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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
  • Tactical Strategy Recommendations For March 3, 2014 3 comments
    Feb 28, 2014 9:00 PM | about stocks: FPX, PBE, GURU, HYLD, HYG, BLV, MDY, IEV

    Please realize you use these recommendations at your own risk. I am not a registered financial advisor. If for any unforeseen reason I do not post the recommendations for the next period, please sell the ETFs and go to cash.

    Shown below are the March 3, 2014 ETF recommendations for the tactical strategies I have discussed in my Seeking Alpha articles. March 3rd is the day to make your trades on all of these strategies.

    The current semi-monthly period produced positive returns in each of the ten strategies presented below. Let's hope it continues to be that way. All of the strategies are giving a bullish (risk on) signal at the present time.

    Also shown below are the 2014 total return and volatility for each strategy. All strategies are positive for the year. The top growth strategy so far in 2014 is the Aggressive SSSEquity4 Strategy at 9.4% albeit with a volatility of 24.6%. The Aggressive SSSEquity2 Strategy comes in second with a growth of 5.7% with a volatility of 17.7%. The best conservative strategy in 2014 so far is the Conservative SSS2 Strategy with 5.4% total return and 10.0% volatility. The Conservative Unified Tactical Strategy (UTS) has a growth of 1.9% in 2014 and a volatility of 9.4%.

    *Aggressive SSSEquity2 Strategy

    Jan. 2, 2014 FPX Return=+0.76%

    Jan.16, 2014 FPX Return=-4.21%

    Feb. 3, 2014 FPX Return=+8.17%

    Feb.18, 2014 FPX Return=+1.28%

    Mar. 3, 2014 FPX

    2014 Total Return (including div.) = +5.7%

    2014 Volatility = 17.7%

    Please note: I have gone to semi-monthly updates rather than monthly updates on this strategy to coincide with all other strategies.

    Aggressive SSSEquity4 Strategy

    Jan. 2, 2014 FPX Return=-0.11%

    Jan.16, 2014 PBE Return=+1.80%

    Feb. 3, 2014 PBE Return=+4.84%

    Feb.18, 2014 PBE Return=+2.64%

    Mar. 3, 2014 FPX

    2014 Total Return (including div.) = +9.4%

    2014 Volatility = 24.6%

    Please note: This strategy has a slightly different update schedule than some of the other strategies, but the trade day is still March 3rd.

    *Moderate AllAssetsExceptBonds Strategy

    Jan. 2, 2014 GURU(50%), IEV(50%) Return=+1.60%

    Jan.16, 2014 GURU(50%), MDY(50%) Return =-6.76%

    Feb. 3, 2014 PJP(50%), SHY(50%) Return=+5.27%

    Feb.18, 2014 GURU(50%), MDY(50%) Return=+0.43%

    Mar. 3, 2014 IEV (50%), MDY(50%)

    2014 Total Return (including div.) = +0.2%

    2014 Volatility = 15.4%

    Please note: I have modified this strategy by exchanging PJP for PBE. PJP gives almost identical backtested results, but is much less volatile. I have posted the 2014 results above that are slightly different when PJP is used in place of PBE (in third period).

    Conservative AssetBlend Strategy

    Jan. 2, 2014 GURU(30%), IEV(30%), HYLD(40%) Return=+1.43%

    Jan.16, 2014 GURU(30%), MDY(30%), BLV(40%) Return=-2.78%

    Feb. 3, 2014 BLV(40%), PJP(30%), SHY(30%) Return=+2.66%

    Feb.18, 2014 BLV(40%), GURU(30%), MDY(30%) Return=+0.78%

    Mar. 3, 2014 HYG(40%), IEV(30%), MDY(30%)

    2014 Total Return (including div.) = +2.0%

    2014 Volatility = 8.8%

    Please note: See note on Moderate AllAssetsExceptBonds Strategy above.

    *Conservative SSS2 Strategy

    Jan. 2, 2014 FPX(60%), HYLD(40%) Return=+0.92%

    Jan.16, 2014 FPX(60%), BLV(40%) Return=-1.25%

    Feb. 3, 2014 FPX(60%), BLV(40%) Return=+4.40%

    Feb.18, 2014 FPX(60%), BLV(40%) Return=+1.29%

    Mar. 3, 2014 FPX(60%). HYG(40%)

    2014 Total Return (including div.) = +5.4%

    2014 Volatility = 10.0%

    Please note: Well, I recommended going with HYLD instead of BLV for last quarter based on my conservative nature. The result: BLV was up 1.3% while HYLD was up 0.6%. Conclusion: stick with the program.

    *Conservative Unified Tactical Strategy (UTS)- Best used on large accounts ($100K-$1000K)

    Jan. 2, 2014 FPX(30%), GURU(15%), HYLD(40%), IEV(15%) Return=+0.38%

    Jan.16, 2014 FPX(30%), GURU(15%), HYLD(40%), MDY(15%), Return=-1.60%

    Feb. 3, 2014 FPX(30%), IEF(40%), PJP(15%), SHY(15%) Return=+1.86%

    Feb.18, 2014 FPX(30%), GURU(15%), HYLD(40%), MDY(15%), Return=+1.26%

    Mar. 3, 2014 FPX(30%), HYLD(40%), IEV(15%), MDY(15%)

    2014 Total Return (including div.) = +1.9%

    2014 Volatility = 9.4%

    Please note: I have decided to change one of the three sub-strategies from SSSEquity4 to SSSEquity2. The reason I'm doing this is to reduce the volatility of this conservative strategy. In particular, PBE in SSSEquity4 has substantially higher volatility than FPX, CSD, or GURU, so I am going with SSSEquity2 instead.

    *Bond-Only Strategy

    Jan. 2, 2014 HYLD(100%) Return=+1.16%

    Jan.16, 2014 BLV(100%) Return=+3.19%

    Feb. 3, 2014 BLV(100%) Return=-1.25%

    Feb.18, 2014 BLV(100%) Return=+1.30%

    Mar. 3, 2014 HYG

    2014 Total Return (including div.) = +4.4%

    2014 Volatility = 5.8%

    Please note: See comments under Conservative SSS2 Strategy.

    *Low Volatility Bond (NYSE:LVB) Strategy

    Jan. 2, 2014 HYLD Return=+1.00%

    Jan.16, 2014 HYLD Return=+0.05%

    Feb. 3, 2014 IEF Return=-0.27%

    Feb.18, 2014 HYLD Return=+0.74%

    Mar. 3, 2014 HYLD

    2014 Total Return (including div.) = +1.5%

    2014 Volatility = 3.6%

    Please note: See comments under Aggressive SSSEquity4 Strategy.

    *Simple Bond Strategy on HYLD/SHY - Trade on Day of 3 Day & 25 Day Moving Average Ratio Crossover

    Please note: If you are interested in this strategy, I can send you the signal the day it occurs. Please send me a SA message asking to be included on the HYLD/SHY alert list.

    Buy: Jan. 2, 2014 Sell: Open Trade Return=+2.5%

    2014 Total Return (including div.) = +2.5%

    2014 Volatility = 2.5%

    Conservative Schwab-Free Strategy

    Jan. 2, 2014 CWB(20%), FEU(30%), IBND(20%), SCHC(30%) Return=+1.95%

    Jan.16, 2014 CWB(20%), PHB(20%), SCHA(30%), SCHC(30%) Return=-4.36%

    Feb. 3, 2014 HYMB(20%), PHB(20%), SCHH(30%), SCHO(30%) Return=+2.05%

    Feb.18, 2014 HYMB(20%), PHB(20%), SCHM(30%), SGOL(30%) Return=+1.26%

    Mar. 3, 2014 CWB(20%), PHB(20%), SCHM(30%), SCHX(30%)

    2014 Total Return (including div.) = +0.8%

    2014 Volatility = 9.9%

    Benchmarks

    For comparison, the 2014 total return (including dividends) and volatility of three benchmarks are presented below.

    Equity Benchmark: SPY

    2014 Total Return (including div.) = +0.9%

    2014 Volatility = 12.8%

    Bond Benchmark: AGG

    2014 Total Return (including div.) = +1.9%

    2014 Volatility = 2.9%

    Balanced (60% Equity/40% Bond) Benchmark: VBINX

    2014 Total Return (including div.) = +1.6%

    2014 Volatility = 7.7%

    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 have my real money invested in these strategies.

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Comments (3)
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  • Randy E.
    , contributor
    Comments (3) | Send Message
     
    I just came across your articles and am very interested in these tactical asset strategies. I am going to track a few of them myself and hope to start investing in them soon. I want to encourage you to keep posting your updates, it's great that you are investing your own money in them. I do worry, however, that trading your own money may cause you to make some moves outside of your original model (like substituting HYLD for BLV as you mention above.)

     

    A comment on formatting - I can't tell to which system the "Please note:" comments apply, are they to the system above or below the comments?

     

    Thank you very much for your exhaustive work on these systems.
    9 Mar, 04:08 AM Reply Like
  • Cliff Smith
    , contributor
    Comments (465) | Send Message
     
    Author’s reply » Thanks, Randy. I will try and identify what strategy goes with the "Please note" sections.

     

    And yes, it is sometimes hard to just go with a mechanical approach, and I let my feelings get in the way, especially if the recommended ETF occurs on just the last day of the period. It always upsets me when a strategy has been picking a certain ETF for the next period, and suddenly, on the last day, the pick is changed when the other ETF is doing fine. I know too much information, and can view the past history on a day-by-day basis.

     

    Plus there is always very recent market history that isn't included in the analysis, and I can anticipate what that might bring to the table in the near future. And sometimes the second ranked ETF actually looks better than the top-ranked because its growth is more steady.

     

    I will always try to identify my own substitutions as they occur, and my reasons why. But I hope I can stay the course, and go with the recommendations of the strategy. Just trust the strategy and the methods it is based on (they are well-researched). But you will see what I mean when (if) you start investing your own money in a tactical strategy. Sticking to a strategy is tough, and requires discipline.

     

    Thanks,
    Cliff
    9 Mar, 05:26 AM Reply Like
  • Randy E.
    , contributor
    Comments (3) | Send Message
     
    "Sticking to a strategy is tough, and requires discipline." Too true! Tactical or not, I've often had trouble sticking to a strategy over the long term.

     

    I'm hoping that your type of system, with some intended protection from bear markets, will help me learn to stay the course. For bull markets, I'll keep some "mad money" outside of the tactical system to keep my greedy, trigger-happy trader persona occupied.

     

    Thanks again, Cliff.
    Randy
    9 Mar, 02:42 PM Reply Like
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