Introduction
With one month left to go in 2022, this is an update on how our Correction Protection Model (CPM) and SEAF Model have fared in what has been a difficult year for investors.
Our models are designed to be a tool for older, more risk-averse investors to participate in the stock market with significantly less risk and a minimal adverse effect on performance.
The Correction Protection Model (CPM)
The Correction Protection Model is our proprietary defensive model for the S&P 500. CPM’s primary objective is to protect investor assets during stock market corrections but to otherwise remain invested, taking advantage of equity prices’ historical propensity to move higher over time. CPM is objective, data-driven, and independent of the day-to-day price fluctuations in the major US stock indexes.
CPM is binary: it is either Risk On or Risk Off. This wealth preservation tool was initially developed following the 2008 Financial Crisis, to protect investors from another similar market collapse.
Year-to-date through November 23rd, CPM is -3.9% year-to-date versus -15.5% in the S&P 500.
This has resulted in relative outperformance of +11.6% by CPM.
Here is the corresponding chart that highlights CPM’s Risk On and Risk Off Signals since October 2021. It shows that CPM is currently on a Risk On status as of October 25th. The S&P 500 has risen by 5.4% since then.
Most importantly, this relative outperformance by CPM was achieved with less risk than the S&P 500 according to beta and standard deviation, and with a lower maximum drawdown.
Learn more about CPM by clicking here
The SEAF (Sector ETF Asset Flows) Model
The flow of money is one of the only metrics we know of that actually leads price movement. The SEAF Model “follows the money” to determine where investor assets are going, and where they are coming from, in US stock market sectors. Our model tracks the total net assets invested in 11 Sector ETFs, in 3 different time frames, to determine the best opportunities to capture outright and relative performance in the sector space.
Year-to-date through November 23rd, the SEAF Model is down -5.4% versus -14.4% in the S&P 500.
This has resulted in +9.00% of relative outperformance by SEAF.
The table below shows that the SEAF Model has outperformed the S&P 500 in 8 of the past 10 quarters.
Most importantly, this relative outperformance by CPM was achieved with less risk than the S&P 500 according to beta and with a lower maximum drawdown.
Learn more about SEAF by clicking here
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Disclaimer: This is provided for information purposes only and is not intended to be a solicitation to buy or sell securities. The performance indicated from back-testing or historical track record may not be typical of future performance. No inferences may be made and no guarantees of profitability are being stated by Asbury Research LLC. The risk of loss trading in financial assets can be substantial. Therefore, you should carefully consider whether such trading is suitable for you in light of your financial condition.