Answer: Based on our experience to date, UMPI has consistently predicted 90% of significant stock market movements. However, as with any prediction, there is always a chance that some market changes may be difficult to foresee. In general, UMPI is most effective under conditions of natural economic cycles. Extraneous factors or circumstances that are not related to normal economy flow may affect UMPI readings and decrease its predictive power. Such non-economic factors include natural or political events of global proportions, which may strongly affect stock markets and result in sudden and significant changes in market indices and stock prices. For example, natural cataclysms (e.g. Fukushima earthquake and tsunami), large scale acts of terrorism (e.g. 9/11), or significant political turmoil (e.g. as a result of unexpected outcome of 2016 US presidential election) all may jolt the financial markets and cause an aberration in UMPI predictions. A recent example of this sort is the crisis in Ukraine that happened in early 2014. During that period UMPI showed somewhat inconsistent behavior. This and a few other similar examples are marked with red stars in the historical UMPI diagrams.
Thus, one should always keep an eye on significant non-economic events and be extra cautious in applying UMPI predictions when such events do take place. Ultimately the decision to sell or buy your assets is completely your own; UMPI is a tool that provides input to help you make such decision.
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