On the financial markets, risks cannot be eliminated, but the rudder of the ship can be held even in the midst of a storm, so as to avoid passively undergoing the oscillations of the wind. To help investors navigate, Advise Only has developed the "Risk barometer“, an indicator of systemic risk. This new tool, already available to everyone on www.adviseonly.com, starts today it is also present on the Facebook page of FIRST online and will soon be integrated into our site.
How does it work? Basically, the Barometer calculates the risk associated with the economic-financial system as a whole (possibility of contagion from one institution to another, collapse of the majority of securities, malfunctioning of the banking and financial system, with multiple bankruptcies and other inevitable heavy repercussions on the real economy).
The mechanism is simple: the strategy proposes to alternate two portfolios, one more defensive (structured on safer assets: cash and physical gold, government bonds), the other more aggressive (mainly shares), according to the value assumed by the Barometer. If this is equal to or greater than 0.50 (normal or lower than normal market risk) you invest in the aggressive portfolio, if instead it is lower than 0.50 (above normal market risk) you invest in the defensive portfolio.
Of course, in the real world "money machines" do not exist and even the Risk Barometer is not an infallible tool. However, in the past, it has already taken timely attention to particularly stressful situations that occurred on the financial markets.
To find out more about how the Barometer works, click here.
To find out how a portfolio linked to the Barometer has performed in the last six months, click here.
