L&S Risk Pulse™ is our measurement of overall market risk based on rigorous tracking and analysis of over 100 economic data points.
We make tactical asset allocation decisions based on current L&S Risk Pulse™ levels. As risk levels rise, we increasingly move from equities to cash. As risk levels drop, we reinvest in equities.
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L&S RISK PULSE™ LEVELS
- Lowered (Green)
- Risk levels are minimal, with global economies expanding and healthy. Markets are undervalued or fairly valued.
- Lowered + (Green-Blue)
- Risk levels are low, as economic conditions remain sound. Low near-term market volatility may be present, but risk of correction is low. Markets are fairly valued.
- Medium (Blue)
- Fringe data points may show levels of elevated risk, but composite risk levels are low. Markets are fairly valued or just slightly overvalued.
- Medium + (Blue-Yellow)
- Core economic indicators are healthy, but markets indicate potential near-term volatility and/or mild correction. Valuations are trending high.
- Caution (Yellow)
- Long-term macroeconomic conditions are strong, but at least several core economic indicators show weakness with noteworthy but outlying risk that requires monitoring. Valuations are approaching high for a majority of stocks.
- Caution + (Yellow-Orange)
- The composite economic picture is mixed or unclear, indicating confusion in global markets. Valuations are questionable and volatility must be monitored.
- Elevated (Orange)
- Global economic conditions are mixed and core economic indicators are deteriorating. Valuations are questionable and volatility must be monitored.
- Elevated + (Orange-Red)
- Global economic conditions are weak and/or markets are overvalued. Volatility is high and the risk of a non-recessionary market correction is elevated.
- Critical (Red)
- Core economic indicators point to a global economic slowdown and/or acute risk in a specific but highly significant market. Valuations are extremely questionable for a majority of stocks, with potential for a substantial market correction.
- Critical + (Dark Red)
- Systemic risks threaten the markets. There is imminent danger of global recession, and a corresponding secular bear market is probable.