Has Investor Credit Stretched Too Far Again?
An interesting chart showing investor credit balances correlated to market activity came across my desk a few days ago. I felt the need to share with all of you. Look closely and study.
We have now had a bull market for over 6 years without any long-term major down trends like in 2007/2008 and 2002/2001. Notice the amount of years on average between each long term downturn? It’s very easy to get complacent after 6 years of gains. Many of our clients’ friends and family members and even our prospective clients continue to ignore any warning signs and stay in the old fashioned “buy and hold”, or as l like to call it, the “buy and hope” portfolio.
Are we on the verge of a downturn? I have no idea. The American stock markets may continue to climb like they have in the past 6 years for another 6 years. I hope they do. All I know is the markets can be irrational a lot longer than we can be rational. That is why at Christian Financial Advisors we use tactical investment management and will stay in as long as the trend is positive regardless of global events. BUT we are ready at a moment’s notice to move to cash if we feel the trend is strongly moving negative for a while. Our tactical approach is subject to change daily, weekly, or monthly, depending on positive and negative trends.
Tactical management seeks to participate in the different markets (stocks, bonds, mutual funds, ETF’s) when they are rising, while avoiding them when they are declining. While tactical management does not completely guarantee against a portfolio downturn, it does seek to minimize losses as much as possible in a downward trend, while at the same time taking advantage of strong upward trends in the markets.
If you are not a client yet of Christian Financial Advisors and would like to talk about tactical management, call 830-609-6986 for a no obligation appointment.
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The views expressed represent the opinion of Christian Financial Advisors®. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Christian Financial Advisors® believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Past performance is not indicative of future results. For any discussion of equity securities: Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. For any discussion of taxes: Christian Financial Advisors® does not provide tax advice and encourages you to seek guidance from a tax professional.