This report contains the 2021 Q4 quarterly allocations for your retirement plan’s tactical models. As of this quarterly review, the U.S. equity trend indicator was positive, the international trend indicator was negative, and the Balance of Strength Signal was positive. Intra-quarter the Bond Bull-Bear Indicator turned positive, but at the end of September, the Bond Bull-Bear Indicator turned back to negative. Models will remain in their maximum High Risk Category exposure. There are no changes to the holdings at this time; however, we will monitor the holdings and may make intra-quarter changes.
Towards the end of September, the Plan fund changes were made, so some of the funds are different, but the fund category remains the same. The current portfolios have a diversified equity exposure with the fixed income portfolio maintaining a majority holding in the short-term bond index fund, so the switch of Bond Bull-Bear Indicator does not have a meaningful impact.
Last quarter, major stock indexes and the US bond market were both negative. Currently, many stock valuations are at extremes we saw before the tech bubble and the financial crisis. This does not mean there is an imminent stock market crash coming, but it is a sign that one should be aware of their portfolio’s potential downside risk and if the potential risk is not appropriate for their financial goals, they should look at other options. Our current thought is that the stock market is in a topping process. Maybe the top was already made, but we feel there is a good possibility that after the current decline there could be another push higher. After the final top is made, we would anticipate a multi-year period of declining stock market prices. The goal of these tactical models is to preserve principal (compared to a similar buy-and-hold portfolio) during these multi-year bear markets. We will continue to monitor the stock market action. Should the stock market decline intensify, and our stock indicators turn negative, we will reduce exposure to High Risk Category investments.
If you are uncomfortable with your selected model maintaining its maximum High Risk Category exposure, we recommend that you look at other plan investment options or a more conservative tactical model. You can also contact your investment advisor representative, Stephen Hetrick at Hetrick@retirementc.com or 717-545-1447 to discuss your concerns and alternative options. For more information, please read the report below.
If you would like to review your account, please contact us.