Tactical Allocations

PERFORMANCE: In September the  Equal weighted portfolio  returned   1.9% and is the baseline for the other portfolios.  The  TA portfolio  (which actively allocates among the four asset classes that are in the equal weighted portfolio) outperformed the equal weighted portfolio returning 2.7%.  The  Enhanced portfolio  (which uses the allocation of the TA portfolio and seeks to enhance those returns with security selection) did the worst, returning 0.8%. The relevant security returns (used in the above three portfolio's) for the month of September (excluding dividends) were: For  Equal  and  TA portfolios :  VTWO   6.0%,  VONE  1.6%,  JNK  0.2%,  AGG  -0.8% For  Enhanced portfolio :  IEMG  0.0%,   DSEUX  1.7%,  KXI  -0.9%,  JXI  -2.6% Co lor significance for whole post: Red  is small cap equity...

Monthly Portfolio Update: The new tactical allocation for September will be:   Large Cap Equity:    83%   Small Cap Equity:    17%   High Yield Debt:        0%    Inv. Grade Debt:        0%   Look for a re-cap of performance on October 2nd. The Equal portfolio:  There are no changes to the equal portfolio. The cash balance at month end is $889.92, total market value is $103,957.14. 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 TA portfolio:  The change from the previous month is a reduction in Small Cap Equity (VTWO) and an increase in Large Cap Equity (VONE). This makes the portfolio a little more defensive, however it is still 100% in equities and therefore very bullish. I will sell 1/3 of the VTWO shares (which is 228/3 = 76)....

In The Lord of the Rings, Gollum's final riddle to Bilbo Baggins was: This thing all things devours:   Birds, beasts, trees, flowers;    Gnaws iron, bites steel;    Grinds hard stones to meal;   Slays king, ruins town,   And beats high mountains down. The riddle's answer is "time". Time has a huge impact on all things.  In my previous post "Why Now" I discussed the important impact of time on investment returns. In this post I would like to discuss the impact of time on risk. There are many types of risk. For this discussion I focus on two critical types of risk which I will name "volatility" and "destruction". Volatility is the risk that comes because prices move both up and down. The bigger the moves, the higher the volatility. You might think of this as the price being less dependable. Destruction is the risk of the investment permanently going away (think bankruptcy for a company). You might think of this as fragility. A ver...

PERFORMANCE: In August the  Equal weighted portfolio  returned 0.0% and is the baseline for the other portfolios.  The  TA portfolio  (which actively allocates among the four asset classes that are in the equal weighted portfolio) underperformed the equal weighted portfolio returning -0.3%.  The  Enhanced portfolio  (which uses the allocation of the TA portfolio and seeks to enhance those returns with security selection) performed very strongly, returning 1.4%. The relevant security returns for the month of August (excluding dividends) were: For  Equal and TA portfolios :  VTWO -1.2%,  VONE 0.2%,  JNK  0.4%,  AGG  0.7% For  Enhanced portfolio :  IEMG  2.3%,   DSEUX  0.5%,  KXI  -0.2%, JXI 3.5% Co lor significance for whole post: Red  is small cap equity  Orange  is large cap equity Purple  is high yield debt Green ...

TRADES  (performed in the morning on September 1st) : Equal Weight Portfolio: Beginning cash $727.11 No trade made because allocations were within acceptable range and cash was below $1000 TA Portfolio: Beginning cash $90.84 Sold 76 shares of VTWO at $112.555 per share, $7 commission, total proceeds $8,547.18 Purchased 75 shares of VONE at $113.8398 per share, $7 commission, total cost $8544.99 Cash left over $93.04 Enhanced TA Portfolio: Beginning cash $165.41 Sold 167 shares of IEMG at $54.305 per share, $7 commission, total proceeds $9,061.94 Purchased 80 shares of VONE at $113.8398 per share, $7 commission, total cost $9,114.35 Cash left over $113.00 I will post last months performance and the allocation adjusted for today's trades later today. 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....