Tactical Asset Allocation - May 2016 Update

by: Paul Novell

Here is the tactical asset allocation update for May 2016. Before I get into the updates for the month I want to share a must read post from Antonacci. In the post he lists some questions he often gets asked about markets and investing. Here they are:

Question: How much do you think the stock market can drop?
Response: 89%
Question: What?!!
Response: Well, that is the most it has dropped in the past. But past performance is no assurance of future success, so I guess it could go down more than that.

Question: I just looked at my account, and it is down. What should I do?
Response: Stop looking at your account.

Question: What are you doing now?
Response: What I always do … following my models.

After these responses, I am usually not asked any more questions.

This is so on point. I have very similar experiences. I'll add a few more.

Q: What are you investing in now? A: Uhh, whatever is going up, or cheap, or both… or I've also said, don't know I'd have to check my computer to tell you.

Q: If I do answer the above with a specific investment, which is usually a mistake, then I get, the why? A: Because the computer/model said so…

Q: What do you think about X? (where X=China, Junk bonds, liquidity, etc..) A: I have a lot of personal opinions about those things but for investing I don't care. Doesn't matter.

After these answers the conversation usually turns to something else, like craft beer…

Below are the updates for the AGG3, AGG6, and GTAA13 portfolios. The source data can be found here. The sheet contains the IVY5, GTAA5, and the Permanent Portfolio as well. These signals are valid after every trading day. So, while I'll maintain these month end updates this means that you can implement your portfolio changes on any day of the month, not just month end. FINVIZ will at times generate signals that are slightly different than Yahoo Finance. Also, year to date performance figures have been updated and are included in the sheet.

Note: I am not maintaining the Yahoo Finance versions any more. All portfolios now use FINVIZ data.

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For May there are no changes to AGG3. For AGG6, VCIT and VBR are new holdings. Both portfolios are 100% invested. For GTAA13, only GSG remains in cash mode. Approximate monthly and YTD performance is below. In a new change global asset allocation is still working well in 2016.

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For the Antonacci dual momentum GEM and GBM portfolios, GEM remains in SPY, and the bond portion of GBM is in MBB. The Antonacci tracking sheet shareable so you can see the portfolio details for yourself.

The Bond 3 quant model, see spreadsheet, ranks the bond ETFs by 6 month return and uses the absolute 6 month return as a cash filter to be invested or not. The Bond 3 quant model is invested in IGOV, VGLT, and MUB.

That's it for this month. These portfolios signals are valid for the whole month of May. As always, post any questions you have in the comments.