Our test of the new Leading Indicator format shows improved responsiveness. An investment of $100,000 in the S&P 500 Total Return Index in January 1990 would have grown to $4.1 million by April 2026, but a strategy that switches proportionately to AA-grade corporate bonds as the Bull-Bear risk-off signal increases would have reached $5.7 million.
A strategy that switches proportionately to Gold instead of AA corporate bonds, however, would have accumulated to $15.3 million over the same period.
How the Portfolio is Adjusted
The portfolio is invested 100% in the S&P 500 index if risk-off is at zero.
As the risk-off measure rises, the weighting to equities is proportionately reduced. When the risk-off signal reaches 40%, for example, exposure to the S&P 500 is reduced to 60% with a 40% weighting in Gold.
If the risk-off signal reaches 100%, the weighting for the S&P 500 is reduced to zero and the portfolio is fully invested in Gold.