Wealth Protect Status Update: May 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.

System Commentary

For the first time since October, we had a trigger in our WealthProtect System as Commodities continued to weaken and triggered out. Commodities have been frustrating as they show signs of life for a month or two only to come back down. Natural Resource and Energy Infrastructure stocks also weakened, but were short of a trigger.

Market Commentary

Real Assets (Real Estate Investment Trusts, Natural Resources, Commodities, Energy stocks) exhibited profound weakness as oil trended lower the past month or two. While large cap US stocks have fared well, small company stocks have been quite a bit weaker. The strongest performance year-to-date has been in the foreign allocations, both developed and emerging market. Many common market psychology indicators are showing abnormally low readings of investor worry. Combined with US markets making all-time highs plus US stocks trading at historically high valuations (only exceeded by a few months in 1999-2000), this should cause investors to pause before abandoning good strategies to chase whatever appears to be working. You add to this that we are at all-time extremes on the amount of margin debt investors have, and we have a recipe for a significant downside. Remember, however, that these indicators don't tell you when the market will correct or crash; just that when they do, there is a lot of potential for serious damage. Give your Client Wealth Manager a call to discuss if you desire.

*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.

The Standard & Poor's 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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