August 1, 2020 Allocation

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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 trades
The TA portfolio:
  • Sell 98 shares of AGG
  • Buy as much VTWO as possible with proceeds and cash 
The Enhanced portfolio:
  • Sell 368 shares of GOVT
  • Buy as much GGZ as possible with proceeds and cash

Allocation Prior to trades:
  • Large Cap Equity (VONE):    34%  
  • Small Cap Equity (VTWO):     0%  
  • High Yield Debt (JNK):           33%   
  • Inv. Grade Debt (AGG):          33%  
Equal Weight Portfolio: 

VONE = 225 Shares
VTWO = 247 Shares
AGG = 248 Shares
JNK = 273 Shares

TA Portfolio:

VONE = 311 Shares
AGG = 390 Shares
JNK = 437 Shares

Enhanced TA Portfolio:

VONE = 226 Shares
IEMG = 158 Shares
AGG = 174 Shares
GOVT =  735 Shares
HIX = 2021 Shares
DSL = 2010 Shares

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

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