Tactical Allocations

January Allocation: On December 6th, 3 trading days after my last allocation update, the signal changed. It then said to take the portfolio a bit more conservative. I wish that had changed a few days earlier so some of the portfolio would have been protected from December's steep decline. As it is, the conservative signal is still there so for the first time in quite a while we have a change to the portfolios. Trades will take place on January 1st. Large Cap Equity (VONE):     92%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):              0%    Inv. Grade Debt (AGG):             8%   The Equal portfolio:   The cash balance is over $1000 so we will make some trades to put it to work.  Current allocations only have 24% in Small Cap Equity and Junk Bonds so we will be buying an equal dollar amount of Small Cap Equity (ticker VTWO ) and Junk bonds (ticker JNK ). The TA portfolio:  I will sell 1/12th of the VONE in the portfolio and use tha

QUESTION:  What is the track record of realized investments? One year performance as of November 30th (in order):   VONE (5.8%) ,  VTWO (0.6%) ,   JNK (-0.6%) ,   AGG(-1.4%) . TA:   Position taken one year ago:  VONE Rank:   1st History 1st 2nd 3rd 4th Number of Bets:   2  5  0  0  % of Bets:   29%  71%   0%  0 % Enhanced:  Position taken one year ago:  DSEEX (5.9%) Rank :  +  Positive History     +   =   - Number of Bets:     2   1   4 % of Bets:   29%  14%  57% ANSWER:  The one year look back in November is perfect. The TA fund picked the best asset class over the last year and the Enhanced fund picked an even better active alternative. 

Sorry for the huge delay in posting November Performance. I feel that I have been overwhelming people with data so I am going to change it up a bit.  Most months I am just going to share the long term performance of the product and talk a little about what is or is not working. At quarter end I will continue to give a full detailed report, like I have been doing on a monthly basis to this point. So Performance as of November 30th was:          1 Mo         3 Mo        1 Yr     3 Yrs     ITD Equal           0.62%        -4.83%      1.25%      -na-     5.24% TA           1.63%        -4.67 %       5.72%      -na-    11.74% Enhanced           0.99%        -3.48%      -0.88%      -na-      4.85% Commentary:  The portfolio is acting well. Performance has been hit in recent months but this seems to be mostly due to a lowering of growth expectations as opposed to a worry about the US entering a recession. Leading economic indicators remain strong but corporate deb

This blog to date has focused on a long term strategy that had added a lot of value for me. For me, sharing that is the reason for doing the blog. As I talk to people, they seem more interested in the stories about investing and in looking at individual companies and themes. I hear a lot about these as well and am going to start posting, on an add hoc basis, some of these types of insights.  I will maintain a discipline of creating a timeline when I share an insight and then reviewing the outcome at the appointed time.

Equal Weight Portfolio: No Trades TA Portfolio: No Trades Enhanced TA Portfolio: Cash balance on November 1st = $114.12 Sold all remaining shares of DSEEX (609.3071) at $15.81, with $7 commission = $9,626.15 Bought 76 shares of VONE at $127.96, with $7 commission = $9,731.96 Cash after transaction = $8.31 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

Monthly Portfolio Update: Although the markets seem scary right now, there is no change to the tactical allocation for November but there are trades to be done. Large Cap Equity (VONE):   100%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):              0%    Inv. Grade Debt (AGG):             0%   The Equal portfolio:   No Trades. The TA portfolio:  No trades.  The Enhanced portfolio:  The purchase I made one year ago was  DSEEX .  I will sell the rest of that exposure and buy  VONE .   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. I own all of the securities suggested in all three portfolio's.    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 Twa

Investing can be compared to a relationship. It is not a casual, short term relationship but a serious long term commitment.  It needs to be well thought out and one needs to have conviction and staying power in order to make it work.     Right now stocks have been on a very long, positive run. This is when most people get interested in investing and this is often the worst time to get started investing. My portfolio is not saying to take risk off yet, but the next change will be to take risk off, it is also not adding risk. Of the four asset classes I have chosen to allocate between, Large Cap Equity is the second safest or most conservative asset class. Only Investment Grade Bonds are more conservative. Investing is difficult because of time and how the recent past affects our current mood. A real world example to help you understand the difficulty: On 11/16/2015 you look at stock A (graph below). It has been going up and looks and feels like a good purchase. You buy10 shar

October was a scary month, and yet the portfolio's did pretty well. I am particularly excited about the TA portfolio's 1 year return.  It is now higher than any of the Morningstar followed managers.  See below for more details. QUESTION:   How did the portfolios perform? Cumulative returns of each of the strategies as though you had invested $100,000 in them at the beginning of the blog. ANSWER:  October was a a "risk off" month.  Assets that are considered risky, such as equity, did very poorly. Assets that are very safe, such as high quality debt, did less poorly. For a recap of the differences between each of the three portfolios go here .   QUESTION:  What happened in the market that impacted portfolio returns? The Federal Reserve announced that they would be raising interest rates faster than they had previously indicated. A raising of interest rates means that borrowing money is more expensive and generally slows down the growth of the

Equal Weight Portfolio: Cash balance on November 1st = $787.63 Bought 3 shares of AGG at $104.35, with $7 commission = $320.05 Bought 13 shares of JNK at $35.11, with $7 commission = $463.43 Cash after transactions = $4.15 TA Portfolio: Cash balance on November 1st = $1,155.53 Buy 9 shares of VONE at $125.10, with $7 commission = $1,132.90 Cash after transaction = $22.63 Enhanced TA Portfolio: Cash balance on November 1st = $302.94 Sold $9160 of DSEEX, with $7 commission = $9,153.00 Bought 75 shares of VONE at $125.10, with $7 commission = $9,389.50 Cash after transaction = $66.44 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 Twa

Happy Halloween Everyone! Monthly Portfolio Update: Although the markets seem scary right now (pun intended), there is no change to the tactical allocation for November but there are trades to be done as cash needs to be invested. Large Cap Equity (VONE):   100%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):              0%    Inv. Grade Debt (AGG):             0%   The Equal portfolio:   I will use the cash that has built up in the account to buy more JNK and AGG in approximately equal dollar amounts to rebalance this portfolio. The TA portfolio:  I will use the cash that has built up in the account to buy more VONE as that is where 100% of the allocation currently resides.  The Enhanced portfolio:  The purchase I made one year ago was DSEEX .  I will sell half of that position and buy VONE as I continue to work on adjusting how I add value in this portfolio.   Disclaimer: Past performance is not a guarantee of future performa

MICE (Money, Ideology, Compromise/Coercion, Ego/Extortion) - a CIA acronym that highlights the main motivations for a person becoming a spy.  It is crucial for the CIA to understand the motivations of those who give them information. It is just as crucial for investors to understand the motivations of those who say they want to give them money. When you look at an investment opportunity, if you do not understand how the money flows and the motivation of everyone involved then you should not invest. This is not to say that you have to talk to all the people involved but you must be able to understand the structure and see why each person is willing to play their part. If you cannot see this then you should not invest. Lets go through a couple of generic examples: A public company ~ A public company has many stakeholders (people who are interested in how it runs its business). It is important to understand each and how they might influence the course of the company. It is also

September showed the defensiveness I have built into the enhanced strategy as it held up in a month when markets in general did very little. QUESTION:   How did the portfolios perform? Cumulative returns of each of the strategies as though you had invested $100,000 in them at the beginning of the blog. ANSWER:   September was a flat month for investments in general. Small cap equities (VTWO) lost money (a pull back after a long stretch of very good results) while large cap (VONE) had modest gains. High Yield bonds (JNK) performed ok while their higher quality counterparts (AGG) lost a little. Interest rates and not risk drove bond returns in September.   QUESTION:  What happened in the market that impacted portfolio returns? Equal Portfolio:   This portfolio is invested equally in each of four asset classes. In September it returned -0.5%. It is the baseline or benchmark against which I judge the other portfolios. TA portfolio:  This portfolio is cu

Monthly Portfolio Update: There, again, is no change to the tactical allocation for October:   Large Cap Equity (VONE):   100%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):              0%    Inv. Grade Debt (AGG):             0%   The Equal portfolio:   There are no trades for this portfolio. The TA portfolio:  There will be no trades in this portfolio.  The Enhanced portfolio:  The purchase I made one year ago was JXI.  There will be no trades in this portfolio.   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. I own all of the securities suggested in all three portfolio's.    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

My lawn is a mess.  You might wonder what that has to do with investing, the answer is nothing, but this weekend I went online to find out how to improve my lawn and found "the Lawn Care Nut" on U-Tube. As I watched his podcasts I realized how something he knew so much about could be very confusing to a beginner.  So I am revisiting the basics today. The Three Keys:   I am going to focus on the three most basic things needed to begin investing. They are Material, Time, & Patience. Material:   Every craftsperson has material they work with or a medium.  The material for investing is cash. Without cash you cannot invest. I define investing as: using your cash to earn more cash.  You can think of each dollar as a little worker that works for you 24/7. Without material (or workers) you cannot build anything. So the first thing you need to do to become an investor is put some cash aside.  This is easiest through a retirement plan, especially if you can have it ta