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.
The sharp drop in stocks combined with the rise in bond yields hit just about all assets hard in late January and early February. This did cause our Real Estate Investment Trust position to trigger out. In addition, both US Small Cap stocks and Energy Infrastructure stocks are much closer to triggering out.
With such abnormal levels of low volatility over the past year or two, it should not come as a surprise that the markets finally had a sharp reaction. Whether this was simply overdue, or a reaction to rising rates amid fears of potential inflation, it is a good reminder that markets don't go in one direction forever. In my opinion, this is not the time to "buy the dip", but rather a useful reminder to not get your exposure in the market above your comfort level. This was (so far) a small dip--just 10%. Maybe this is just an overdue correction in an ongoing bull market, or it could be the first leg of an impending bear market. We don't know. Until stocks trigger out (which implies a shift in trend), then our assumption is this is just a correction. Only time will tell.
Thanks for your trust and call us if you have any questions.