A Global Tactical Asset Allocation Model [View article]
Dear Ypa Finance,
It would have been kinder (and more professional given that you seem to use similar strategies) to ask questions rather than being so disrespectful.
Then our answer regarding "under the hood mechanics of the backtest" could have been that it is pretty straightforward to replace GLD by the price of spot gold before the creation of the ETF, etc...
A Global Tactical Asset Allocation Model [View article]
RM13 -
Thanks for the comments.
The results of the model presented in this article are baktested.
It should be noted that the objective of this kind of strategy is not to beat SPY (or any other benchmark) every single year, but to record positive returns every year, with lower volatility and small drawdowns. The latter part is key when judging a strategy in my opinion: the less risky a strategy is, the more likely an investor will be able to stick to it and let emotions out of the decision-making process.
This said, one can note that over the last 10 years, returns were positive every year. The strategy underperformed SPY only twice: - once in 2006. The 3 subsequent years (2007-2009, remember?), the strategy returned +56%, +34% and then +54% - once in 2012...
Top 20 Dividend Growth Stocks For 2013 [View article]
Bob -
Thank you. I'm a reader of your articles too. We see the DGI portfolio as part of a larger portfolio with a large part dedicated to global tactical asset allocation strategies. This influences some of the choices: - the idea is to have a majority of stocks with betas lower than 1 - less than 20 stocks - a sector allocation that broadly mimic the S&P500 allocation, but underweighing financials. - use of options to enter and manage positions
Top 20 Dividend Growth Stocks For 2013 [View article]
Thank you all for your thoughtful comments. - on UTX, it is indeed a great stock, for which we had a Dividend Score of 72 as of yesterday. Was it not for the arbitrary 2.5% yield cut off we chose for the article, it could have been in the Top List - I agree with the comments on Defense contractors, which are represented by 3 companies in the list: LMT, RTN, GD. When building a portfolio, it is important not to overweight this kind of sector. Two options here: (i) choose 1 or 2 out of the 3 stocks; (ii) build smaller relative positions in each of them. In any case, a number of things should be kept in mind: - the list is a wish list. From here to actual positions, having the opportunity to get in at favorable entry prices can make a difference. Options strategies are key for this. - the 3 stocks currently have relatively low valuations compared to historic norm. This may suggest that the market is already factoring in lower government spending in the years to come.
An Income Producing Strategy And Hedge For Wal-Mart [View article]
I agree with the author. Better sell the calls when stock is overbought and sell the puts when it's oversold. You then increase both the premium collected and the chance the option expires worthless.
This said WMT is currently neither oversold nor overbought, as highlighted by a 46 reading on the RSI.
The Best SA Articles Of All Time, As Chosen By Their Authors [View article]
Just saw our article received the most votes! So thank you all voters, authors and of course Seeking Alpha for building such a great community.
I must confess we did not expect (and probably did not deserve) to win this at all, especially given that there were pieces by Chuck Carnevale and David Fish to name only a couple. Very good surprise and thanks again
This distinction makes limited sense here as the initial list (DRIP List) is quite homogenous. And effectively, replacing average by median for yield and DGR would not really change the outcome of the screen. As far as the payout is concerned, the hurdle would be excessively difficult to overcome.
An Income-Growth Portfolio For 2012: 4%+ Yield, Dividend Growth And Lower Beta [View article]
Great article! It is nice to see investors with similar philosophies. I agree that stocks with high yield, high DGR and low payout tend to outperform over time. I have started building a portfolio along these lines, which are pretty similar to your approach. I added further consideration on valuation and earnings to avoid stocks that seem overvalued. http://seekingalpha.co...
Building A Permanent ETF Portfolio, Part I [View article]
The permanent portfolio in its purest form, as imagined by Harry Browne is 25% stocks / 25% long term treasuries / 25% gold / 25% cash or short term T-bills. The idea is that such a portfolio can produce good returns whether we are in a strong expansion, a period of deflation or a period of high inflation. The theory is that each of the first three asset class will perform well enough in each of the three economic situation described above to offset losses in the other two.
PRPFX has been a strong performer over the last decade but seems more tilted towards inflation protection that deflation protection. Keeping it simple and aligned with the pure concept, a simple portfolio SPY/TLT/GLD/SHY (buying and holding, rebalanced annually) over your same backtesting period has returned around 11% per year with lower drawdowns and volatility than in your 10-month MA strategy.
On a side note, only being long the top 2 out of these 4 ETFs based on their 6-month performance would have returned over 16% per year with volatility and drawdowns only slightly higher than that of PRPFX.
A Global Tactical Asset Allocation Model [View article]
It would have been kinder (and more professional given that you seem to use similar strategies) to ask questions rather than being so disrespectful.
Then our answer regarding "under the hood mechanics of the backtest" could have been that it is pretty straightforward to replace GLD by the price of spot gold before the creation of the ETF, etc...
A Global Tactical Asset Allocation Model [View article]
Thanks for the comments.
The results of the model presented in this article are baktested.
It should be noted that the objective of this kind of strategy is not to beat SPY (or any other benchmark) every single year, but to record positive returns every year, with lower volatility and small drawdowns. The latter part is key when judging a strategy in my opinion: the less risky a strategy is, the more likely an investor will be able to stick to it and let emotions out of the decision-making process.
This said, one can note that over the last 10 years, returns were positive every year. The strategy underperformed SPY only twice:
- once in 2006. The 3 subsequent years (2007-2009, remember?), the strategy returned +56%, +34% and then +54%
- once in 2012...
A Global Tactical Asset Allocation Model [View article]
Thanks for your interest.
No, taxes are not taken into account given the range of individual situations - from Mr. Buffet to his assistant :-)
Top 20 Dividend Growth Stocks For 2013 [View article]
Finally opened a position at $489 near the low a couple of days ago
Top 20 Dividend Growth Stocks For 2013 [View article]
Thank you. I'm a reader of your articles too.
We see the DGI portfolio as part of a larger portfolio with a large part dedicated to global tactical asset allocation strategies. This influences some of the choices:
- the idea is to have a majority of stocks with betas lower than 1
- less than 20 stocks
- a sector allocation that broadly mimic the S&P500 allocation, but underweighing financials.
- use of options to enter and manage positions
Top 20 Dividend Growth Stocks For 2013 [View article]
PS: long UTX
Top 20 Dividend Growth Stocks For 2013 [View article]
- on UTX, it is indeed a great stock, for which we had a Dividend Score of 72 as of yesterday. Was it not for the arbitrary 2.5% yield cut off we chose for the article, it could have been in the Top List
- I agree with the comments on Defense contractors, which are represented by 3 companies in the list: LMT, RTN, GD. When building a portfolio, it is important not to overweight this kind of sector. Two options here: (i) choose 1 or 2 out of the 3 stocks; (ii) build smaller relative positions in each of them. In any case, a number of things should be kept in mind:
- the list is a wish list. From here to actual positions, having the opportunity to get in at favorable entry prices can make a difference. Options strategies are key for this.
- the 3 stocks currently have relatively low valuations compared to historic norm. This may suggest that the market is already factoring in lower government spending in the years to come.
Top 20 Dividend Growth Stocks For 2013 [View article]
Thank you for your comment.
An Income Producing Strategy And Hedge For Wal-Mart [View article]
This said WMT is currently neither oversold nor overbought, as highlighted by a 46 reading on the RSI.
The Best SA Articles Of All Time, As Chosen By Their Authors [View article]
I must confess we did not expect (and probably did not deserve) to win this at all, especially given that there were pieces by Chuck Carnevale and David Fish to name only a couple. Very good surprise and thanks again
An ETF Trend-Following Plan For All Seasons [View article]
Strong Dividend Stock Portfolio Update [View article]
Strong Dividend Stock Portfolio Update [View article]
An Income-Growth Portfolio For 2012: 4%+ Yield, Dividend Growth And Lower Beta [View article]
Building A Permanent ETF Portfolio, Part I [View article]
PRPFX has been a strong performer over the last decade but seems more tilted towards inflation protection that deflation protection. Keeping it simple and aligned with the pure concept, a simple portfolio SPY/TLT/GLD/SHY (buying and holding, rebalanced annually) over your same backtesting period has returned around 11% per year with lower drawdowns and volatility than in your 10-month MA strategy.
On a side note, only being long the top 2 out of these 4 ETFs based on their 6-month performance would have returned over 16% per year with volatility and drawdowns only slightly higher than that of PRPFX.