It’s a Fine Time for Aggressive Capital Preservation | ETF Trends

By Rob Isbitts via

Investment markets can be confusing. To try to cut through the chatter and investment slang, we present this monthly view to you. We want to give you a 50,000-foot view of market conditions updated as our view evolves. Currently, our Investment Climate Indicator remains at Stormy. Stormy means that bear market rules apply, and we believe could be a period of wealth destruction.


(with apologies to all 5 Beatles and their fans)

It’s a Fine Time For “Aggressive Capital Preservation”

May was a disturbing month for investors who believe the easy money in investing will go on forever. Maybe it was concerns about slowing global growth, slowing corporate earnings, a budding trade war or something else.  Regardless, you get the sense that the markets are less patient now than earlier this year when it comes to seeing what happens. Sometimes in investing, they ring the proverbial bell and the sellers pile on. To push the Beatles reference perhaps a bit too far, Helter Skelter can ensue.

And while one month is just that…a month…it does appear more likely that things are playing out according to the “Eye of the Hurricane” scenario I have discussed here all year.  In fact, since I edged my proprietary Investment Climate Indicator (ICR) from its 2nd most risky level (Overcast) to its riskiest (Stormy) back in late January 2018, the S&P 500 Index (including dividends) is down 1.7%.

Following a roughly 350% rally from the depths of the Financial Crisis back in 2009, that’s a footnote.  But without a doubt, there are shifting winds in this storm.  As a result, investors need to start accounting for the risk-management side of their personal financial plan.  Thinking with only the reward-seeking part of their brain is more likely to backfire than at any point since many in the millennial generation were still in school.

And for retirees, the focus on what I refer to as “aggressive capital preservation” should be primary.  Does that mean your investment choices have narrowed to a lockbox, stuffing cash under your mattress, or CDs?  Not at all.  That’s why this monthly report tracks 100 different ETFs, each representing a segment of the global investment markets.  But, the biggest mistake one can make right now is to ignore the blowing winds and assume your portfolio will stand up to it.

Click here to read the full article on