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Home Hedging Strategy Core Long/Cash Portfolio adding Exposure

Core Long/Cash Portfolio adding Exposure

Enough of our core market indicators strengthened today to add more long exposure to our core Long/Cash portfolio.  The core portfolio is now 60% long and 40% cash.  Our other portfolios are still 100% cash or aggressively hedged since 10/19/2012.

One thing of note is that our core market health indicators are reflecting the uncertainty in the market.  Since the beginning of August they have had eight major signals.  All of them have been between 1395 and 1430 on the S&P 500 Index (SPX).  We’ve basically put on some longs then raised cash at almost the same level over the past five months.  Now we’re adding exposure again…in the same range.

The discrepancy between our Core portfolio and our other portfolios gives us concern.  Usually we see our Market Risk Indicator looking better when we add exposure to the Core portfolio.  Right now we’re seeing risk rising at the same time as the underlying market is getting healthy.  This is one more sign about the huge uncertainty in the market…and one more reason to be careful with your portfolios in the current climate.

Portfolio raising cash and adding exposure

The green lines in the chart above represent adding exposure to stocks.  The yellow lines are raising cash.

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