Portfolio Changes Update, May 9, 2018

Just want to give you a quick market update and our posture based on the recent market movements. We have had more of a move over the last couple days to a more defensive posture in our portfolios just because of the way we follow the markets and the indicators that we look at to do so. Our indicators are not predictive. They’re not talking about what’s going on. It’s just that we’re looking for the trends and following the trends. So this has been precipitated both about three weeks ago in April, where we had about a third of some of our portfolios go from risk assets to safe assets.

We now had about another third in many portfolios–sometimes is 50% to 66% now–that has been moved to safer positions. But the way we follow a trend, just to refresh your memory, is we’re using a moving average crossover for some of the things that we look at. The way that that works is we have an index price, when the market’s moving randomly like that. And then we are using a short-term moving average, which follows the market like this, and a longer-term moving average that is going like this. And when those moving averages cross over–so we now have the shorter-term moving average below the longer-term moving average–that’s the point in which we take action. It’s not predictive. It doesn’t mean that the downtrend is going to continue. It just gives us a pretty good indication that based on the way the market is right now downtrends have started from here.

So just a brief history of this as we’ve used it and then done our work and our research going backwards to the type of markets we’ve had since 2000. This has happened now the fifth time. Two of those in 2011 and 2015 early 2016 were kind of didn’t make much difference.The market rebounded quickly. These crossed over, went back in, no big deal. The earlier markets when we had the big market declines 2000, 2001, 2002, 2007, 2008, using a moving average crossover made a big deal of difference. And that’s why we use this strategy. Again, nobody knows what’s going to happen. It’s not predictive. It’s just following the trend and making the best use of the information and knowledge that we have. I hope that helps.

If you have any questions or comments, just give us a call or shoot us an email at info@shepherdwealth.com and reach out if you have anything else you’d like to know. Thanks so much.

About David W. Shepherd, Jr., CFP®

David is the Chief Investment Officer for Shepherd Wealth & Retirement and a CERTIFIED FINANCIAL PLANNER™ practitioner. Have a financial question? Click Here to contact David W. Shepherd, Jr.

Investment advice offered through Shepherd Wealth Group, a Registered Investment Adviser doing business as Shepherd Wealth & Retirement.

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