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Autopilot Portfolio: TANER APP (III) (Jan. 23,2012)

The market cycles are not easy to monitor, but my extensive market experience and analysis can help me to do the pretty good job, by looking closely at inflation expectations, money supply, and various asset valuations. Of course, we cannot time precisely, but six satges are observed:

U1: Upswing One, bottoming out, focus on individual securities (equities and a few ETFs carefully selected).

U2: Upswing Two, rapidly advancing, investing more heavily and aggressively

U3: Upswing Tree, becoming cautiously optimistic, targeting more broad categories of assets.

D1: Downswing One, defensive., trading less.

D2: Downswing Two, trading more cautiously in a relatively longer term.

D3: Downswing Three, investing very selectively in a relatively intermediate term.

The allocations of capital to a long-run portglio ("Autopilot Portfolio") and Two Trading Accounts, and the allocation to the components of Autopilot Portfolio are:

 

 

ASSET

TOTALBOND

TOTAL STOCK

EMERG MKT

BOND ASSETS

STOCK ASSETS

YILD %

2.36%

2.00%

1.96%

   

SYBOL

VBTLX

VTSAX

VEMAX

   

9/2/2011

17.1%

12.3%

6.2%

41%

60%

9/9/2011

17.3%

12.3%

6.0%

40%

60%

9/16/2011

16.8%

12.6%

5.9%

38%

62%

9/23/2011

17.7%

12.3%

5.4%

40%

60%

9/30/2011

17.9%

12.3%

5.5%

40%

60%

10/7/2011

17.6%

12.7%

5.5%

43%

57%

10/14/2011

17.7%

13.0%

5.8%

43%

57%

10/21/2011

17.6%

13.1%

5.8%

39%

62%

10/28/2011

18.7%

15.8%

7.8%

39%

61%

11/4/2011

21.1%

19.6%

7.8%

42%

58%

11/11/2011

20.8%

23.1%

7.7%

43%

57%

12/16/2011

21.5%

22.9%

7.3%

45%

55%

1/20/2012

16.5%

23

.7%

7

.7%

47%

53%

Click to enlarge

 

AUTOPILOT PORTFOLIO

If anyone asks me what is the easiest way to set up a reliable portfolio with only three assets, my answer is to go with:

(a) A tota-bond market ETF (or mutual fund), e.g.. BND (Vanguard Total Bond Market ETF)

(b) A total-stock market ETF (or mutual fund), e.g.. VTI (Vanguard Total Stock Market ETF)

(c) An emerging market ETF (or mutual fund), e.g.. VWO (Vanguard Emerging Market ETF)

Since mutual funds within Vanguard, for instance, can exchange one to the other with free, Vanguard mutual funds of these three Vanguard ETFs are selected in my Autopilot Portfolio. In adddtion to these three mutual funds, other mutual funds (three to nine) are added. Currently the portfolio contains seven funds. My Income Portfolio shows most of them. The current market stage is U3 so that the portfolio has consolidated in a smaller number of funds which have more broader aeet categories.

 

Daily TANER Mometums (DTMs) are a summary of all betting in the market (including yours and mine) at any specific day (e.g. 1/3/2011). This information is only ONE "cross-section-data" set, based upon the closing prices. All prices changes in extra hours (4:00 p.m. to 8:00 p.m.) and in extended hours (8:00 a.m. to 9:30 a.m.) are excluded.. A single point datum is weak to predict future. That's why the TANER Momentum Trend (TMT) is introduced.

Following TMTs for a longer period of time, we can adjust (a) our asset allocations between equities and bonds or (b) our income portfolio. Or we can get an idea to determine which securities buy, sell, or hold. (See "How to Use the TMT (TANER Momentum Trend)".)

Autopilot Protfolio has reflected the following TMTs of BND, VTI, and VWO.

 

 

   

1-2-3 M

 

WEEK

BND

VTI

VWO

 

TOTALBOND

TOTAL STOCK

EMERGING MKT

9/27-10/3

15

5

3

10/4-10/10

14

6

5

10/11-10/17

11

5

4

10/18-10/24

10

11

1

10/25-10/31

8

7

1

11/1-11/7

6

10

4

11/8-11/14

4

11

1

11/15-11/21

7

10

4

11/22-11/28

8

11

2

11/29-12/5

8

12

2

12/6-12/12

0

15

1

12/13-12/19

4

9

1

12/20-12/27

3

6

3

12/28-1/3

1

6

0

1/4-1/9

1

4

0

1/10-1/17

2

4

3

1/18-1/23

5

5

1

TOTAL

107

137

36

Click to enlarge