2020 Q1 Performance
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:
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:
In this blog I share and discuss three portfolios.
The first is a "buy and hold" strategy that does not ever change. I call this the Equal portfolio because it is made up of four equal parts allocated to different asset classes. It is 1/4 in Large Cap Equity (Ticker VONE), 1/4 in Small Cap Equity (Ticker VTWO), 1/4 in Investment Grade Bonds (Ticker AGG), and 1/4 in Junk Bonds (Ticker JNK). The allocations never change. The only thing needed is to rebalance every so often as performance differences will cause the weights to get out of whack.
The second portfolio is a "tactical" portfolio. It is tactical because it adjusts the weights to the four asset classes above based on market conditions. I call this the TA portfolio. It can go 100% into any one asset class or be a mixture of them. 1/12th of this portfolio can change each month as I make a monthly call on what i expect will do best over the next year based on current market conditions. Historically I have picked the best asset class about 50% of the time, the second best about 25% of the time, the third best 18% of the time and the worst 7% of the time.
The third portfolio is also a "tactical" portfolio. I call it the Enhanced portfolio because I follow the same allocation as the TA portfolio but I try to pick other vehicles that will give a better return than the four basic ones used in the Equal portfolio. This allows for exposure to International Equities, Emerging Markets, and Commodities among others.
DISCLAIMER:
The first is a "buy and hold" strategy that does not ever change. I call this the Equal portfolio because it is made up of four equal parts allocated to different asset classes. It is 1/4 in Large Cap Equity (Ticker VONE), 1/4 in Small Cap Equity (Ticker VTWO), 1/4 in Investment Grade Bonds (Ticker AGG), and 1/4 in Junk Bonds (Ticker JNK). The allocations never change. The only thing needed is to rebalance every so often as performance differences will cause the weights to get out of whack.
The second portfolio is a "tactical" portfolio. It is tactical because it adjusts the weights to the four asset classes above based on market conditions. I call this the TA portfolio. It can go 100% into any one asset class or be a mixture of them. 1/12th of this portfolio can change each month as I make a monthly call on what i expect will do best over the next year based on current market conditions. Historically I have picked the best asset class about 50% of the time, the second best about 25% of the time, the third best 18% of the time and the worst 7% of the time.
The third portfolio is also a "tactical" portfolio. I call it the Enhanced portfolio because I follow the same allocation as the TA portfolio but I try to pick other vehicles that will give a better return than the four basic ones used in the Equal portfolio. This allows for exposure to International Equities, Emerging Markets, and Commodities among others.
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. The writer of this blog owns many (long positions only), if not all, of the securities discussed in this blog. 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
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