Weekly Commentary

April 21, 2010

Early last week the equity markets seemed robust with the retail sales report showing a strong increase in spending, indicating a growing consumer confidence in the improving economy. That exuberance quickly dissipated though with the announcement that the SEC had filed a civil suit against the investment banking firm Goldman Sachs. Needless to say this sent shock waves through the markets, most notably the financial sector. Given this news, it is no wonder that the market sold off as heavily as it did at the end of last week. During that volatility, several of our positions crossed their sell criteria, and were moved to cash. These included XLF (SPDR Financials), IYF (iShares DJ Financials), and IYR (iShares DJ Real Estate). This is exactly why we utilize our sell criteria, even in the Green market risk level of the model; to handle this type of news driven price action that cannot be seen in any indications. Currently, with the Stadion Investment Model near its lowest market risk reading and continuing to signal for full equity allocations based on risk tolerance, once the markets stop showing weakness allocations will be purchased to bring all portfolios back in line with the model. However, as always we remain cautiously optimistic and all holdings will continue to have sell criteria placed on them. If any positions cross that sell criteria we will move to a more defensive position, and wait for a better opportunity to make our investments.

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