Why does a Portfolio Stress Test matter?

We are now offering free portfolio reviews for investors that would like to ensure that their investments are aligned with their personal investing goals. Whether it is the change in the markets or a shift in your own investing desires, it is prudent to review your current allocations and how they may act under stress.

2016 is setting up to be an interesting year. Here are a few things you may want to think about as we head into the New Year:

  • Equity Markets are flirting with all-time highs and valuations seem to be fairly stretched
  • The Bull Market in Equities is aged at about 7 years from the 2009 lows
  • Expectations for The Fed to raise interest rates have increased significantly within 2015
  • The 2016 Election is up for grabs and at this moment there is greater uncertainty of its outcome
  • Commodity prices have cratered in 2015 causing concern for many companies in the energy and materials sectors
  • Terror events across the globe have recently increased in frequency and intensity
  • Currency markets have seen big changes over the last year which may be influencing your portfolio more than you know.

These are just a few of the things we know about.

What if you could better determine how your nest egg would perform as events change?

How it works:

1. Find the connections – By using data to measure the various relationships between investments in your portfolio and a selected stimulus such as, “What may happen if interest rates rise?” We can help determine which portions of a portfolio may experience greater levels of stress.  

2. Model the Impacts - In a stress test, potential investment performance is projected using the relationships measured in step 1

3. Create Plan B –The ultimate goal of a stress test is to have a plan B thought out before it is needed. This way we can watch and observe market moves and begin acting on plan B if signs of stress should start to show.