I normally don’t time the market or change my allocation based on whatever is happening, I simply don’t have the skill to do it. However occasionally stuff happens that makes it difficult to stay invested, and now this new war in Iran is starting to make me a bit worried. I’m curious what people are thinking about current events. Will it all blow over? Are we headed for stagflation? What asset classes should we hold now? What’s going to happen with gold?
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So I do not like to weigh in on politics and current events so I won’t.
But a purely objective hidden Markov model is putting the utility sector at higher risk than normal although not flashing “crisis” yet. Hmmlearn actually uses unsupervised learning and “crisis” is an interpretation of a 3-state HMM model. I suspect if this continues XLU and other sectors will enter crisis mode soon enough–making your concerns valid.
Predicting SPY is hard, mathematically at least. Because different sectors behave differently–adding noise to any signal. Identifying sectors at risk makes it easier is one of the lessons of HMMs.
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