Here you’ll learn more about the Economic Strength Index, a proprietary macroeconomic indicator created by Adaptive Wealth Solutions to better protect its clients against market downturns. There are two videos on this page, one is a relatively brief 14 minute overview that introduces the Economic Strength Index and how it works. The second video offers a more detailed overview of the Economic Strength Index and why it was built the way it was built.
What Is The Economic Strength Index? – Brief Overview
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What Is the Economic Strength Index? – Detailed Overview
Press the arrows button in the bottom right corner of the video player to maximize the video to full screen. To speed up playback and listen to the recap at a higher speed press the gear icon, Speed, then 1.25x or 1.5x speed.
These video serve as an introduction to the Economic Strength Index (ESI) and the role it serves in guarding client portfolios from recessions and protracted bear markets.
The ESI analyzes important measures of the US economy and rates them all on a scale of 0 to 100. (Worst to Best)
This allows us to make more intelligent decisions about risk in the portfolio. If the economy is strong and expanding, we can invest in more growth-oriented strategies so that we can better participate in the upswings in the markets associated with an expanding economy. If the ESI is low, the economy is at a greater risk of recession and it’s better to increase our allocation to more nimble and defensive strategies that can better adapt to a contracting economy and the higher volatility in the markets that comes with it.
While there are always ups and downs even in expanding economies, but by reducing risk in times when the markets are at their weakest, we can better avoid the points in time where large sustained losses can occur in a portfolio. (Sustained downturns are the most dangerous to a portfolio’s long-term health.)
This video focuses on the S&P 500 Index for an easily recognizable comparison to the broader markets. Equity allocations in client portfolios are typically comprised of allocations to the Adaptive Value, Adaptive Momentum, and Shareholder Yield strategies offered by Adaptive Wealth Solutions.
For more information about the risk metrics spoken about during the video, please view this video:
How Is Investment risk Measured?
For disclosure information please see the disclosure slide at the end of the video.