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Walk A Crooked Mile

|Includes: ISD, PML, VBTLX, VNQ, VNQI, Vanguard Total Stock Market Index Fund (VTSAX), VWO, VWOB

I didn't like what I wrote last time. I was in a hurry and generally upset due to some financial problems. And since I've gone to a prn status, I get paid a good bit more per hour, but sometimes there's not shifts available.

Anywho. I was happy to see that SA now is using tickers for mutual funds. So now I can expound a bit more on what I'm doing in my 401k. Basically I just hold VTSAX and VBTLX - Vanguard's total stock and bond funds. Contributions are 60/40 between them. Every four months, I reallocate them to 75/40 depending on what the 100 day relative strength of the funds are (the stronger one gets the 75% reallocation) and ignore them the rest of the time. It's worked out pretty well.

For example, I implemented this in September vs. the 300 day moving average method I had been using. At the time, the bond fund got most of the money based on the relative strength. Then October happened. Then it ended. And it was the end of December and to get on a regular schedule most of the money went into the stock fund. Then January happened and I was: "Oh, shit! Bad idea!". But I didn't make any changes. And then February happened and things are back on track. The next rebalance date is for April 1, but due to having pseudo-superstition, I will probably reallocate a day before or after that date.

Credit for this strategy goes to:

Credit for the previous strategy, which I still like and use the 300 day moving average to some extent (the first time I came across it) goes to this:

And some additional homework if you're curious about trend following or relative strength strategies:

One thing I did that I regret was trying to implement something similar with svxy in the taxable account in December. I ended up selling it yesterday for an 8% loss. Which considering it was down close to 30% in January, I don't regret. Lesson learned - don't try a momentum strategy with leveraged etfs or anything that may act like a leveraged etf.

Proceeds went towards MORL, which is a leveraged etn, but like all the leveraged etns I have, I scale in slowly and they are purely for income. I also have a self-imposed cap on the amount of money I can put into any given one.

Since I've decided to start concentrating on maxing out the Roth after the 401k and then focus on the taxable (by my calculations that's only $230 a paycheck) and Vanguard's etfs trade commission free, I'm going to be focusing on these: VWO, VWOB, VNQ, VNQI and the plan is to utilize something similar to what I've been doing in the 401k once I have enough money in each for that to make sense. Basically, emerging stocks vs. emerging bonds and then US real estate vs. foreign real estate.

Now, for various cefs and preferred shares. At the time, what I should have done was buy some of the VNR preferreds when they were trading below $20 par value. I let another commentator cast doubt in my mind and they no longer are trading at that level and are trading around $22-23. Which is another reason that I don't comment too much these days - over complicating a system causes problems.

Cefs - one I sold for a profit and wish I hadn't, but the need for cash came first - ISD.

It would be nice if the discount was a bit more, but a short duration hy fund (3 years) with an eps greater than its' distribution is nice in case rates do go up faster than myself and others think. The main purpose of a cef like this would be to get a decent yield (pushing 9%) monthly to counterbalance the much more rate sensitive 2x leveraged etns I have. Just in case.

Muni cefs! A quick screen yesterday and not much. PML. CXE.

Both have eps that is greater (barely) than distributions. I would probably pick pml (even with barely a discount) between the two as it has a fairly large unii as of the end of Nov which should help it maintain if rates rise or maybe a end of the year distribution.

Anywho. I'm not sure what I'll buy into in the Roth tomorrow. VNQI, maybe. VNQ has a higher RS, but the price has been dropping after a very nice run-up. While VNQI has gone back above the 300 day sma, the fifty has not crossed back above the 200 yet. Already have some VWO. VWOB is kind of a mess due to the Russian sanctions/ Ukraine war. Anywho, one of them.

For the taxable account, since I'll have enough money to make a starting purchase in something:

PML or ISD (leaning towards the former as it's a muni fund). Might lean towards the later in the Roth, but you know, only $230 and a $7 commission isn't very efficient.

I should point out that any info on relative strength and moving averages are all based on this site:

I don't know if their info is more accurate than others. I just know it's free to use after registration and I like them and have been using them since 2007 or so. :)

Additional disclosure: For the love of Mike, don't invest in what I do.