Volatility continues - stick to Purple Chip strategy

In light of recent volatility in world markets, I would like to clarify the Purple Chips strategy.

What’s happening?

• US inaction towards deficit will weigh on the markets • Eurozone may be redefined • Global economy has demonstrated that it is slowing down

There is an abundance of bad news that could weigh on stock markets around the globe. Our position is to be objective in the face of this news because it is nearly impossible to know what markets will do in the next few months. What is known is that reversion to the mean is a solid principle that works for investing. Purple Chips is based on this principle.

The Purple Chips model identifies the best quality stocks at low valuations. However, any buy-and-hold approach will not do well in a declining market. To counter this headwind, my strategy is to continue to take modest profits when they appear. Until there is evidence of a positive change in valuation trends, I will continue to use the buy signals of the Purple Chips model and I recommend to sell into strength when there are modest profits. Valuations are currently low but there is still no evidence that the downward trend in valuations has changed. The current market environment requires a lot of patience but investors must not forget to remain objective.

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