Gyroscopic Investing

Choose Your Tactical Asset Allocation Strategy Carefully

https://www.capitalspectator.com/choose ... carefully/


Morningstar last week advised that tactical asset allocation funds “failed—again.” That sounds ominous for this class of strategies, but a closer review suggests it’s misguided to pull the plug on the on idea that dynamically adjusting weights of asset classes has crashed and burned. As discussed below, the case for tactical asset allocation (TAA) is quite strong, assuming you’re an informed investor able and willing to separate the wheat from the chaff in this corner of portfolio management.

I don't know what it is, but I monitor this class of ETFs albeit loosely, and I haven't found any one of them that piques my interest as a TAA user. By TAA user I mean almost 100% of my equity slice is tactical.

The portfolio I built has a backtest over many time frames that clubs the commercially available ETFs / mutual funds like a lost baby seal during a seal hunt. And that includes trade friction.

But I've noticed that my portfolio is very trade-y. Think 300% turnover per year. I think maybe commercial products just can't be that nimble. That can't go from cash to an equity position in one go one month, then go back to cash the next.

My portfolio gets an at-bat and swings for the fences, or it decides to bunt or try to get hit by a pitch, or lets someone else steal a base based on the momentum signal for that month. That's why it's so active.

All of that activity results in rather small changes to the monthly success rate, but these small in the at-bat odds changes make all the difference

60/40 # of profitable months 66.5%, worst month -10.3% sharpe ratio 1.17 maxDD -9%
my TAA port # of profitable months 69.2%, worst month -5.3% sharpe ratio 0.68 maxDD -30%
similar CAGR about 10%

My conclusion is if you're unwilling or structurally unable to make big moves guided by the indicators... best not to try. Honestly, just hold the HBPP or GB.

well these portfolios i mentioned are not tactically allocated .

they stay fixed , some are not even rebalanced unless the fed lowers orraises rates and even then its only rebalanced that once

as an example here is the accelerated pp .

there is nothing tactically changed

25% leveraged stock funds (UPRO),

27.5%% leveraged long-term treasury bond funds (TMF),

25% preferred stock funds (PFF

and 22.5% gold (GLDM).

ochotona wrote: ↑Tue Feb 11, 2025 8:53 am The portfolio I built has a backtest over many time frames that clubs the commercially available ETFs / mutual funds like a lost baby seal during a seal hunt.

Someone was in a mood

And I thought Crazy Eddie was crazy. Turns out he was amateur hour.