Tactical Allocations

Long overdue performance update. Markets have been going strong based mostly on Government stimulus.  While this makes me very nervous, my model says things look good and so it has been adding risk  Performance Charts: Cumulative Returns show the Enhanced portfolio made some strong gains in November and is close to matching the TA portfolio in the long run. Recent returns have strongly favored the Enhanced portfolio as all of its picks have outperformed over the past 3 months.

Big update below because I have been negligent in keeping my spreadsheet up to date.  Below you will find the November 2nd trades, followed by the December 2nd trades.  I will follow up with a performance update through December 8th in a separate post.   Trades made on November 2nd 2020 Equal Weight Portfolio: No trades TA Portfolio: Cash balance prior to trade $448.52 Sold  94 shares of  AGG  at $117.33 with $0.23 SEC Fee. Total proceeds $11,028.79 Bought 91 shares of  VTWO  at $125.19 with $0 commission. Total cost $11,392.29 Ending cash balance of $85.02 Enhanced TA Portfolio: Cash balance prior to trade $843.59 Sold 367 shares of  GOVT   at $27.68 with $0.22 SEC Fee. Total proceeds $10,158.34 Bought 85 shares of  VTWO  at $125.19 with $0 commission. Total cost $10,641.15 Ending cash balance of $360.78 Trades made on December 1st 2020 Equal Weight Portfolio: Cash balance prior to trade $376.16 Bought 3 shares of AGG at $117.81 with $0 commission. Total cost $353.43 Ending cash bala

The markets have recovered to the point where I am now moving back into large cap equity VONE .  I will be selling AGG  as that was the purchase one year ago and will use the proceeds to buy VONE in both the TA  and  Enhanced  portfolios . I will make these trades today, Monday November 2, 2020 and will post the details of the trades later today. Note: The sells are approximately 1/12th of the total portfolio and will be made tomorrow. This will bring my Investment Grade Bond holdings to 0%. The Equal portfolio:   Buy as much  AGG  as I can with cash in the account. The TA portfolio: Sell 95 shares of  AGG Buy as much  VONE  as possible with proceeds and cash  The Enhanced portfolio: Sell 87 shares of AGG Buy as much  VONE  as possible with proceeds and cash Allocation Prior to trades: Large Cap Equity (VONE):     26%   Small Cap Equity (VTWO):     34%   High Yield Debt (JNK):            32%    Inv. Grade Debt (AGG):           8%   Disclaimer: Past performance is not a guarantee of fu

 I continue the move into small cap equity this month. In both the TA and Enhanced portfolios  I will buy  VTWO . TA will be selling AGG .and the Enhanced portfolio will be selling the rest of GOVT . I will make these trades today, Monday November 2, 2020 and will post the details of the trades later today. Note: The sells are approximately 1/12th of the total portfolio and will be made later today. The Equal portfolio:   Buy as much  JNK  as I can with cash in the account. The TA portfolio: Sell 94 shares of  AGG Buy as much  VTWO  as possible with proceeds and cash  The Enhanced portfolio: Sell 367 shares of  GOVT Buy as much  VTWO  as possible with proceeds and cash Allocation Prior to trades: Large Cap Equity (VONE):     34%   Small Cap Equity (VTWO):     17%   High Yield Debt (JNK):            32%    Inv. Grade Debt (AGG):           16%   Disclaimer: Past performance is not a guarantee of future performance.  This strategy is presented for informational purposes only and is not

 I apologize for not posting for awhile.  Below is some information in brief form to catch up: Market Overview: These markets are very strange.  It seems that recently the only thing one needs to monitor is how much stimulus the Government is providing.  If it is increasing then you want to be in equities, if it is decreasing you want to be in bonds. I do not believe this is healthy nor sustainable and it causes deep concern for me. Update on performance:  The enhanced portfolio continues to do well in recent months. Sept 1st Trades: Equal Weight Portfolio: No Trades in this portfolio TA Portfolio: Cash balance prior to trade $347.29 Sold  103 shares of  AGG  at $118.24 with $0.22 SEC Fee. Total proceeds $12,178.50 Bought 99 shares of  VTWO  at $126.26 with $0 commission. Total cost $12,499.74 Ending cash balance of $26.05 Enhanced TA Portfolio: Cash balance prior to trade $466.62 Sold 87 shares of AGG   at $118.24 with $0.21 SEC Fee. Total proceeds $10,286.67 Bought 1,049 shares of  G

I continue the move into small cap equity this month. In the  Enhanced portfolio  I will add to the Gabelli Global Small & Mid Cap Value Trust  GGZ . In the TA portfolio I will buy  VTWO . Both funds will be selling AGG . I will make these trades on Monday September 1, 2020 and will post the details of the trades later that day. Note: The sells are approximately 1/12th of the total portfolio and will be made later today. The Equal portfolio:   Buy as much JNK as I can with cash in the account. The TA portfolio: Sell 103 shares of  AGG Buy as much  VTWO  as possible with proceeds and cash  The Enhanced portfolio: Sell 87 shares of  AGG Buy as much  GGZ  as possible with proceeds and cash Allocation Prior to trades: Large Cap Equity (VONE):     34%   Small Cap Equity (VTWO):      9%   High Yield Debt (JNK):            33%    Inv. Grade Debt (AGG):           24%   Disclaimer: Past performance is not a guarantee of future performance.  This strategy is presented for informational purp

 Below are the trades made within the portfolio's on August 3rd 2020 followed by a listing of the current holdings in each portfolio. Equal Weight Portfolio: No Trades in this portfolio TA Portfolio: Cash balance prior to trade $281.82 Sold  98 shares of  AGG  at $119.25 with $0.22 SEC Fee. Total proceeds $11,686.28 Bought 99 shares of  VTWO  at $120.25 with $0 commission. Total cost $11,904.75 Ending cash balance of $63.35 Enhanced TA Portfolio: Cash balance prior to trade $466.38 Sold 368 shares of  GOVT   at $28.19 with $0.21 SEC Fee. Total proceeds $10,373.71 Bought xxxxx shares of  GGZ  at $9.51 with $0 commission. Total cost $10,831.89 Ending cash balance of $8.20 The Portfolios after the trades on 8/3/2020: Equal Weight Portfolio:   Cash = $226.25 VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 273 Shares TA Portfolio: Cash = $63.35 VONE   = 311 Shares AGG  = 390 Shares JNK  = 437 Shares VTWO = 99 Shares Enhanced TA Portfolio: Cash = $8.20 VONE  = 226 Shares

Markets have been very robust and my model says it is time to begin taking on small cap equity risk. Small cap has under performed large cap by a large amount over the last few years yet over longer historic periods it typically outperforms. In the Enhanced portfolio I am adding the Gabelli Global Small & Mid Cap Value Trust GGZ . It is a closed end fund that invests in global small cap companies. This adds a few risks relative to VTWO . First of all it includes non-US securities, it also has some leverage and focuses on value companies. I expect it will be less volatile and have a higher income (dividend) than VTWO . It is also currently selling at a 20% discount to the underlying NAV which adds additional capacity for out performance over time. I will make these trades on Monday August 3, 2020 and will post the details of the trades later that day. Note: The sells are approximately 1/12th of the total portfolio and will be made later today. The Equal portfolio:   No tr

The Origins of My System: This will likely be too in depth for many but I wanted to put my process out there for those who might be interested. So how did I create my system for taking risk.  It actually was an effort that progressed through about 10 years as I learned of new techniques and thought of new ways to implement the information.  Below is a high level overview of the process. I began by collecting many different economic indicators that I felt might give some indication of upcoming performance.  I found that many indicators had a cyclical nature to them and so I looked at these relative to the next year of returns on a bunch of different indices. If there was a strong correlation between the level of the economic indicator and the index return then I kept it as valuable information. I then studied the indicators that gave the strongest signals and noticed that some of the indices went up when the indicator went down and others moved the opposite direction.  I also n

YTD 2020 through June we have seen a sharp decline followed by a steep reversal. This year has been a perfect example of why you want to stay  fully invested and not trade based on emotions. If you pulled out of the market when everyone was scared (as COVID became reality in March) you would have sold at low prices and missed a huge rally.  By staying invested and being disciplined about the type of risk you are taking, which is what my approach does, it has allowed us to weather the storm and generate solid returns without taking on inordinate risk. It is nice to see the Enhanced portfolio starting to produce better results. Early results were hit by a bet on international equities and the US did much better. The recent positioning in low quality bonds has been quite beneficial. June performance of the holdings in the various portfolios from the highest to lowest return: HIX 7.2%, DSL 6.7%, IEMG 5.7%, VTWO 4.1%, VONE 1.6%, AGG 0.5%, GOVT 0.0%, JNK -0.8%. Thank y

Below are the trades made within the portfolio's on July 1st 2020 followed by a listing of the current holdings in each portfolio. Equal Weight Portfolio: Cash balance $948.93 Bought 9 shares of JNK at 101.05 with $0 commission. Total cost $909.45 Ending cash balance of $39.48 TA Portfolio: Cash balance prior to trade $419.93 Sold 78 shares of  VONE  at $142.75 with $0.23 SEC Fee. Total proceeds $11,134.27 Bought 114 shares of  JNK  at $101.05 with $0 commission. Total cost $11,519.70 Ending cash balance of $34.50 Enhanced TA Portfolio: Cash balance prior to trade $540.89 Sold 76 shares of  VONE  at $142.75 with $0.23 SEC Fee. Total proceeds $10,848.77 Bought 722 shares of  DSL  at $15.77 with $0 commission. Total cost $11,385.94 Ending cash balance of $3.72 The Portfolios after the trades on 7/1/2020: Equal Weight Portfolio:   Cash = $39.48 VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 273 Shares TA Po

We are still adding to our High Yield exposure this month. The markets are recovering and mid month is looked like we would be adding small cap however the risks changed and we are going to increase high yield bond exposure again. Note: The sells are approximately 1/12th of the total portfolio and will be made later today. The Equal portfolio:   Use cash in account to buy $948.93 of JNK The TA portfolio: Sell 78 shares of  VONE Buy as much JNK  as possible with proceeds and cash  The Enhanced portfolio: Sell 76 shares of  VONE Buy as much  DSL  as possible with proceeds and cash Target Allocation Prior to trades: Large Cap Equity (VONE):     41%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):            24%    Inv. Grade Debt (AGG):           34%   Equal Weight Portfolio:   VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 264 Shares TA Portfolio: VONE   = 389 Shares AGG  = 390 Shares JNK  = 323 Sha

YTD 2020 through May we have seen a sharp decline followed by a steep reversal. The big question on everyones mind is whether we have seen the worst of this downturn or not.  The answer to that is not simple.  The huge stimulus announced by the Federal Reserve is fighting against the very difficult economic backdrop of shelter in place.  There are clear winners and losers in this scenario but are these changes permanent or will things go back to normal at some point?  These are all difficult questions. I am happy to be seeing that my model continues to work in these unique times. The key is to not ever take risk off the table but just change the type of risk.  Over the past 12 months VTWO  (small cap equity) has lost 4.70% while VONE  (large cap equity) has gained 10.44%. This is typical during times of turbulence - people flee to larger companies that they feel more secure in. I moved into the very low risk AGG  (high quality bonds) for a couple of months early this year. Now

Below are the trades made within the portfolio's on June 1st 2020 followed by a listing of the current holdings in each portfolio. Equal Weight Portfolio: Cash balance $554.73 No trades TA Portfolio: Cash balance prior to trade $49.19 Sold 78 shares of  VONE  at $140.06 with $0.23 SEC Fee. Total proceeds $10,924.45 Bought 108 shares of  JNK  at $101.59 with $0 commission. Total cost $10,971.72 Ending cash balance of $1.92 Enhanced TA Portfolio: Cash balance prior to trade $226.46 Sold 86 shares of  DVY  at $82.96 with $0.23 SEC Fee. Total proceeds $7134.33 Bought 502 shares of  DSL  at $14.65 with $0 commission. Total cost $7,354.30 Ending cash balance of $6.49 The Portfolios after the trades on 6/1/2020: Equal Weight Portfolio:   Cash = $554.73 VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 264 Shares TA Portfolio: Cash = $1.92 VONE   = 389 Shares AGG  = 390 Shares JNK  = 323 Shares Enhanced TA Po

We are still adding to our High Yield exposure this month. The markets are recovering however the risk in the high yield bond market is still well compensated. Note: The sells are approximately 1/12th of the total portfolio and will be made later today. The Equal portfolio:   No Trades The TA portfolio: Sell 78 shares of  VONE Buy as much JNK  as possible with proceeds and cash  The Enhanced portfolio: Sell 86 (all remaining) shares of  DVY Buy as much  DSL  as possible with proceeds and cash Allocation Prior to trades: Large Cap Equity (VONE):     53%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):              9%    Inv. Grade Debt (AGG):           28%   Equal Weight Portfolio:   VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 264 Shares TA Portfolio: VONE   = 467 Shares AGG  = 390 Shares JNK  = 215 Shares Enhanced TA Portfolio: VONE  = 302 Shares IEMG  = 158 Shares DVY  = 86 Shares

Below are the trades made within the portfolio's on May1st 2020 followed by a listing of the current holdings in each portfolio. Equal Weight Portfolio: Cash balance $554.73 No trades TA Portfolio: Cash balance prior to trade $156.00 Sold 77 shares of VONE  at $128.65 with $0.23 SEC Fee. Total proceeds $9,905.82 Bought 103 shares of  JNK  at $97.21 with $0 commission. Total cost $10,012.63 Ending cash balance of $49.19 Enhanced TA Portfolio: Cash balance prior to trade $47.48 Sold 76 shares of  VONE  at $128.65 with $0.23 SEC Fee. Total proceeds $9,777.17 Bought 786 shares of  DSL  at $12.49 with $0 commission. Total cost $9,817.14 Ending cash balance of $7.51 The Portfolios after the trades on 5/1/2020: Equal Weight Portfolio:   Cash = $554.73 VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 264 Shares TA Portfolio: Cash = $49.19 VONE   = 467 Shares AGG  = 390 Shares JNK  = 215 Shares Enhanced TA Port

I am still not sure whether or not we have hit bottom. There is a lot of potential for bad news in the coming year. One key bankruptcy or another bout of the virus could put markets back into a tail spin. That said, risk in high yield bonds is attractive at these levels and so I will be adding to that exposure. Note: The sells are approximately 1/12th of the total portfolio. The Equal portfolio:   Beginning Cash $554.73 No trades The TA portfolio: Beginning Cash $156.00 Sell 77 shares of  VONE Buy as much JNK  as possible with proceeds and cash  The Enhanced portfolio: Beginning Cash $47.48  Sell 76 shares of  VONE Buy as much  DSL  as possible with proceeds and cash Allocation Prior to trades: Large Cap Equity (VONE):     53%   Small Cap Equity (VTWO):      0%   High Yield Debt (JNK):              9%    Inv. Grade Debt (AGG):           28%   Equal Weight Portfolio:   VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  =

In Q1 2020, COVID 19 hit the world and the markets. The lack of small cap stocks was very beneficial in the TA and Enhanced portfolio's.  The portfolio's have lower risk in them than the equal weighted portfolio and this was demonstrated in this quarters returns.  During the quarter, the four asset class returns were  VONE -20.50%, VTWO -30.75%, JNK -13.08%, AGG 3.04%. Over the past 12 months returns were  VONE -9.73%, VTWO -25.03%, JNK -7.19%, AGG 8.82% Small cap stocks ( VTWO ) tend to do poorly at the end of the market cycle and during a crash. After we move through the bottom of this cycle we will begin adding them back into our portfolio as they are usually the stars during a rebound.  We added high yield ( JNK ) this month as the yields are very beneficial when equity markets are low and they tend to rebound very quickly when the market begins to heal. Performance as of March 31, 2020 was: Blog Basics: In this blog I share and