Managing Risk As The Global Economy Sputters

We favor internet stocks since they reflect consumer and business preferences for internet related services, such as shopping and entertainment. Our investment in health care equipment reflects our confidence in that industry as the world’s wealthiest society ages.

Our recent addition of an investment focused on the aerospace and defense industries reflects our continuation of emphasizing companies whose sources of revenue are more closely tied to the U.S. and to relatively defensive equities.

We also have exposure to real estate, which is relatively defensive in nature. The investment we chose for this sector has significant exposure to residential REITs and office space, but also includes cellphone towers, data centers, and self-storage companies, which also stand to benefit from continued economic growth while being rather insulated from global economic risks.

Broadly speaking, our global and international equity allocations tend to favor defensive areas, such as consumer staples and health care, that are generally less susceptible to economic risks.

Our broad diversification in the fixed income space allows for a relatively attractive yield with an eye towards risk management. With the yield curve flattening, our traditional fixed income allocations tend to favor high quality, intermediate duration corporate bonds, as well as taxable municipal bonds in our more income-oriented strategies. Our short-duration floating rate fixed income holdings should benefit from continued Fed rate hikes as short-term interest rates move higher.

Other alternative investments are important as we attempt to generate returns while limiting volatility risk. Options writing, merger arbitrage, and other strategies fit this theme for us.

Overall, as the global economy and markets shift, risk management, sound diversification, and the use of alternative strategies has become increasingly important in our opinion.


The Cash Indicator (CI) has settled into a range close to historical norms. This is consistent with our fundamental analysis that the global financial markets should be able to withstand any shocks coming from trade wars or other near-term headline risks.

Exhibit 7 Cash Indicator

This article was written by Gary Stringer, CIO, Kim Escue, Senior Portfolio Manager, and Chad Keller, COO and CCO at Stringer Asset Management, a participant in the ETF Strategist Channel.


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Index Definitions:

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.