March and April Results and May Holdings

03/31/16 Shares
VGLT 385 80.41 30957.85 paid .161 3/1 added to cash Sell VGIT and Buy IAU for March
IAU 2543 11.88 30210.84
IGOV 333 97.19 32364.27
Cash 71.93 Change Month $ Change Month All Time
93604.89 1.03% 956.08 -6395.11

4/1/2016 START Shares
VNQ 370 83.8 31006.00 Sell VGLT and Buy VNQ on 4/1
IAU 2543 11.88 30210.84
IGOV 333 97.19 32364.27
Cash 23.78 Change Month $ Change Month All Time
93604.89 0.00% 0.00 -6395.11

4/30/2016 FINISH Shares
VNQ 370 81.83 30277.10
IAU 2543 12.47 31711.21
IGOV 333 98.81 32903.73 paid .13 on 4/1 added to cash
Cash 67.07 Change Month $ Change Month All Time
94959.11 1.45% 1354.22 -5040.89

OK, so we were up 1.03% in March and another 1.45% in April, finally some gains. Gold and the IGOV bond etf are responsible for most of that. No changes and still a Very interesting mix of ETFs for May, Real Estate, Treasury Bonds, and Gold…while the market is near all time highs. Very odd, but since this is a momentum strategy and the stock market has gone nowhere in the past year I understand why.

Good Luck in May.

January and February 2016 Updates

As expected the stock holdings we came into January with did not perform well at all as the portfolio was off 1.9% for the month. After January’s performance, the portfolio quickly flipped from 2 stock holdings in January to 3 bond holdings in February. So at the end of January, the portfolio looks like this:

01/31/16 Shares
MTUM 422 70.5 29751.00
VNQ 386 76.99 29718.14
0.00
Cash 31275.23 Change Month $ Change Month All Time
90744.37 -1.90% -1760.24 -9255.63

At the end of January we sold MTUM and VNQ and bought equal amounts of VGLT, IGOV, and VGIT, all bond holdings. So much for the Fed raising rates huh? This is how we started February:
02/1/16 Shares
VGLT 385 78.52 30230.20
VGIT 459 65.82 30211.38
IGOV 333 90.71 30206.43
Cash 96.36 Change Month $ Change Month All Time
90744.37 0.00% 0.00 -9255.63

…..and here is how we ended February:

02/29/16 Shares
VGLT 385 80.57 31019.45
VGIT 459 66.24 30404.16
IGOV 333 93.48 31128.84
Cash 96.36 Change Month $ Change Month All Time
92648.81 2.10% 1904.44 -7351.19

As you can see finally with stocks continuing down and bonds up the portfolio was up 2.1% for the month.

The are some changes for March though as Gold is starting to gain momentum. We are selling VGIT and buying IAU (gold) for March and the portfolio looks like this:
03/1/16 Shares
VGLT 385 80.57 31019.45
IAU 2543 11.99 30490.57
IGOV 333 93.48 31128.84
Cash 9.95 Change Month $ Change Month All Time
92648.81 0.00% 0.00 -7351.19

Good luck out there!

December and End of Year 2015 Update

The trendless market continues and as I mentioned in earlier posts, this portfolio is designed to profit in up trending markets and keep the investor out of declining markets/sectors.  Since we are going sideways there is just no way to profit.  The portfolio itself lost 0.35% in December and lost 7.5% for the year.  If I had done the AGG3 from day one it would have lost 3.69% over the course of the year but I started out with the AGG6 and that was the source of the additional losses.

A signal to sell VTV on 12/31 has left it 33% in cash with the other 66% in VNQ and MTUM.  If this market cracks all we can hope is that it doesnt loose it all in one month while we are still holding MTUM and VNQ.  This bull market seems to be worn out.  What is the next catalyst for growth?

 

Here’s how December finished:

12/31/15 Shares
MTUM 422 73.29 30928.38 paid .202148 $85.31
VNQ 386 78.5 30301.00 paid 1.098 $$423.83
VTV 374 81.52 30488.48 paid .588 $219.91 all3 added to cash
Cash 786.75 Change Month $ Change Month All Time
92504.61 -0.35% -320.79 -7495.39

 

 

Here is how the portfolio will look in January:

01/31/16 Shares
MTUM 422 73.29 30928.38
VNQ 386 78.5 30301.00
0.00
Cash 31275.23 Change Month $ Change Month All Time
92504.61 0.00% 0.00 -7495.39

October and November Updates

Here are updates for the months of October and November 2015.

In October the only position was in VGIT which went down slightly as the S&P and similar indexes rebounded all month which for this portfolio is unfortunate.  This portfolio only makes money when a particular asset class trends higher for a few months in a row, otherwise, when the market is choppy like it is now it bumps in and out of positions and doesn’t get anywhere.  However, the fact that any downward movement takes it out of positions it serves as a risk management function.

10/31/15 Shares
xxx 0.00
xxx 0.00
VGIT 472 65.02 30689.44 paid .092 on 10/1 added to cash
Cash 61996.08 Change Month $ Change Month All Time
92685.52 -0.20% -183.14 -7314.48

The action in October signaled the selling of VGIT and the buying of MTUM, VNQ, and VTV.  This choppy action is a little unnerving with this portfolio because the 3 positions this signaled getting into for November had good months in October and nothing seems to be able to sustain any long term trend higher.  The minute we get into these things they reverse and have a bad month.  Here’s how November started:

11/30/15 Shares
MTUM 422 73.2 30890.40
VNQ 386 79.89 30837.54
VTV 374 82.62 30899.88
Cash 57.70 Change Month $ Change Month All Time
92685.52 0.00% 0.00 -7314.48

 

….and here’s how it ended….essentially flat like the S&P that was also flat.

11/30/15 Shares
MTUM 422 73.59 31054.98
VNQ 386 79.39 30644.54
VTV 374 83.07 31068.18
Cash 57.70 Change Month $ Change Month All Time
92825.40 0.15% 139.88 -7174.60

 

There are no changes for the month of December so the above positions remain the same.  Hopefully we close the year out strong.

September Portfolio Review and Update

September was a volatile month with the markets whipping around seemingly everyday on oil, interest rates, the fed, or most likely just the fact that were are in year 6 of a bull market.  The S&P 500 was down around 3% while the portfolio was in cash.

Regardless, the risk management aspect of our method kicked in last month and kept us completely out everything and the only change for September is the addition of 1/3 of the portfolio in VGIT, Intermediate Term Government Bonds.  At some point, hopefully after a much larger drop there will be a great time to buy with a better risk reward picture.  That time is not now.  Here’s what the Portfolio looks like for September:

09/30/15 Shares
xxx 0.00
xxx 0.00
VGIT 472 65.5 30916.00
Cash 61952.66 Change Month $ Change Month All Time
92868.66 0.00% 0.00 -7131.34

August Portfolio Review and Update

Well, it was bound to happen eventually.  The market had its worst month in a very long time.  I have been thinking (admittedly for way too long) since 5/2014 that the market was over extended, but, in the spirit of sticking with the GTAA 3 method, we had to be invested for this past month.  The portfolio was down 6% for the month and is down 7.1% since we started.  Not very good, BUT the one thing this method ascribes to do is to keep us out of horrible markets and after this big down month, NONE of the 13 asset classes are above their 200 day moving averages.  Which, according to those simple rules means we are all in cash.  That’s where we will stay until something ends a month above that 200 day threshold.  So, what I am looking for now is a sustained gring lower, preferable 6-8 months.  That will give the averages time to top out, flatten, and turn lower.  One thing I can guarantee in September, we wont get hurt by any volatility or crashes!  Now its purely a waiting game.  Lets see when the method signals us to get back in.  Here are the results from August and the portfolio for September.

08/31/15 Shares
VTV 368 79.27 29171.36 -5.88%
MTUM 492 69.89 34385.88 -5.75%
VBK 232 125.52 29120.64 -6.95%
Cash 190.78 Change Month $ Change Month All Time
92868.66 -6.05% -5981.88 -7131.34

Here is how the portfolio looks for September:  All cash

09/30/15 Shares
VTV 79.27 0.00 0.00%
MTUM 69.89 0.00 0.00%
VBK 125.52 0.00 0.00%
Cash 92868.66 Change Month $ Change Month All Time
92868.66 0.00% 0.00 -7131.34

July Results and Portfolio Updates for August 2015

Another month come and gone and the sideways grind continues.  It’s in times like these when it’s tough to stick with a strategy, but unless you have a crystal ball and like to eat broken glass you have to make and stick to a plan…whatever it is

The portfolio gained 1.86% for the month but is still negative on the year.  Its sure does seem like the market is topping out as well as bonds so when this thing cracks it will be interesting where this method allocates funds.  Right now the commodity class is just awful!  Perhaps that will be the place to be when the market rolls over.  Here are July’s final numbers:

07/31/15 Shares
VTV 368 84.22 30992.96  1%
MTUM 492 74.15 36481.80 3.79%
VBK 232 134.9 31296.80  0.4%
Cash 78.98 Change Month $ Change Month All Time
98850.54 1.86% 1802.92 -1149.46

 

For August there are no changes to the portfolio, MTUM, VTV, and VBK are still the best three and above their 200 day averages, although VTV was right on it.  Things could get interesting in the fall.

 

See ya in 30 days!

June Results and Portfolio Updates for July

Well it was another boring month from a market movement standpoint.  Really most of the averages went nowhere to slightly down even though from a news standpoint there was a lot going on.  China had 3 +/- 8-10% trading days (yeah that’s a sign of a healthy stable market) and Greece is about to default on its sovereign debt…another sign of a healthy worldwide economy.  But not to worry, our Central Banks and Government leaders have it all figured and certainly 0% interest rates for 7 years and various other accommodative and supportive policies will surely get the economy back on track.  Funny thing is, who is to say that the economy, the way it’s performing now isn’t “good.”  I mean if next year we have 20% unemployment (like Greece and Spain), the economy today would look great!  We always look at it from the past’s perspective, or our own perspective.  I am sure if you asked someone how the economy was 6 months after they got laid off and haven’t found work they would say its awful…even if it was 2006.

Enough about that, let’s look at the portfolio for the month and the changes for July:

06/30/15 Shares
VBR 285 107.81 30725.85
MTUM 492 71.44 35148.48 -0.65%
VBK 232 134.24 31143.68
Cash 29.61 Change Month $ Change Month All Time
97047.62 -0.76% -740.93 -2952.38

Everything was slightly down for the month and we are still negative since we started.  If you look back at some of the earlier blogs you will see I was a little apprehensive to be starting a timing/momentum strategy at what I considered the end of the momentum, but at the same time, this is a long term strategy and what “I consider” should never be considered!  LOL.  The point is, don’t forget this method has specific rules and there really is no place in it for “feeling like” or predicting where things are going because no one knows, and anyone that tells you they do is lying.  There is one change for July and we are selling VBR and buying VTV.  One important thing I have noticed is that ALL of the asset classes are losing steam, only 5 of the 13 choices are above their 200 day moving averages, and even the “best” performing asset class, MTUM has a momentum score of 5.38%..pretty sad.  For comparison sake, VGLT and VNQ had momentum scores of 17%+ back in February.  Here is the new portfolio for July:

07/31/15 Shares
VTV 368 83.36 30676.48
MTUM 492 71.44 35148.48 0.00%
VBK 232 134.24 31143.68
Cash 78.98 Change Month $ Change Month All Time
97047.62 0.00% 0.00 -2952.38

Enjoy your 4th of July!

Bruce

May Portfolio Updates and Changes for June

Another month has come and gone so lets take a look at how things turned out.

05/31/15 Shares
VTV 372 85.76 31902.72  +1.16%
MTUM 492 71.91 35379.72 3.36%
VWO 720 42.34 30484.80  -3.55%
Cash 21.31 Change Month $ Change Month All Time
97788.55 0.41% 396.36 -2211.45

Essentially the portfolio went nowhere…slightly positive for the month as has been the case all year the market in general went nowhere. (with the exception of the Central bank and government supported Chinese market)  That’s the uncomfortable reality right now….when bad economic news is released and the market senses the inevitable government and central bank support, stocks go higher.  Not exactly the confidence that I would like to have when buying stocks. However, that’s why I always let quantitative nature of this method tell me where and when to invest.  What’s even scarier than that are a few tidbits of information I read this past weekend:

1.  The Dow Jones Transportation Index is now down 11.1% from its high while the S&P index is within 1% of its All-time high.  Is this clear divergence a canary in the coal mine signaling the beginning of a correction?  We haven’t had a market correction in 3 and 1/2 years.  Who is left to buy stocks?  Who wants to be the last buyer when the herd starts selling?

2.   Mergers and Acquisition activity in April was at its highest level in history coming in at $242 Billion.  Here are a few other high water marks:  May 2007 $226 billion and Jan 2000 $213 billion.  We all know what happened in the market shortly after those high water marks.

3.  Corporate stock buybacks have been at an extremely high level as of late and I have heard at times corporations buying back their stock have been 1/3 of the daily volume in the market thus propping up the prices of the stock with their own demand.  When these bids dry up, again, who is left to buy at these lofty valuations?  Another question I have is how much does reducing the outstanding share count help to make earnings per share numbers improve?  The less shares outstanding, the higher the earnings per share even if earning aren’t growing.

Here are a couple of links to learn more about these interesting points:

http://www.investopedia.com/terms/b/buyback.asp

http://fortune.com/2015/02/11/stock-buyback-binge/

http://www.dailyfinance.com/on/wall-street-bull-market-how-long-can-it-last/

http://www.ravfinancial.com/blog/2015/05/22/divergence-in-transportation-index-may-be-a-warning-sign.240

With all these “obvious” signs the market is going to crash, then why would I be buying stocks here?  Because I, and no one else for that matter knows if or when the market is going to crash.  The market could double from here as easily as it could be cut in half and if you are going to follow a quantitative strategy then you must stick with it through thick and thin because if you try to apply your own gut feeling to it then it no longer is a quantitative strategy and its just guessing.

Here are the changes for June:

SELL VTV and VWO and BUY VBR and VBK.  VBR and VBK are both small cap index funds which makes buying them here even scarier but we shall see June 30th what the verdict is!

06/30/15 Shares
VBR 285 109.46 31196.10
MTUM 492 71.91 35379.72 0.00%
VBK 232 134.41 31183.12
Cash 29.61 Change Month $ Change Month All Time
97788.55 0.00% 0.00 -2211.45

April 2015 Portfolio Update and May changes

Well, that was an awful month for the portfolio….down 3.21% and that makes this portfolio down 2.61% since its inception. The market itself it oscillating and going nowhere and its times like these that people make the mistake of chasing other strategies or chasing recent performing sectors.  The key to any strategy is sticking with it long enough for it to work and with our trend following strategy, eventually the trend we are riding will end.  The good news is we don’t have to sit and wonder what to do next because the sixth grade math tells us what to do, and as usual I disagree with it!

Here is how the portfolio ended April.

04/30/15 Shares
VNQ 393 79.38 31196.34 -5.85%
MTUM 492 69.57 34228.44 -1.04%
VGLT 404 77.85 31451.40 -3.08% Paid .162 per share 4/6 added to cash
Cash 516.01 Change Month $ Change Month All Time
97392.19 -3.21% -3229.08 -2607.81

We received two sell signals and two buy signals so we sold VGLT and VNQ both of which we held for 6+ months and we replaced them with VWO and VTV.  VWO is an Emerging Market ETF and VTV is the Vanguard Large Cap Value ETF.  Are these good picks for May?  I don’t know but as the old saying goes,

He who lives by the crystal ball will eat shattered glass.

Here is the current portfolio.

05/31/15 Shares
VTV 372 84.77 31534.44
MTUM 492 69.57 34228.44 0.00%
VWO 720 43.9 31608.00
Cash 21.31 Change Month $ Change Month All Time
97392.19 0.00% 0.00 -2607.81