Cash Indicator
Our Cash Indicator is an important component of our Strategies that can advise us to increase our cash reserve to either 25% or 50% of the Strategy in rare market environments. We use this intentionally stubborn tool as an “airbag” to potentially protect principal during extreme market downturns and reinvest at lower valuations as the markets recover.
- We use the disproportionate correlation that can occur among volatility indicators during outlier events as an early warning system and a well-defined process for identifying those extreme market environments. Importantly, we remove the emotion from the cash raise decision.
- We believe that significant preservation of capital and enhanced return can be achieved when we are able to exit the markets in anticipation of extreme market dislocation and redeploy that cash at more attractive valuations.
