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The Markets and More ... March Ending 2017 Recap along with some allocation and position changes.

edited April 2017 in Off-Topic

Old_Skeet's market barometer which follows and measures certain metrics of the S&P 500 Index from both a fundamental and technical perspective currently has the Index scored as overvalued over a four week rolling period. A lower reading on the barometer indcates less investment value in the Index while a higher reading indicates more value. Over the past four weeks the closing weekly readings for the barometer were 144, 140, 146 and 141 for a rounded average of 143. With this, the equity weighting matrix suggest an equity weighting for the portfolio of 48%. Currently, I am at about a 50% equity weighting within my portfolio.

During the month of March I reduced my equity allocation downward from about 53% to about 50% and have raised cash along with opening some new positions in my hybrid income sleeve plus began restoring my CD ladder with some of my equity sell proceeds.

Being a former corporate credit manager part of my job was to manage credit and receivable risk. Taking this risk management on into investing when stock valuations are high I hold less equities and when stock valuations are towards the lower end of the scale I hold more equities. As an aid to help me establish a valuation measurement and tool an engineer friend and I developed the barometer along with an equity weighting matrix tool. Over the past couple of years we have both used it as an aid in helping us to adjust our equity allocation within our portfolios. Thus far, it has worked well for us and has kept us from becoming overweight equities during high valuation periods and underweight equities during lower valuation periods.

Currently, Morningstar's Market Valuation Graph (linked below) currently has stocks that are qued to their tool at a valuation of +4% while the barometer on its four week rolling average has the 500 Index at a valuation of +2%. I have not yet decided if I am going to trim (rebalance) equities further back within my portfolio because 1Q2017 earning season is soon to begin and I'm looking to see favorable earnings and revenues being reported. With this, I may hold off to May before I dial my equity allocation below 50% (or to the suggested matrix reading) as I also make equity weighting adjustments based upon stock market seasonal trends.

Some have recently commented that market timing is a fools game. From my perspective, it has a lot to do with managing stock market risk and having tools in place to help and aid in knowning when to throttle up (or down) my equity allocation and not doing it soley based upon the calander and/or whim.

You will have to decide for yourself ... Is managing risk and positioning market timing and a fools game?

Have a good weekend ... and, I wish all "Good Investing."


  • You explain your methods well. Surely, that is working for you. Interesting. But I realize that I myself know "just enough to be dangerous." I gotta KISS it.
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