Statement from Jason T. Lambert, Portfolio Manager / Senior Vice President

November 21, 2018

As many of you may have seen, we have experienced an increase in trading as of last week. In response to technical signals received. we have moved to a more defensive position in our growth model only. If you are involved in any other sleeves they are not affected.  What this means is that we are reducing our clients’ exposure to technology stocks and moving into more defensive stocks and cash.

Our philosophy has always been to take a more defensive approach when our technical signals have trigger. For many of you, this will be about a 24% allocation in our growth portfolio. The signal that caused the move to a more defensive position is based entirely on a rules-based model, using a long and short exponential moving average crossover. When the signals cross it is time to reduce our exposure to equity positions. There is no fundamental evaluation of market conditions, only the rules-based approach on the technical indicators. This is the first signal cross and can mean that we could take a further defensive trade if necessary or we could simply move back into the market.

We recognize that the signal that triggered the recent pullback had just crossed our threshold. Because of that, we remain invested in equities with a large portion of our portfolio. This tactical model is a component of our overall strategy and is employed to hedge our market exposure in volatile times.

While we have seen some uptick in volatility, the duration of this holding pattern is unknown. It could be as short as a few days, or longer if the indicator proves to be a harbinger of things to come. We are aware there are many risks to consider, such as geopolitical risk, inflation, and interest rate risk.

We at Northwest Financial and Tax Solutions believe in reducing risk when necessary, so we are taking a proactive approach to help protect your portfolio by taking a more defensive position. We will continue to monitor the markets and provide updates when conditions warrant a move back into the market. Thank you for your continued faith and confidence in our firm.



Jason T. Lambert

Portfolio Manager/Senior Vice President
Northwest Financial & Tax Solutions