Tactical Allocations

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, especial...

I am changing the way I present the review of the three strategies. Each section will be titled with a question and under that question will be the data, tables, or commentary that answers the question. At the end I will give the answer I take away from the data presented. I hope this makes it easier for readers to see and understand the data presented. I would love to hear your comments or let me know if there are other questions you would like me to try to answer. 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:     All returns are positive so that is good. The TA strategy is doing everything I would hope it would do. The enhanced strategy continues to struggle and I am revisiting the way that I "enhance" that portfolio going forward.  QUESTION:  What happened in the market that impacted returns? Equal Portfolio: ...

Equal Weight Portfolio: Cash balance on September 4th = $362.11 No trades TA Portfolio: Cash balance on September 4th = $573.46 No trades Enhanced TA Portfolio: Cash balance on September 4th = $291.95 Sold 218 shares of JXI at $49.60, with $7 commission = $10,805.80 Bought 83 shares of VONE at $133.29, with $7 commission = $11,070.07 Cash left over = $27.68 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: There, again, is no change to the tactical allocation for September:   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 account. The TA portfolio:  There will be no trades in this portfolio.  The Enhanced portfolio:  The purchase I made one year ago was JXI.  This is a global utilities ETF.  I am going to sell 218 shares of JXI and use the proceeds and cash in the account to 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 sugges...

"Mistakes are the portals of discovery" ~ James Joyce I decided to do two insight posts this month as I have missed a couple of the past months. In statistics there is a test for hypothesis which looks at the hypothesis prediction and the actual outcomes over many experiences.  The less errors the more robust the hypothesis. I decided to do this for my model going back as far as I could. I was curious about my ability to protect in down markets and yet still take advantage of up markets. For my review I called any year where fixed income did the best as a down market and all other years up markets. In alignment with this I looked at my calls and if I had called for a fixed income investment then that was a defensive portfolio, all others were aggressive portfolios. The results are: Total periods: 359 Analysis:  These results show what I expected.  I am capturing 96% of the strong markets (259 of the 271 strong market periods) while still avoiding 27% o...

“Great works are performed not by strength but by perseverance" ~ Samuel Johnson   Patience and perseverance seem to be increasingly scarce and disregarded today.  Technology has given us quick access to ease and comfort; often at the touch of a button.  We get irritated when it takes 5 seconds for a screen to load or if we have to wait in line or for a package to be delivered.  In contrast, I recently had a wonderful meal at a French restaurant that was all about waiting. The waiter took time to explain the preparation of each course in detail. They described the processes the chef went through to develop the unique textures and flavors. Many of the servings were barely a mouthful but the chef and his team had taken weeks to prepare them. They were able to get textures and flavors out of ingredients that I would not have thought possible. Every step was timed precisely, too early or late and the result would not have been pleasing. When done c...

COMMENTARY: Equal Portfolio:   This portfolio is invested about 25% in each of four asset classes ( investment grade debt AGG (-0.2%) ,  high yield debt JNK (1.3%) ,  large cap equity VONE (3.4%)  and  small cap equity VTWO (1.6%) ). In Juuly it returned 1.9%. It is the baseline or benchmark against which I judge the other portfolios. TA portfolio:  This portfolio is 100% in   large cap US equities VONE (3.4%) . So, in July it returned 3.9% (due to a dividend payment). Enhanced portfolio:     This portfolio returned 2.5% in July.  global utilities JXI (1.8%) ,  global consumer staples KXI (3.2%) ,  US equity DSEEX (4.2%) ,  commodities DBCMX (-2.5%) , emerging markets (2.8%) . Commodities were the main detractor. Co lor significance: Red           =   Small cap equity  Orange     =   Large cap equity Purple      =   High yield debt ...