THE CASH INDICATOR
The Cash Indicator (CI) has increased in recent weeks, reflecting the disturbing market decline that has shocked so many of us. The CI helps us put this shock into perspective. Note that the November month-end value of 28.72 is close to the median month-end value of 27.51 and below the average value of 35.01 going back to 1986. In effect, the CI is reflecting average levels, but not heightened risk of a meltdown.
However, this level of risk may feel more extreme given the rate of change. For example, the CI’s September month-end value of 16.16 was well below the median and less than half the historical average value. So, the markets went from an environment of extreme complacency to one of average uncertainty. We think that it is this rate of change that makes us feel so shocked.
Recall that the CI is designed to signal increased probability of a black swan event. It is not designed as a market-timing tool nor do we expect it to signal every pending market correction. We have other frames of reference for that, such as our fundamental view outlined above that calls for increased volatility.
Any forecasts, figures, opinions or investment techniques and strategies explained are Stringer Asset Management, LLC’s as of the date of publication. They are considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect to error or omission is accepted. They are subject to change without reference or notification. The views contained herein are not be taken as an advice or a recommendation to buy or sell any investment and the material should not be relied upon as containing sufficient information to support an investment decision. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested.
Past performance and yield may not be a reliable guide to future performance. Current performance may be higher or lower than the performance quoted.
The securities identified and described may not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.
Data is provided by various sources and prepared by Stringer Asset Management, LLC and has not been verified or audited by an independent accountant.
Bloomberg Barclays U.S. Corporate High Yield Index – This Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, are excluded.
Bloomberg Barclays U.S. Corporate Index – This Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by US and non-US industrial, utility and financial issuers.
S&P 500 Index – This Index is a capitalization-weighted index of 500 stocks. The Index is designed to measure performance of a broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.