“Suggested 401(k) Maneuvers” is comprised of two strategies 50% allocated to each. The first strategy’s goal is to be invested in equities during Bull markets and in fixed income during Bear markets. The second strategy combines relative-strength rankings, current Market trends, and predetermined minimum and maximum Equities exposure. It can be 100% invested in equities, or up to 50% invested in bonds. The strategies primarily use Exchange Traded Funds (ETFs), but may also use open-end mutual funds when an alternative is necessary. The first strategy uses the Bull-Bear Indicator to determine allocations. The second strategy uses the Quarterly-Trend Indicator to determine allocations on a quarterly basis. The indicators are described below.
Once the indicators determine whether the strategy is allocated to equities or fixed income (one or the other, not both) then the quarter by quarter positions, indicated in the Bond Allocations by Quarter or Equity Allocations by Quarter links below, are equally weighted.
The performance shown in the Daily and Monthly data links below utilized and average of the opening and closing price for each position through June of 2016, and then the Volume-weighted average price (VWAP) since then. The source of the data is W.E. Sherman and Co. and they utilize Commodity Systems Inc. (CSi) for the daily pricing data. Though we deem these research and data services to be reliable, we cannot guarantee the accuracy of the research and pricing received by them and distributed to us.
Bull-Bear Indicator (Longer-Term)
The Bull-Bear Indicator is constructed from measurements of market internals and is intended to reveal the relationship of supply and demand at the longer-term timeframe of months to years. The measurements are ratios of supply and demand factors, normalized to a scale of 0 to 100. For example, the ratio of up-volume to (up volume + down volume) will always be in the range of 0 to 100, where the higher readings indicate a preponderance of demand (larger up volume) and lower readings indicate a preponderance of supply (larger down volume). Other examples of ratios of supply and demand are advancers to (advancers + decliners) and new 52-wk highs to (new 52-wk highs + new 52-wk lows). There are 7inputs in total, 5 of which are these supply and demand ratios, and 2 are pure price inputs. These inputs are continuously re-examined over a trailing one-year period, and the ratios are then weighted, and combined into a single, statistically smoothed final Bull-Bear Indicator. When the Bull-Bear Indicator is in a Bull Market mode and then pierces the Bear Market Threshold, a new Bear Market is signaled. When the Bull-Bear Indicator is in a Bear Market mode and then pierces the Bull Market Threshold, a new Bull Market is signaled. Once a mode (Bull or Bear) is established, it is considered to remain in place until the Bull-Bear Indicator eventually pierces the opposite threshold.
Quarterly-Trend Indicator (Medium-Term)
Designed to act only at quarterly intervals, it is a quarter-by-quarter look at the probable risk environment of each quarter, using the trend status of US and International equities. The trend labeling is derived from the slope of a tangent to a curvilinear regression going through the last ‘n’ data points of a statistically-smoothed closing price data series; stated more compactly, it’s based on direction of the regression curve through a smoothed price series, and the ‘prices’ referred to are the Russell 3000 for the US, and the MSCI Ex-US for International. If either the US or International equities are in an uptrend, a lower-risk quarter is indicated; if neither the US nor International equities are in an uptrend, a higher-risk quarter is indicated.
Below are links to other important data:
Link to Equity Allocations by Quarter
Link to Bond Allocations by Quarter
Link to Indicator History
Link to Daily Data
Link to Monthly Data
401(k) Maneuver™ is offered by Royal Fund Management, LLC, which is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Royal Fund Management, LLC, is not affiliated with or endorsed by NASDAQ.
All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio. There are no assurances that a client’s portfolio will match or outperform any particular benchmark. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. Projections are based on assumptions that may not come to pass.
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