Some Thoughts For September 2020
Portfolio Strategy, Momentum, Long-Term Horizon, Bonds
Seeking Alpha Analyst Since 2013
Now in retirement and trying to preserve (and grow) my life savings, I currently have a strong interest in tactical asset allocation strategies and permanent portfolios, and have studied them extensively. I have developed a number of tactical strategies involving the periodic trading of mutual funds and ETFs. These strategies have been extensively backtested using the Portfolio Visualizer (PV) software. My goal is to earn 8-10% annually with no negative years, to have maximum drawdowns (on a monthly basis) less than 3%, and to have monthly win rates over 80%. The strategies include purchasing a limited number of assets with the highest growth and lowest volatility, and minimizing risk using dual momentum, relative strength, moving average and risk parity methods. My emphasis is on bond strategies, although I have developed some equity strategies.
I publish a free monthly article on Seeking Alpha Instablog that presents each month's selections of the strategies I invest in. I provide PV links to all of my strategies.
I am currently a retired Aerospace Engineer. I am married with three children and nine 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. degree from Caltech (1973), and a M.A. - Biblical Studies degree from Birmingham Theological Seminary (2013). I worked at Pratt & Whitney (1973-1986) and CFD Research Corporation (1987-2008).
- High yield municipal bond assets no longer show good momentum. I do not own any high yield bond assets at the present time.
- In contrast, senior bank loans such as LSFAX and SRLN do exhibit good momentum. I own LSFAX and SRLN at the present time.
- IOFAX continues to shine, up 4.4% in August. It looks like AlphaCentric has eliminated its 1% early redemption fee if sold within 180 days; good news for those purchasing IOFAX/IOFIX.
- My baseline semi-permanent portfolio was up 1.03% in August and 25.4% YTD.
- My Schwab accounts are up 11.5% YTD; my Vanguard accounts are up 8.7% YTD.
Give a portion to seven, or even to eight
for you know not what disaster may happen on earth. (Ecc. 11:2)
Here is my current list (and links) of strategies that I use as guides after the Covid-19 market collapse:
Weekly MDBS_MF: Currently selects LSFAX. Last month, this strategy initially owned MMHAX and then switched to LSFAX for the last two weeks. It gained 1.46% in August, and is up 14.9% YTD.
Weekly MDBS_ETF: Currently selects SRLN. It gained 0.77% in August, and is up 14.1% YTD.
Baseline Semi-Permanent Portfolio: The baseline assets are QQQ, GLD, EDV, TLT, IEF, and cash; the baseline allocation percentages are 30%, 10%, 10%, 25%, 25%, and 0% respectively. In the linked strategy, this is portfolio #1. Portfolio #2 is the Dalio All-Weather Strategy. The baseline semi-permanent portfolio was up 1.03% in August, and has gained 25.4% YTD.
I currently own allocation percentages of 20% QQQ, 15% GLD, 10% EDV, 25% TLT, 25% IEF and 5% cash in my Schwab account. In my Vanguard account, the approximate allocation percentages I own are 20% QQQ, 20% GLD, 10% EDV, 20% TLT, 20% IEF and 10% cash.
I have taken a 14-day trial license with Eric Basmajian (EPB Macro Research). He starts from Dalio's All-Weather Strategy and tweaks the allocations based on short-term and long-term macro market conditions. So this compliments my semi-permanent portfolio strategy if I decide to go with it. He updates his allocations at the end of each month. I will let everyone know what I think about his strategy and service after the 14-day trial. I will say that it looks like my allocations in the Schwab account closely mimic Eric's recommendations if I combine some of Eric's assets.
Weekly IOFAX Strategy: Currently selects IOFAX. It held IOFAX in August, and gained 4.4% in the month. There was an extra-large return of 2.06% on August 26th.
Target Volatility Strategy: I don't use this strategy at the present time. The 2X version may be of interest to younger, more risk-taking investors.
TrendXplorer VAA-G4 Strategy: Currently risk-on; selects VWO and VOO. These are the same two assets it held in August. This strategy provided a gain of 4.86% in August and 22.4% over the last 12 months.
Allocate Smartly GPM Daily Allocations: Currently selects GLD 27.8%, IEF 16.7%, QQQ 27.8%, and TLT 27.8%. It gained 0.91% in August, and 16.4% YTD. The daily allocations can be found at Allocate Smartly at the above link (using its free subscription service).
I don't strictly follow these strategies, but I review them at least weekly and base most of my holdings on them.
Overall, August was a good month for me in my Schwab accounts, up 1.2% in August. Most of the gain came from IOFAX. I am currently holding LSFAX from MDBS_MF, IOFAX, the semi-permanent portfolio strategy (with some modifications to the allocations reported above), the GPM strategy, SRLN from MDBS_ETF, and about 50% cash. I am up 11.5% YTD in my Schwab accounts. Most of my retirement money (about 75%) is invested at Schwab.
I did not do as well in August in my three IRA Vanguard accounts; I lost 0.19% in August. This ended a string of 10 straight months of positive gain in my Vanguard accounts. I am currently holding the semi-permanent portfolio strategy (with some modifications to the allocations as discussed above) in one account, SRLN from MDBS_ETF in a second account, and cash in a third account. I am currently up 8.7% YTD in my Vanguard accounts.
Soli Deo Gloria
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