Tactical Asset Allocation + HBPP an intriguing combo

[HappyMan]

I think we all have to be cognizant of the fact that as soon as something gets turned into an investable product it becomes a mechanism for bringing efficiency to that element of the market. It will be interesting to see how it works going forward. The longer I’m around this stuff the more I become impressed with the S&P 500. Ultimately it’s a momentum fight amongst America’s most successful companies...that’s been a good combo and hard to beat.

Do you simply buy and hold s&p? Buy at dips, minus 10% and lower?

[Kbg]

My personal 25% (leveraged) is the Nasdaq 100. Mainly I just rebalance when I think it is a good time to rebalance. I have a BUNCH of indicators that are all automated in their production. My basic process is...do I need to rebalance based on bands. If the answer is yes, then I start a bit of market timing to time the rebalance. Every once in awhile I get a screaming buy or sell signal and if there is anything to rebalance then I will rebalance. For example if my mix was at 30, 26, 24, 20 I may look at the left or right end if there is an applicable signal. If there was a signal on the two in the middle I'm doing nothing. With 3x ETFs you can get a lot of movement very quickly. If I was unleveraged I'd probably just band rebalance.

All the above is an example of my basic methodology, not the specifics.

[ochotona]

On a 3 6 12 month basis, Canada is outperforming the USA. I like Canada. I need to buy some EWC on July 1 when I trade.

EWC 10.19%
SPY 9.61%

[ochotona]

The GEM portfolio is in US Equities for July 2019 (SPY, IVV, VOO, SCHX).

Having said that, I am doubting the ability of the 12-month lookback to perform accurately past the end of September, due to the extreme volatility of Q4 2019. This is a bad feature of this particular simple way to calculate momentum. It could very well post a "BUY" signal for late 2019 / early 2020 simply due to the trough in the stock market in late 2018 / early 2019.

I find that an 18 month simple moving average has similar results to the 12-month lookback, so I'll be reporting that from now on.

I'll still be comparing S&P 500 stocks vs. ACWI ex-US (I'll use the CWI ETF, it outperforms VEU) using the 12-month lookback to find out which to invest in, I just won't use the 12-month lookback to go risk-on / risk-off.

{FYI - I'm not using the above. I'm following the Economic Pulse model, which I can't disclose, but I don't want to leave readers in the lurch}

[ochotona]

Paul Novell was on Meb Faber's podcast recently.

https://mebfaber.com/2019/07/01/the-bes ... dels-fail/

[ochotona]

The GEM portfolio is in US Equities for August 2019 (SPY, IVV, VOO, SCHX)

[HappyMan]

The GEM portfolio is in US Equities for August 2019 (SPY, IVV, VOO, SCHX)

Thanks for the information. Do you still consider USMV?

[ochotona]

I am concerned USMV is too crowded a trade. Still using SP500 cap weighted ETFs.

That said, for my wife's purely buy-and-hold portfolio, I am using ACWV, iShares MSCI Min Vol Global ETF. I think over a period of time it will be more suitable for her than VT, which she was in before.

[ochotona]

The GEM portfolio is in US Equities for September 2019 (SPY, IVV, VOO, SCHX).

[ochotona]

I'm in a 401(k) which I detest. The two best funds I have access to are Invesco S&P500 Equal Weight (VADAX), and American Funds New World Fund® Class R-3 (RNWCX). The later is a global fund, actively managed and costly, and heavily EM weighted, almost 1/2 EM. I get assailed by ridiculous fees. You know what it is. Thankfully, when I turn 59.5 I can do an in-service transfer and rip the accumulated funds out.

Being half EM sounds like a recipe for failure, but I have noticed that as on Aug 30, RNWCX beats VADAX on a 12-mo momentum basis, so I switched over to it. I'm trying to run something like a GEM in my 401(k) and hope I don't hit any frequent trading limits. I should be OK.

Interesting observation I thought others would like to hear. The US vs International, the passive vs active worms may be turning.

[pmward]

Interesting observation I thought others would like to hear. The US vs International, the passive vs active worms may be turning.

Honestly, I wouldn't be surprised at all to see active start working again when we do get the next "paradigm shift". Especially since active fees have dropped considerably in the last few years. I mean, there are some solid active funds now under 1% ER (like the highly regarded Contrafund).

[ochotona]

How much does Interactive Brokers save you in trading friction? Are their order executions that much better than Schwab, Fidelity, etc for trading ETFs? That might be a consideration for a momentum investor.