As we enter the seasonally weak time of the year, this year the stock and bond markets both look especially vulnerable to further selling pressure.
Last week, the S&P 500 broke toward the February lows and appears to be heading to new lows in the 3963-3943 area. For now, that level may provide a short-term bounce, but I do not believe we will see the ultimate lows until late this summer and or fall of this year.
Global markets look no better and bonds have performed as poorly, giving investors few places to hide.
For these reasons, the May ETF model rebalances include a high percentage of cash or cash equivalents with each model.
Some model, such as the popular Balanced Model is 100% cash/cash equivalents. Keystone is holding over 40% in cash.
This is exactly what we want the models to do in such times as this. The primary goal should be to protect capital.