We email the status of our WealthProtect System* monthly and give probability (Low, Mid, High) of a change in status within the next two months. We also include a commentary on actions taken this month as well as changes in overall asset allocation.
There are no trades in our WealthProtect System this month; we remain fully invested in equities in our broad allocation. The "Trump Rally" has been fairly powerful. It has been particularly beneficial for US Small Caps, financial stocks, healthcare stocks, and the energy sector. On the other hand, bond yields have risen, and this has led to a dramatic drop in bond prices, especially in Long-Term Treasuries and municipal bonds. In November alone, the Barclay US Aggregate Bond Index fell over 2%. Interest rate sensitive investments such as Real Estate Investment Trusts and utility stocks have been relatively hammered. Technology stocks and emerging market equities have also been under pressure. This rally is not unusual as the US market tends to rise after presidential elections in the short term. Many times, however, this move is reversed. For example, when Ronald Reagan was elected in 1980, the market rose about 6% initially, only to eventually drop 25% in 1981-1982 before beginning the very powerful 1982 bull market. So our advice is to avoid getting too caught up in this rally emotionally. Stick with your strategy or consult us if you would like to revisit your strategy.
Thanks as always and have a blessed Christmas and a Happy New Year.