This is the monthly WealthProtect System* status update and includes the probability (Low, Mid, High) of a change in status within the next two months. Below is a commentary on actions taken this month as well as changes in overall asset allocation.

Commentary

Happy New Year everyone. There are no trades in our WealthProtect System this month; we remain fully invested in equities in our broad allocation. Over the past 30 days the "hot hands" of the Trump Rally-US stocks in general and small caps in particular-cooled off a bit. Other asset classes such as foreign securities, energy infrastructure securities, and bonds had a bit more strength. The biggest challenge we see right now in the markets is investor psychology. Investors seemed convinced that with Trump coming in the markets can do no wrong. Their mantra seems to be "It is different this time." While I agree that Trump's likely policies are potentially beneficial for the economy and thereby US stocks, this doesn't change the math that exists at present. We have a US stock market that is overvalued by all valuation methods with reliable historical records. We have tightening monetary conditions (although still easy historically) combined with very low velocity of money. Historically this is not conducive for bull markets. We have investor psychology by a number of measures at levels that are closer to market tops than anything else. The only thing that the market seems to have going for it is that the trend is still bullish. I hope the up market continues, but remember that eventually the market will take a serious breather. It is never "different this time." That being said, our indicators do have us fully invested, even if I am a bit nervous about it. Until next time...