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An Update of our Rules Based Strategy

In 2016, we introduced a Rules Based Strategy to our clients. To review, our Rules Based Strategy is a collection of investments that have built in “rules” that tell us when an adjustment is necessary based solely on actual market data and not on the emotional ups and downs of the news cycle. Little did we know that 2016 would be an extremely volatile year in the market! So, you may be wondering with all the volatility of last year what adjustments were made and where are we now?

The 3 modes built into our Rules Bases Strategy are “Conservative”, “Moderate”, and “Target”, which is the most aggressive. As a reminder, you should always have an honest conversation with your financial advisor about what level of risk you are comfortable with. Every investment mix can have a different risk level but maintain the 3 modes. Prior to 2016 the investment models had been in “Target” mode for over three years. The early year volatility, the Brexit vote, and anticipation of the U.S. election resulted in our models trading 4 times. Those trades ranged from “Target”, all the way down to “Conservative” and back to “Target”, which we’ve been at since August 15, 2016. It is interesting to consider that date. That is before the U.S. election. You’ll remember the days leading up to and immediately following the election, the media was reporting all kinds of volatility, however the actual data told us to stay where we were. Since we followed the “Rules”, we’ve maintained our position as the market has grown to record levels.

This is the beauty of the Rules Based Strategy! Emotion would have told us to make a change in November, and certainly more than only 4 trades in all of 2016! When we remove emotion, and follow the data and rules our investments are kept on a more level trend line. Our goal with a Rules Based Strategy is to make investing feel more like a kiddie ride instead of the roller coaster you see on the evening news. We can all agree, when it comes to your retirement investments, the kiddie rides would do just fine! Talk to a Sound Financial advisor today to see how a Rules Bases Strategy could work for your retirement plan!

Investment Advisory Services offered through Sound Financial Strategies Group, Inc. (“SFSG”), a Registered Investment Adviser. Certain representatives of SFSG are also Registered Representatives offering securities through APW Capital, Inc., Member FINRA/SIPC, 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866 (800)637-3211. SFSG and APW Capital are separate and unrelated companies. 

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by APW Capital.

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