My rules-based investment process tells me what to invest in and when. I have removed the risk of poor emotional decisions.
I have built an investment process with clear rules that tells me what to buy and when to buy it.
My process is based on academic research and uses market statistics to build an efficient and robust portfolio.
I have built an efficient portfolio that invests in assets across both the U.S. and other countries based on value.
I use a well-known and proven value-based screen to identify the world's cheapest countries and invest in low-cost ETFs that track those countries.
Capital preservation is a key principal for me. That is why I have risk management rules in place.
I use clear signals that tell me when to protect my capital and portfolio through selling and moving to cash.
Get immediate access to all the investing signals I use to manage my portfolio, including the stocks and ETFs my systems are telling me to buy.
Click below to see the Portfolio Dashboard and all the signals I use to manage my portfolio.
My Portfolio Asset Allocation
My portfolio includes five pillars - four that are a part of my stock market investments and one that is an alternative investment class.
Pillar 1: U.S. Tactical Allocation Model
This long-term strategy uses the predominant market trend to either invest in the market, or sit on the sidelines in cash. It is focused on capital preservation and risk management to get the gains from the market, while minimizing the large drawdowns that can come with a buy-and-hold approach.
Pillar 2: Global Value
This is a value-based investment strategy that uses the Schiller CAPE ratio to identify the world's cheapest countries with potential for higher gains in the future. The strategy buys the ten cheapest countries and updates the holdings annually.
Pillar 3: U.S. Momentum Stocks
Using Amibroker analysis software, this strategy scans the market for stocks with upward momentum and invests in the top four to five. It supplements the passive style of the U.S. Tactical Allocation Model to capture additional returns from individual stocks. Aggressive risk management practices are part of this strategy.
Pillar 4: Volatility Trading Strategy
This strategy uses a unique set of signals and indicators to trade volatility. It is high risk strategy, with potential for very high reward, but with strong risk management in place. The portfolio moves in and out of XIV depending on the signals. This strategy has provided me with huge gains, but with a lot of ups and downs!
Pillar 5: Peer-to-Peer Lending
As an additional diversification tool and additional potential returns, I also actively invest in peer-to-peer lending. With returns that have historically been greater than 10%, this has been a solid method to increase my portfolio's returns while investing outside of the stock market.
U.S. Tactical Allocation
- Depending on the market trend, I am either invested in the market or in cash.
- Trades the SPDR S&P MidCap 400 ETF (MDY), Nasdaq (QQQ), and the Equal-Weighted SPY (RSP) as historically the combination of these three funds have had stronger performance than the S&P 500.
- Uses two indicators to signal the trades:
- S&P 500 above its 200 day moving average and;
- My own market breadth indicator calculated daily using Amibroker. This tells me how the market is behaving and if it is a good time to be in the market or not.
- This strategy captures all the gains of the markets, but protects my capital when markets turn negative.
- System Maximum Drawdown -16.63% versus S&P500 Maximum Drawdown of -56.78%.
Get access to both indicators and will see exactly when the signals say to be invested in MDY or in cash.
U.S. Momentum Stocks
- The system invests in 4 or 5 of the highest ranked momentum stocks that have exhibited traits consistent with strong performers.
- Captures continued gains in stocks that are statistically ranked according to their ability to continue running higher.
- The system uses position sizing methodology to make sure the portfolio is exposed to the right level of risk.
- Includes a mechanism to protect capital through strategic market timing.
- Backtesting has shown solid returns, and my real money portfolio is also performing better than the market.
Get access to the weekly statistical ranking of the S&P 500 components with the highest momentum.
- Investing globally is important in order to diversify away risk and get access to other markets that can provide additional returns.
- Based on Meb Faber's book, "Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns in the Stock Market".
- The Global Value portfolio invests in the ten cheapest countries based on the CAPE ratio and is adjusted annually.
- Countries with historically low CAPE ratios have been proven to have above-average returns over the next ten years.
- This strategy directs capital to the countries with the highest probability of above-average returns.
- It is a long-term strategy for investors looking to generate alpha over at least five years.
Get access to the list of the world's cheapest countries based on country CAPE ratio as well as visibility into the portfolio in action.
Volatility Trading Strategy
- Trading volatility, is a high risk / high reward activity. If done poorly, it can blow up an account very fast. It can also provide spectacular gains when risk is managed properly.
- As a way to diversify my portfolio away from just stocks, I also trade volatility.
- These volatility products are a way I add additional return to my portfolio.
- I use a number of signals and indicators to determine when to buy XIV and when to sell it. The returns are great, but the drawdowns can be huge (+50%) so a strong stomach is required.
- The charts to the left show the excellent returns possible with this strategy - the white line is the strategy's backtested results, while the green is a buy and hold of XIV, and the pink is a buy and hold of SPY. Clearing the results with the strategy is much better.
See when my signal tells me to be in XIV or out, depending on the system's signals. This strategy has the potential for massive gains, but can be very volatile!
You can see exactly how I use my investment process to invest using the strategies and tools outlined above.