Risk

Every time I start looking at the scope of the next publication, I make a list of the information I have to analyze.

I collect the data (yes, I still do it manually). I like to get a feeling for the numbers and the revisions. I get a better understanding of what is happening.

At the end of the process, I go through an incredible number of charts and graphs. As I look at them, I ask myself whether or not what I am looking at is relevant and if it helps conveying to you what I see.

If the chart fits a definite pattern, I use it as “evidence.” I realize that I have to present my case to you in a convincing way. I know you need hard evidence because you have to make tough decisions for you and/or your clients.

At the end of the process I found out this is the longest issue. Why? Because I need to convince myself about the trends I see so that I can explain them to you.

The most important concept is the idea of risk and how various asset classes reflect this risk. This is how I see it.

Moving from low risk to high risk these are the options: T. bills, CDs, 12 month Treasuries, 20+ year Treasuries, short-term high-grade corporate bonds, long-term high-grade corporate bonds, short-term low-grade corporate bonds, long-term low-grade corporate bonds, high-yield bonds.

Risk rises substantially when you move into the asset class “stocks” (see our financial risk indicator).

Investors have to allocate capital depending on risk, depending on the odds of making money. There is no question the economy is growing slowly. This is the reason commodities and interest rates are heading lower and will stay low.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

George Dagnino, PhD