Our personal asset allocation preference is a cross between the Ivy and Permanent Portfolio for your 401k, retirement accounts. Here is an outside link (sign-up for free account to read) that explains how to protect yourself against inflation, deflation or recession. When you have a portfolio of assets with similar long-term returns but dissimilar short-term returns, volatility can be lowered and your return can be enhanced. in each phase of the business cycle, different assets are king. Stocks do best when the economy is growing and inflation is falling, coinciding with the recovery phase after a recession; bonds do best when the economy is tanking and inflation is falling, coinciding with the downward leg of a conventional recession.This portfolio mix helps to protect you against inflation, deflation & recession.
Using a moving average (SMA or EMA) strategy will insure participation in most of the upside price movement while dramatically reducing losses. This system significantly minimizes the downside risk (psychological and financial) of bear-market declines. For most investors a 10-month moving average (MA) would be the least time consuming…. dshort tracks the performance record using the 10 month MA… article. Using this end of the month check is a very good way to keep your portfolio fine tuned with very little trades and time.
Most of these assets don’t move in the same direction all the time; when one is up, others might be down — or at least zigging to a different degree. Sometimes, all assets act similarly, such as in 2008, when they declined almost 40% or more. In most years, they’ll march at least somewhat to their own beats; as long as they don’t perform identically, investors benefit from diversification. Some people just re-balance yearly staying in the market at all times. (if you must) In secular bull and bear markets, passive management buy & hold (B&H) is a successful strategy on the way up, but it is a losing proposition on the way down. The reverse is true for active management with MAs. It’s unlikely to outperform B&H on the way up, but out performance on the way down is a virtual guarantee.
Intermarket Technical Analysis is the study of the relationships between the four major financial markets: Stocks, Bonds, Commodities and Currencies. There are several key relationships that bind these four markets together. These relationships are: ^source stockcharts.com
- The INVERSE relationship between commodities and bonds
- The INVERSE relationship between bonds and stocks
- The POSITIVE relationship between stocks and commodities
- The INVERSE relationship between the US Dollar and commodities
POSITIVE: When one goes up, the other goes up also.
INVERSE: When one goes up, the other goes down.
A more reflationary period favors stocks over other asset classes. A firmer dollar favors stocks over commodities. A firmer dollar also favors U.S. stocks over foreign stocks. UUP» daily chart» The INVERSE relationship between the US Dollar and commodities – see inter-market relationship chart
Portfolio suggested holdings
- 25%-disinflation/growth – Stocks: (USA)VTI – (Foreign)VEU – Emerging Markets: VWO, DEM
- 25%-inflation/mix – Gold: IAU Energy: VGENX(VDE) (Reits)VNQ (Commodities)HACMX, DBC
- 25%-disinflation/recession – Treasuries: VBTLX
- 25%- inflation/recession – Cash: (GNMA)
Don’t pay out high fees for poor portfolio managers that don’t protect your assets or live up to your expectations. A majority of the American workers are lackadaisical about their 401K and retirement investments. They give very little thought about the financial future, thinking it’s beyond their knowledge. They do little re-balancing and don’t pay attention to even large market corrections or bull advances. As you age, portfolio destruction from bear markets can chip away at valuable assets that will be hard to recover as you near retirement age. Inflation, deflation and market fluctuations affect your retirement accounts if you are already retired. Don’t be LAZY… Take control of your investment future, this isn’t has hard as you think!
RS - perchart
The DIY Portfolio
|reits/energy||total bond market|
|VTI- IT||VWO/VEU||VDE /IT||GNMA||VBTLX|
|On the Bench|
|IAU – IT|
|VEU IT||0%||% Total-short-term reserves|
The primary driver is the individual ETF’s performance (MA) as to when to re-balance. We use the Advisor Model as an overall longer-term outlook, secondary to whatever MA time frame you use. For most investors a 10-month moving average (MA) would be the least time consuming and easiest. Sam Stoval also has a modified approach - chart.This tactical asset portfolio protects you in its holdings and its ability to protect you on the downside. Learning how not to lose money is more important than learning how to make money. (see table) on how long it takes to just get back to even after market down-turns.
We adjusted the holdings more towards the article (sign-up for free account to read) Adjust to your preferences as to the MA and or time period (daily, weekly, monthly). You can add or omit the above players that suits you. Tailor according to your preferences, purchase like-funds that your account allows. We like to use a short term fund (GNMA) for our cash reserves to gain some interest instead of the money market fund. We also see another mix of the above portfolio by leaving out the cash. Because we can’t predict the future, the smart strategy is to prepare for many possible outcomes. Be diversified and avoid wealth-destroying behaviors. Diversification doesn’t depend on the number of asset classes in a portfolio. Rather, it depends on the correlations between the asset classes in a portfolio.
- EASY to use & implement
- This system is FLEXIBLE
- Along with your DISCIPLINE.
- lets you ADJUST according to YOUR preferences
- contains NO FEES
- with LOW time constraints