Can the “90-Day Test” help you more effectively manage your investments?
I’m Keith DeGreen and this is your Investors Minute.
According to a just-released survey by McKinsey, business executives around the world now cite geopolitical instability as the top risk to both short- and long-term global growth. This is called headline risk.
Respondents were most concerned about volatility in the Middle East, North Africa, and Ukraine. Only 39% of respondents expect global economic conditions to improve over the next six months.
It’s difficult to quantify this type of risk. At our firm we apply, among other things, what we call the “90-Day Test.” We ignore the political hyperbole and ask whether profits, markets or our clients will be adversely affected by a headline today, 90 days from now. If so, we may go partially or completely to cash.
You might consider the same approach for your portfolio.
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