Global Stock Market Breakdown
Summary
Highcroft’s Wealth Shield, rules based discipline stopped our clients out of stocks and into cash and bonds on 01/21/2022.
Stock markets have broken into a bear trend globally.
The growth stock leaders in the U.S. have lost their leadership status.
Stopped out to Cash 01/21/2022
On January 21, 2022 our capital preservation discipline, Wealth Shield, stopped us out of equities and shifted the proceeds into cash and U.S. Government Bonds. This protected client capital and locked in a slight gain year to date for our client accounts. This compares to major stock market indices that are slipping deeply into negative territory. We look to reinvest back into stocks at lower prices.
Global Bear Trend
Major stock markets globally have broken into a bear trend.
Wilshire 5000 Index: a broad measure of the total U.S. stock market, broke into a bear trend in mid-January and since then a series of failed rallies indicates a continuation of downward momentum. The index has a long way to go in order to return to a bull trend. (source www.stockcharts.com)
NYSE FAANG+ Stock Index: which represents the largest mega cap technology stocks that are generally considered to be the leadership group over the past decade. This index has broken into a major downtrend. With the leadership group in a bear trend it will be almost impossible, in my opinion, for the broad stock market indices to regain their respective bull trends. This index has lost all of its’ gains, going back to September 1st 2020. (source www.stockcharts.com)
S&P 500 Index: the U.S. bell weather has broken trend as well. (source www.stockcharts.com)
MSCI World Ex-US Index: has broken into a deep bear market and has given up all its’ gains going back to December 2019. In my opinion this is another bad omen as the correction in stock market values is just beginning. This weakness could lead to decades of gains wiped out. (source www.stockcharts.com)
Highcroft Wealth Shield
Highcroft Wealth Shield – Highcroft Investments Advisor’s Wealth Shield program is a discipline that has capital preservation as its’ primary objective. Using a rules-based system the program exits equity investments that have broken trend, shifting those investments into cash, high quality bonds, or another equity investment (a defensive position). The discipline helps to limit losses or lock in gains, preventing potential precipitous declines. Wealth Shield acts as a brake when investments and markets generate downward momentum.
Wealth Shield Availability
The Highcroft Wealth Shield program is only available in the Strategic Asset Management (SAM) account managed on a full discretion basis in the Highcroft Investment Advisors office by Gerald Asplund, the program is not applied to other SAM accounts or to any brokerage or 401k accounts.
Note: past performance is not an indication of future results and expectations might not materialize. Current investor concerns could evaporate as fast as they occurred.
LPL 1-05255681
DEFINITIONS
MSCI World Ex-US Index - The MSCI ACWI is a market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world, excluding the United States. The MSCI World Ex-US Index is maintained by Morgan Stanley Capital International (MSCI) and is comprised of stocks from 23 developed countries and 24 emerging markets.
NYSE FAANG+ Index - An index that provides exposure to 10 of today’s highly-traded tech giants. The index launched on 09/26/2017, prior performance (09/19/2014 to 09/25/2017) is based upon backtested index calculations. Gross total return variants are shown for all of the indices in the chart. The NYSE FANG+™ Index is an equal-weighted index.
S&P 500 Index - The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90. The index is a capitalization weighted index of the 500 large companies listed on various stock exchanges (such as the NYSE or NASDAQ). The S&P 500 was developed and continues to be maintained by S&P Dow Jones Indices, a joint venture majority-owned by S&P Global. The S&P 500 differs from the Dow Jones Industrial Average and the NASDAQ Composite index, because of its diverse constituency and weighting methodology. It is one of the most followed equity indices, and many consider it one of the best representations of the U.S. stock market.
Trailing Stop - The term stop loss refers to a general strategy whereby investors desire to limit declines in their investment holdings and avoid participating in a significant drawdown. The strategy does not eliminate the possibility of loss, it is designed rather to cut short the trend of continued losses. The strategy can lock in gains.
Trailing Stop Order - A trailing stop order is setting a stop condition, creating a moving (i.e. trailing) activation price. Trailing stop orders have unique risks which include but are not limited to:
· Trailing stop prices are not guaranteed execution prices. The price at which a stop order ultimately is executed may be very different from the stop price.
· Trailing stop orders may be triggered by a short-lived, dramatic price change. During volatile market conditions the price of a stock can move significantly in a short period of time and trigger an execution of a stop order.
· Trailing Sell stop orders my exacerbate declines during times of extreme volatility. Activation of sell stop orders may add downward price pressure on a security.
· Trailing stop orders face risk from mechanical malfunction, system disruptions, some types of corporate actions (e.g. cash dividends), and bad price ticks; among other factors.
· This service may be discontinued or limited at any time and without prior notice.
Highcroft Wealth Shield –Highcroft Investments Advisor’s Wealth Shield program is a discipline that has capital preservation as its’ primary objective. Using a rules-based system the program exits equity investments that have broken trend, shifting those investments into cash, high quality bonds, or another equity investment (a defensive position). The discipline helps to limit losses or lock in gains, preventing potential precipitous declines. We believe that investment management should comprise a plan for growth of assets as well as preservation of assets.
Wealth Shield acts as a brake when investments and markets generate downward momentum. The rules-based system is designed to help preserve capital and help avoid investments that are in a bear trend. When an investment shifts from bull to bear trend we can sell that investment and shift the sale proceeds into a defensive position. The discipline can result in all equity investments being shifted into cash.
The Highcroft Wealth Shield program is only available in the Strategic Asset Management (SAM) account managed on a full discretion basis in the Highcroft Investment Advisors office by Gerald Asplund, the program is not applied to other SAM accounts or to any brokerage or 401k accounts.
Wilshire 5000 Composite Index - The Wilshire 5000 Total Market Index, or more simply the Wilshire 5000, is a market-capitalization-weighted index of the market value of all US-stocks actively traded in the United States. As of December 31, 2019, the index contained only 3,473 components.[1] The index is intended to measure the performance of most publicly traded companies headquartered in the United States.
IMPORTANT DISCLOSURES
This correspondence expresses the opinions and views of the author as of the date indicated and are based on the author's interpretation of the concepts therein and may be subject to change without notice. Neither Highcroft Investment Advisors, Gerald Asplund, nor LPL Financial, has no duty or obligation to update the information contained herein.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. This memorandum is being made available for educational purposes only and should not be used for any other purpose.
Some of the statements may be regarded as forward-looking statements. Forward-looking statements are, by their nature, subject to uncertainty. Forward-looking statements may include assumptions relating to future investment and economic scenarios. When used herein, the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “going forward”, “intend”, “may”, “ought to”, “plan”, “project”, “seek”, “should”, “will”, “would” and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect an opinion relating to future events and are not a guarantee of future performance or developments. Reliance on any forward-looking statements involves known and unknown risks and uncertainties. Actual results and events may differ materially from information contained in the forward-looking statemen ts as a result of a number of factors. Accordingly, you should be prudent with your reliance on any forward-looking information or statements.
Investing involves risks including possible loss of principal. Past performance does not guarantee future results. Any investment or investment strategy outlined herein are not suitable for all investors, readers should conduct their own review and exercise judgment prior to investing. Wherever there is the potential for profit there is also the possibility of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. The fast price swings in commodities and currencies can result in significant volatility within an investor's holdings.
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Certain information contained herein concerning economic trends, Fundamentals, and/or Technical analysis, and performance is based on or derived from information provided by independent third-party sources. The economic forecasts set forth in this material may not develop as predicted.
Technical analysis is generally based on the study of price movement, volume, sentiment, and trading flows in an attempt to identify and project price trends. Technical analysis does not consider the fundamentals of the underlying corporate issuer.
The sources from which information has been obtained is assumed to be reliable; the accuracy of such information is not guaranteed and the accuracy and completeness of such information has not been independently verified.
This report, including the information contained herein, has been prepared exclusively for the use of Highcroft Investment Advisors clients, and may not be copied, reproduced, redistributed, republished, or posted in whole or in part, in any form without the prior written consent of Highcroft Investment Advisors.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results. Investing in the index would require investors purchase an investment product, which would involve fees and expenses.
ABOUT US
The advisors at Highcroft Investment Advisors provide retirement planning, investment management, financial planning, fiduciary investment management, and lifetime income planning. Certified Financial Planner. Working with business owners, individuals, and wealthy families near Wayzata, Minnetonka, Plymouth, Orono, Minnetrista, and Minneapolis Minnesota (55402, 55391, 55447, 55364, 55428).
The advisors at Highcroft Investment Advisors serve as a 3(21) and 3(38) Investment Fiduciary and fiduciary for labor union supplemental 401(k) and pension plans and corporate 401(k) plans. The advisors at Highcroft work with the union's counsel, recordkeeper, administrator, and the plan's trustees. United Association, Plumbers, Pipefitters, Steamfitters, IBEW, and Carpenters. Serving Wisconsin and Minnesota. 401(k) investment advisory services provided through LPL Financial's corporate RIA - offering 3(21) and 3(38) services
Working with business owners, individuals, and wealthy families near Wayzata, Minnetonka, Plymouth, Orono, Minnetrista, and Minneapolis Minnesota (55402, 55391, 55447, 55364, 55428). As independent financial advisors we are not driven by certain products or services, instead we focus on your needs as an individual. Services include investment fiduciary fee only, retirement and divorce financial planning, life insurance, capital preservation, lifetime income planning, bonds, stocks, ETF, income, IRA, brokerage, rollover IRAs. Financial advisor near me, financial planner near me, independent planner near me.