. All indices are unmanaged and may not be invested into directly.

International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

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 investment objectives of this program will be attained.

The fast price swings in commodities will result in significant volatility in an investor's holdings.

All performance referenced is historical and is no guarantee of future results.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.

Diversification does not protect against market risk.

The forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

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