Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

3rd Quarter | 2021

Market insights and analysis


Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

It was over 30 years ago. I sat in a pew in a little church on the village green of Franklin, Michigan. It was the usual Sunday service, but I was stirred by the sermon from a minister who was still relatively new to me.

Why is the stock market so disconnected from what is happening in the economy? And why does it seem like all stocks—no matter what their quality—are going up?Just like you, we grapple with these complex market questions every day in our quest to bring investors better risk-managed investment solutions. These two are the ones I’ve been asked most frequently recently—which makes sense. It does seem like the market is acting illogically … but is it? Let’s take a closer look to see what’s behind it all.

This year has been somewhat like a master class, or real-time laboratory, in illustrating some classic concepts of behavioral finance in a compressed time frame. Think about it.

This column has explored the topic of risk management in some detail over the years, addressing several questions: • Are the retail investor and financial adviser underserved by the buy-and-hold philosophy? • What is the potential role of dynamic risk-managed strategies in investors’ portfolios? • How might modern, risk-managed portfolios be best constructed on a conceptual level?

For more than four decades, I have been a professional in the investment business. Some may be surprised to find out, however, that finance wasn’t my first chosen career path.

For most of us, “stress” is considered a bad word (and maybe an ever-present word these days). When we stress about work or relationships, we usually feel miserable.

The major stock market indexes fell last week. The Dow Jones Industrial Average lost 3.3%, the S&P 500 Index fell 2.9%, the NASDAQ Composite dropped 1.9%, and the Russell 2000 small-capitalization index fell 2.8%. The 10-year Treasury bond yield fell almost 5 basis points, as Treasury bonds gained ground for the week. Last week, spot gold rose 1.57%, behaving like a safe-haven asset as stocks took a break from their recent climb.

Gold stayed inside the trading range it has been in for the last eight weeks, closing last week at the lower end of the range at $1,688.00 per ounce. This consolidation can now provide support for another run-up in the current gold bull market.

The major stock market indexes finished to the downside last week. The Dow Jones Industrial Average lost 2.6%, the S&P 500 Index fell 2.4%, the NASDAQ Composite slipped 1.2%, and the Russell 2000 small-capitalization index lost ground at a 5.6 % rate. The 10-year Treasury bond yield fell 4 basis points, advancing Treasury bonds higher. Last week, spot gold closed higher at $1,743.67, up $40.97 per ounce, or 2.4%.


I don’t know whether you are in a state that is beginning to get out from under a stay-at-home order or if you are, like us here in Michigan, still very much in the shelter-in-place mode. But one thing I am certain of—you want to get out of the house and do something. Anything!


I was listening to one of my favorite radio broadcasts last Friday morning (March 6), about 45 minutes before the market open. Tom Keene, of Bloomberg Surveillance, was reviewing various pre-market levels. Dow futures were down at the time around 700 to 800 points, and other indexes were similarly heading south in a big way. He made the curious comment, “It just does not feel like a 49-level VIX for equities at the moment”—even though that is where the VIX stood. (The VIX, also known as the “fear index,” is a measure of stock market volatility. On Friday, it went on to make a 52-week high over 50 before closing at 41.9.)