The Financial Defensive Condition (FIN-DEFCON®) strategy attempts to identify economic trends that have preceded past U.S. economic recessions and recoveries, and then use this information to influence asset allocation decisions.


Asset allocation is a term used to describe how investments are distributed among different asset classes, such as fixed income or equities. However, asset allocation cannot guarantee a profit or protect against loss.  Over time, some of the most dramatic declines in portfolio values were experienced during economic recessions.


The goal of the FIN-DEFCON® strategy is to influence Tactical Asset Allocation changes and improve long-term portfolio performance relative to a Strategic Asset Allocation (Buy and Hold) strategy and the “Optimal Risk Portfolio in the Single-Index Model” formula widely recognized in academic research: 

FIN-DEFCON® employs terminology similar to the United States’ Armed Force's Defensive Readiness Condition (DEFCON) system.  FIN-DEFCON® is a proprietary strategy developed by Gerald Steffes, CPA/PFS, CFP®, AIF®, with Steffes Financial, Ltd, in Overland Park, Kansas.

United States Armed Force's DEFCON System


 Condition             Level                Description

DEFCON 1                                   War is imminent

DEFCON 2                                   All forces ready to engage within 6 hours

DEFCON 3                                   Air Force ready to mobilize within 15 minutes

DEFCON 4                                   Increased security watch

DEFCON 5                                   Normal readiness, Peace time




  FIN-DEFCON® Tactical Asset Allocation Strategy


     Condition                  Level               Description                          

  FIN-DEFCON 1                                    Recession conditions exist        

  FIN-DEFCON 2                                    Significant risk of recession      

  FIN-DEFCON 3                                    S&P 500 Index trending down  

  FIN-DEFCON 4                                    Pre-recession conditions exist    

  FIN-DEFCON 5                                    Recession conditions not evident 



Patent Pending 62/902,492

You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.

                             - Peter Lynch


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