Irrational Longer Than You Can Remain Solvent
Asbury Research’s Stock Market Update & Asbury Investment Management Video is a free report that we use to keep in contact with existing clients, and those who have previously asked for information about either Asbury Research or Asbury Investment Management (AIM). Feel free to contact us for additional information about our services for both professional and private investors.
Perhaps our most popular and well-known Tactical model — which indicates when to be adding, or subtracting, stock market risk from portfolios — is the Asbury 6. We often display and discuss the Asbury 6’s latest status in this free bi-weekly report.
We also have another Tactical model called the Correction Protection Model (CPM). CPM is our proprietary defensive model for the S&P 500. Its 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.
Unlike the Asbury 6, which is a dynamic, daily-updated measure of the stock market’s internal health, CPM is an actionable model that our clients use to avoid stock market corrections and the big portfolio drawdowns they cause. It is objective, data-driven, and independent of the day-to-day price fluctuations in the major US stock indexes.
The colored arrows in the chart below indicate CPM’s Risk On (green) and Risk Off (red) signals since October 2019, and highlights the Feb 24th 2020 Risk Off signal in pink. That February-March collapse, at 35% in the S&P 500 from top to bottom, was the biggest US market decline since the 2007-2008 Financial Crisis. CPM helped our clients to avoid most of it.
The chart also shows that the model is on a Risk On status as of May 27th.
The benchmark S&P 500 (SPX) finished Friday’s session at 4468. It is now up 19.0% for 2021 and has risen by an incredible 103.9% from the March 2020 lows. Meanwhile, market breadth has been weakening since the beginning of the year, the S&P 500 is historically very over-extended from a momentum standpoint, investor sentiment is historically too bullish, and market leadership has been reluctant and spotty at best. This means that the market is currently vulnerable to a significant corrective decline according to most historical standards.
However, as the famous economist John Maynard Keynes said: “Markets can remain irrational longer than you can remain solvent.”. So, as long as our CPM model remains on a Risk On status, we will continue to remain cautiously invested and capture as much of this extraordinary move as we can — while it lasts.
Our latest video below shows how we have navigated these recent market conditions for client portfolios in real-time.
Asbury Investment Management (AIM): Our Latest Video
Asbury Research Ideas, Expertly Managed
Here is our August 13th Video Review, which explains how we have recently utilized Asbury Research’s market analysis and investment ideas to professionally manage client portfolios.
Click Here to view a brief video about our management philosophy. Feel free to share with anyone who might benefit from our risk–managed approach.
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This communication is for informational purposes only. It is not intended as investment advice, or as an offer or solicitation for the purchase or sale of any financial asset. 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.