6 Reasons Why It’s Time To Take “Risk Off”

6 Reasons Why It’s Time To Take “Risk Off”

I’ve been saying over the past few weeks I think it’s time to take “risk off,” or reduce risk in your investment portfolio. John Hussman recently made a very good case for doing so:

Put simply, my view is that the present is a terrible time to accept a significant amount of market risk. I certainly can’t provide a weighty argument to support the view that the market will advance or decline over the next week or the next month. But there is strong precedent for extended market losses and bear markets following overvalued, overbought, overbullish, rising-yield syndromes – say, Shiller P/E above 18, S&P 500 at multi-year highs, 8% above its 200 day moving average, close to its upper Bollinger bands (2 standard deviations above 20-period averages) on weekly and monthly resolutions, Treasury yields above 20-26 weeks earlier, and low bearish sentiment relative to bullish sentiment, all of which were observed in late-1972, July-August 1987, in 2000, in 2007, and early this month.

For those that aren’t familiar with those dates they were very bad times to have been exposed to “market risk.”

via Pragmatic Capitalism

Jesse has been managing money for over 20 years. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Today he works with a select group of clients at Felder & Company, LLC in Bend, Oregon.