Tactical Allocations

Monthly Portfolio Update: The new tactical allocation for July will be: Large Cap Equity:  58%   Small Cap Equity:  42%   High Yield Debt:      0%    Inv. Grade Debt:       0%   Look for a re-cap of performance in July 3rd's post. The Equal portfolio:  There are no changes to the equal portfolio.  I will only rebalance when weightings get off by 5% or more (i.e. one of the asset classes has less than a 20% or more than a 30% weighting) or the cash balance hits $1000. The cash balance at month end is $197.27. The TA portfolio:  The change from the previous month is a reduction in Small Cap Equity and an increase in Large Cap Equity. This makes the portfolio more defensive, however it is still 100% in equities and therefore very bullish.  The size of the trade will be 1/12th of the total portfolio value ( market value of portfolio/12) plus any dividends received (there were no...

I believe diversification is one of the most powerful but misused concepts in finance. Professional investors use it as an excuse to buy horribly priced assets, index funds use it as the prime rationale for  their existence, and some people go completely away from it trying to get rich quick. I am here to tell you that Diversification is a bit like fire; If used properly it can do wonderful things for you (cook your food, heat your home) but if misused and misunderstood it can burn your home down or worse. First of all, what is diversification: Wikipedia defines it as follows:  I n finance,  diversification  is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. Basically, don't put all of your eggs in one basket. For example, if you put all of your money into  Microsoft you have a whole bunch of things that could go wrong and would cost you dearly. At the highest level, the overall markets could go d...

Trades: As this was the first month, I have invested the full $100,000 for each portfolio. Benchmark or Equal Weight Portfolio: Purchased 225 shares of VONE at $111.10 per share, $7 commission, total cost $25,004.50 Purchased 227 shares of VTWO at $110.02 per share, $7 commission, total cost $24,981.54 Purchased 228 shares of AGG at $109.48 per share, $7 commission, total cost $24,968.44 Purchased 673 shares of JNK at $37.20 per share, $7 commission, total cost $25,042.60 Cash left over $2.92 TA Portfolio: Purchased 450 shares of VONE at $111.10 per share, $7 commission, total cost $50,002.00 Purchased 454 shares of VTWO at $110.08 per share, $7 commission, total cost $49,983.32 Cash left over $14.68 Enhanced TA Portfolio: Purchased 998 shares of IEMG at $50.10 per share, $7 commission, total cost $50,006.80 Purchased 4283.30 shares of DSEUX at $11.67 per share, $7 commission, total cost $49,993.11 Cash left over $0.09 Performance: As this is the first mont...