rudi

E-Z Stealth ETF Portfolio

Hi Thomas,
I hope you don't mind me posting a few comments on the portfolio. I agree that one shouldn't try to play the market. This is in fact, however, also good advice for experts.
The portfolio as described above is obviously not a passive portfolio, but bets on a badly performing US economy. I would go so far as too say it is de facto an extremely active approach, and certainly cannot be reconciled with efficient market theory. (Which I hope you believe in, considering you are giving advice to a growing community here.)


While historically the stock market has outperformed bonds marginally, the volatility of equities is three times that of bonds.
And regarding the negative correlation between these asset classes and relying on Markowitz, one should have about 60%-90% bonds.
I would therefore suggest adding a very substantial position of WIP, for example. It is well diversified and inflation linked. Secondly, I don't understand why you arbitrarily buy different sectors and SPY as well. If you don't want to bet but to invest, buy ACWI.
Thus reducing fees, whilst establishing a greater level of diversification.
In order to fine-tune the portfolio, I would suggest reducing the RJI position, as the expected return is around the rate of inflation. So it just works as a hedge (which you do not need if you do not lever).

I would increase the carry trade position as it further diversifies the portfolio, whilst the returns are similar to those of bonds. Bear in mind, that DBV (if i remember correctly) charges 0.65% fees, which is definitely too much. One can easily look up the monthly composition of DBV and buy the currencies manually and save 90% of the fees.

There could be more fine-tuning, by adding some more asset classes and adjusting the percentages. But I am afraid I would be divulging trade secrets if I were to go any further.
Finally, a portfolio with 50% WIP added and levered by 1.5-2.0 will certainly and consistently outperform your portfolio!

best regards
Rudi