May 31, 2017 - It begins

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Tactical Allocation:
The current tactical allocation is:

  • Large Cap Equity:  50%
  • Small Cap Equity:  50%
  • High Yield Debt:      0%
  • Inv. Grade Debt:       0%



The change from the previous month was a reduction in Small Cap Equity and an increase in Large Cap Equity (so this months bet is 1/12th of the portfolio going into Large Cap US Equity). Since this is the first month there is really not a change but rather just the initial investment but had we been doing this for the past year it would have been as described above.  This makes the portfolio more defensive, however it is still 100% in equities and therefore very bullish.

For the Allocation portfolio I will purchase VONE and VTWO.

My personal enhancements to the above portfolio will be to use DSEUX (international and actively managed) in place of the Large cap equity portion and IEMG (emerging market equities) for half of the small cap equity portion.  Basically this is expressing a belief that the US is overvalued relative to the rest of the world right now.  I will make these trades tomorrow morning and will post the results in a follow up post.

 For details on how to get started see the technical post

 Quote of the month: 

 The real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one.  The commonest kind of trouble is that it is nearly reasonable, but not quite. Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait. 

~ G.K. Chesterton

Disclaimer:
Past performance is not a guarantee of future performance.  This strategy is presented for informational purposes only and is not a solicitation to buy or sell any securities. October is one of the peculiarly dangerous months to speculate in stocks in.  The others are July, January, September, April, November, May , March, June, December, August and February. ~ Mark Twain

Comments

  1. Bryan BaggenstosJune 1, 2017 at 10:30 AM

    I had a couple of good questions from a great friend who I often talk about investing with and I thought that a few others might also have the same questions:

    DSEUX requires $100K in a regular account but it only requires $5000 in an IRA. If you are in a regular account you can use DLEUX which is the same strategy with a slightly higher fee and only has a $2000 minimum investment.

    He has also heard me say I am worried about equities and was a little surprised by my beginning allocation. I am worried about US equities (and that is why the enhanced portfolio has none of them). Also, the model I use says the best equity returns happen when volatility is low, and it is as low as it has ever been. Only time will tell if it continues to be a strong signal for equity returns.

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