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Cliff Smith
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I am currently a retired Aerospace Engineer. I am married with three children and seven grandchildren. I was born in San Francisco, CA in 1949 and moved to Newport News, VA in 1951 where I lived until I went to college. By God's grace, I received a B.S. degree from Virginia Tech (1972), a M.S.... More
  • ETF Recommendations For Tactical Asset Allocation Strategies 8 comments
    Jan 15, 2014 6:29 PM | about stocks: CSD, GURU, HYLD, MDY

    Please realize you use these recommendations at your own risk. I am not responsible for any financial loss you may incur by using these strategies.

    I have listed here the latest ETF recommendations for the Tactical Asset Allocation (TAA) strategies I have discussed in my Seeking Alpha articles. To mimic the strategies, you should try to buy the ETFs of a particular strategy on the first business day of each semi-monthly period, preferably toward the end of the trading day (3:00 - 3:30 pm). However, making the trades anytime on the first trading day of a period will not significantly alter the results. The first trading day of the next period is Jan. 16th.

    Please use limit order trading at the last sell price if there is a large difference between bid and ask prices. Some of the ETFs are not heavily traded so there might be relatively large differences between bid and ask prices.

    The strategies assume automatic rebalancing of the ETFs at the end of the first business day of a new period. In actual practice, this would require selling every holding and buying new holdings at the start of each period, even if the holdings do not change. This procedure will increase costs due to excessive buying and selling of ETFs. Of course, rebalancing of the strategies should be performed whenever all of the ETF recommendations change in a new period. Otherwise, rebalancing of the ETFs should only occur when the percentage of one ETF gets more than 5% out of line. Of course, this is not an issue with SSSEquity since only one ETF is recommended each period.

    Aggressive CSD-Bond Strategy (almost called SSSEquity)

    Jan. 2, 2014 CSD Return=+1.71%

    Jan. 16, 2014 CSD

    Moderate AllAssetsExceptBonds Strategy

    Jan. 2, 2014 GURU (50%), IEV (50%) Return=+1.79%

    Jan. 16, 2014 GURU (50%), MDY (50%)

    Conservative AssetBlend Strategy

    Jan. 2, 2014 GURU (30%), IEV (30%), HYLD (40%) Return=+1.47%

    Jan. 16, 2014 GURU (30%), MDY (30%), BLV (40%)

    Conservative Super Simple Savings Strategy

    Jan. 2, 2014 CSD (60%), HYLD (40%) Return=+1.42%

    Jan. 16, 2014 CSD (60%), HYLD (40%)

    30 Day Moving Average Strategy on HYLD - Update Posted on Day when 30 MDA & 3 MDA Cross

    Jan. 2, 2014 Buy HYLD Trade open Return=+0.99%

    These strategies have been backtested over a limited timeframe and shown to produce good growth with minimum risk, but future results may be dependent on factors not considered. Use these recommendations at your own risk. I am not responsible for the outcome.

    Disclosure: I am long CSD, GURU, HYLD, MDY.

    Additional disclosure: I have put my own retirement money in these strategies.

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Comments (8)
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  • oldorv
    , contributor
    Comments (399) | Send Message
     
    Nice article. I got Guru and a bunch of other ETFs. But your system is way too much work for me. I've found ETFs to be ideal for the lazy investor like me. 'set it and forget it' Of course, you probably make a little more money than I do...
    16 Jan, 08:23 AM Reply Like
  • Cliff Smith
    , contributor
    Comments (293) | Send Message
     
    Author’s reply » Well, that's been O.K., to buy and hold, for the past five years. But another big downturn is going to happen, and when it does, investors can lose 50% pretty quickly. It happened in 2001-2002. It happened in 2008. It's very painful, especially if you are retired. And then it takes many years to get back up to where you were.

     

    These tactical strategies reduce such risk by using methodologies to get out of the ETFs at the start of the drawdown. That means sometimes there will be fake drawdowns (just corrections to the market), but when the big drawdowns occur, these strategies will be worth a lot.

     

    And the other big benefit of tactical strategies is to pick the best of the ETFs when the market is doing good. The best equity ETFs will have the largest drawdowns (so we have to get out then), but during good times, we want to be in the fastest-growing ETFs.
    16 Jan, 08:58 AM Reply Like
  • Kits
    , contributor
    Comments (18) | Send Message
     
    Cliff don't know if you are aware of this web site
    http://bit.ly/vymI3O
    They use momentum and relative strength as a basis for their
    tactical asset allocation . Thought you might be interested.

     

    Randy
    13 Feb, 07:36 AM Reply Like
  • Cliff Smith
    , contributor
    Comments (293) | Send Message
     
    Author’s reply » Hi Randy,

     

    Yes, I am aware of them, and get their emails. They use some of the same techniques, but their backtest results seem much less than mine.

     

    Thanks,
    Cliff
    13 Feb, 08:38 AM Reply Like
  • extremebanker
    , contributor
    Comments (1684) | Send Message
     
    Cliff:
    You might want to look at rpv instead of mdy. Better performance for last several years.
    13 Feb, 09:28 AM Reply Like
  • Cliff Smith
    , contributor
    Comments (293) | Send Message
     
    Author’s reply » Thanks. I looked back to the inception of RPV (2006), and the total returns are almost equal. Plus the drawdown was less for MDY in 2008. MDY allows more backtesting too. But RPV is definitely better the last year.

     

    Cliff
    13 Feb, 10:34 AM Reply Like
  • Flippster
    , contributor
    Comments (3) | Send Message
     
    Cliff, I'm a major fan and hope that the responses you receive to your articles and updates will lead to more of your fine analyses.
    You asked in an earlier post to hear from folks who are investing according to your guidance. Since I've been following your work for less than two months, I'm hesitant to fully commit, but I did purchase FPX earlier this month (I already owned GURU) on your advice and am glad I did. Please keep up the great work.
    BTW, I was interested to see that Les Masonson contacted you early on. Was your exchange with him productive?
    21 Feb, 06:55 PM Reply Like
  • Cliff Smith
    , contributor
    Comments (293) | Send Message
     
    Author’s reply » Hi Flippster,

     

    Thank you for your nice comments. Please remember that the key to owning FPX and/or GURU is to have some plan of getting out when their is significant downside risk. When the market goes south, these fast-growing ETFs will drop more than their slow-growing counterparts.

     

    I am continually looking at new strategies, and trying to optimize the current strategies. There is something about actually having a living history of a strategy online that makes me realize what needs to be corrected in a strategy. Plus I get a lot of thought-provoking comments and messages that cause me to reconsider my positions and lead to innovation.

     

    Les Masonson was very complementary, but we never went beyond exchanging emails.

     

    Thanks,
    Cliff
    21 Feb, 07:53 PM Reply Like
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