On 2nd March 2018, I lowered the allocation to equities in the Active Asset Allocator from 20% to 0%, moving to a fully defensive position. Stock markets appear to be setting up for a failing rally, a lower high following the surge to new all time highs in January 2018.
This month, I examine a potential buying opportunity for the Active Asset Allocator in European equities and explain how the German stock market will likely trigger a move. I highlight the ongoing dominance of the FAANG stocks, which continue to drive the broad market averages higher and will likely continue to do so for the remainder of this bull market. I also discuss current stock market valuations and some technical indicators that are breaking down. These include an increasing number of stocks making new lows vs those making new highs and an increasing number of stocks trading below their long-term moving averages.
In bonds, I cover the outlook for government bond yields in the US and Europe, while also discussing the possibility that the Federal Reserve in the US is potentially trapped and unable to raise short-term interest rates without popping the stock and bond market bubbles. I argue there is still some room for EU government bonds to rally in a risk-off move in the stock market, which is why the Active Asset Allocator currently holds a mix of cash, bonds and gold for capital preservation. On to gold, I highlight an upcoming investment opportunity for precious metals and also discuss an excellent research report from the folks at GaveKal - "The Upcoming Monetary War, with Gold as an Arbiter". Click here to view the May 2018 Investor Letter.
Chart of the Day
The Active Asset Allocator investment strategy is designed to deliver a consistent level of positive returns over time with a strong focus on capital preservation. I follow a multi-asset investment approach, actively allocating between global equities, bonds, precious metals, currencies and cash. I always invest with the primary trend of the market and do not follow a benchmark. Instead, I manage the market risk for clients. My strategy has returned +10% per annum net of fees since inception. My active asset allocation approach is best illustrated in the following chart.
Technical Trend Indicator Performance History
For more information, please contact Brian Delaney at firstname.lastname@example.org.
ONE2ONE: We also offer one-to-one sessions where we provide an advisory service tailored to suit your individual investment goals and objectives. We show how you can implement your investment decisions in a low cost way and avoid the expensive commissions and management fees typically charged by the investment industry in Ireland.