Tactical Allocations

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 ...

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  ...

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  = 26...

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 ...

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 (...

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 ...

Below are the trades made within the portfolio's on April 1st 2020 followed by a listing of the current holdings in each portfolio. Equal Weight Portfolio: Cash balance prior to trade $372.33 No trades TA Portfolio: Cash balance prior to trade $472.32 Sold 86 shares of  AGG  at $115.06 with $0.24 SEC Fee. Total proceeds $9,894.92 Bought 112 shares of  JNK  at $92.23 with $0 commission. Total cost $10,329.76 Ending cash balance of $37.48 Enhanced TA Portfolio: Cash balance prior to trade $942.91 Sold 320 shares of GOVT  at $28.14 with $0.23 SEC Fee. Total proceeds $9,004.57 Bought 2021 shares of HIX  at $4.92 with $0 commission. Total cost $9,943.32 Ending cash balance of $4.16 The Portfolios after the trades on 4/1/2020: Equal Weight Portfolio:   Cash = $372.33 VONE  = 225 Shares VTWO  = 247 Shares AGG  = 248 Shares JNK  = 264 Shares TA Portfolio: Cash = $37.48 VONE ...