Harry Browne came up with the Permanent Portfolio in the 1980's and it is brilliant in design. The PP has 4 equal weighted components, US Stocks, Gold, Long term treasuries, and Cash. The idea is that even in the worst of economic conditions, at least one quarter of the portfolio should be doing well, and several can be doing well. It has lower drawdowns, more steady returns than investing in the broad stock market. Returns can lag the S&P, but the drawdowns are also far better. Tyler's site, www.PortfolioCharts.com highlight the Permanent Portfolio, his Golden Butterfly and many other allocation based strategies which only need annual rebalancing.

I have gravitated to the dual momentum style of investing and don't mind potentially making changes at the end of a month, I feel the benefits outweigh the drawbacks. This type of strategy may seem too fiddly for some though, which is why I introduce the DMS-4ETF strategy. Similar to the Permanent Portfolio, or the Golden Butterfly, the DMS-4ETF is a static allocation which only needs annual rebalancing.

My take on this is slightly different from the other allocation strategies mentioned, DMS-4ETF uses 4 ETF's that are a bit different, and less tested over the longer horizon.

• ASPY is the main holding at 55%, in a nutshell, ASPY is an ETF which holds futures, similar to a dual momentum strategy which will go risk on / risk off, so does ASPY through futures, but you pay them a ~ 1% fee to manage it and it's hands off from your end. This is the newest ETF in the allocation, but it has done well since inception.
• DBEF is an international fund which hedges to the US Dollar with a 15% allocation, this makes it less volatile than other funds like ACWX and VXUS, and DBEF has historically outperformed the non-hedged funds, this may not hold going forward.
• SGOL is a Gold ETF with a 15% allocation.
• DBMF is a managed futures ETF with a 15% allocation. A traditional managed futures account often would require an individual investor to commit a large sum of money to get into such a strategy, but DBMF, and other similar ETF's bring this type of investment to the masses. The managed futures account is very uncorrelated to the market, it could be completely opposite the market, somewhat similar, or at times completely correlated.

The limited time that I have to show results for this allocation is really encouraging. It is a bit nouveau in how it is using more modern and non traditional ETF's like ASPY and DBMF, and through the use of the US-hedged DBEF for international.

I am a bit unsure how to incorporate this into the monthly reporting because I cannot extend back in time and only have a short results period. I may not have something in the deck for this in the April Reporting Deck, but I'll figure out something soon.

btw - If you want true simplicity without any rebalancing at all, you could just buy ASPY, a single stock portfolio. The 4 ETF allocation I've outlined looks really intriguing to me, and seems worth the hassle of having to rebalance it once a year, but if you really want zero effort investment and to get near market returns with lower volatility, you could just buy ASPY and be done with it!

More information on: ASPY, DBEF, SGOL, and DBMF

I made some tweaks to the Model Portfolio allocations, the Model Retire is toned down some, even the Moderate is toned down a little, and the Aggressive is still pretty aggressive.

Here is a new version of the January 2023 Reporting Deck with the new allocations. The Fact Sheets for the Model Portfolio's list the allocations and show all the associated data, that can be compared with the previous allocations in the original January 2023 Reporting Deck.

Risk Off, how often have the strategies been Risk Off as long as this current time period?

GPMv has been Risk Off for 8 consecutive months, and 9 of the last 10. The last time it was in Risk Off for 8 months or more was 11 months from July 2008 through May 2009, it was also Risk Off in March and April 2008. Those are the only two periods from now back to 1980 that it was Risk Off for 8 months or more.

The Triad trio of strategies has been 100% Risk Off for the past three months, the last time this happened for three months or more was the 4 month period from September 2008 through December 2008. The time before that was for 3 months from September 1981 through November 1981. Just three times have the Triad strategies been 100% Risk Off for three months ore more.

The Russell, Global Navigator, and the LT Gain strategies are a bit more binary and don’t scale in the way GPMv does, or bucketize investments like Triad does, there have been more times they have been Risk Off than the past 7 months. Global Navigator for example has been Risk Off for the past 7 months, this has also happened 5 other times going back to 1980, same as The Russell and LT Gain strategies.


Leverage and a persons personal allocation.

We are currently on the verge of all strategies going fully into the markets in December, and with Leverage if it is a + (2X) or ++ (3X) strategy. Are you properly allocated? For example, let’s say I was younger than I am and I have myself set to 100% LT Gain++. If the signal flips to go invested in equities for December, because we have triggered Smart Leverage, the LT Gain++ strategy would go in 100% with UPRO which is 3X the S&P. Are you good with that? If we happen to see that we are currently in a bear market rally and during December the S&P tanks 10%, would you be ok watching your investments go down near 30% for the month?

I personally had a bit of FOMO during the tail end of the rally in mid to late 2021 and levered up in some strategies that I really shouldn’t have been in, took a bit of pain when the market rolled over. The bad is, I went too risky and lost some money that I shouldn’t have. The good is, I learned from this and have over the past many months ‘come to my senses’ and adjusted my portfolios to a more appropriate allocation for my personal risk tolerance, and place in life. Just in case you are curious, here is my personal investment portfolio breakdown:

Looking at all investments, I have 38% in investment real estate (my personal home which I own outright is not included in this portion, it is my residence, not an investment.) And I have 62% in equities. Of that 62% in equities. Looking at the 62% of equites as a 100% pie, 5% of that is in a couple of stocks (which I wish I never purchased…) of the remaining 95% of equities, looking at that as a 100% total: 25% is in GPMv, 45% in Triad++, 15% in IWR, and 15% in DBMF. Honestly, I really wish I had been in that allocation for longer than this year, but I am in it now and have no intention of changing it. GPMv is my most recent strategy, a variation of Keller and Keunig’s GPM strategy, Triad is my second most recent strategy. I have lots of love for The Russell, Global Navigator, and LT Gain, however, I am happier being in the allocation that I am which still has historically resulted in fantastic returns, and also terrific risk adjusted returns. Not a lot of downward volatility which is just my style.

DBMF is a managed futures strategy in an ETF, it wasn’t long ago that you had to have big money to open an account with a CTA for a managed futures account, I like that this has a low correlation to the market and since inception has had market like returns with less volatility.

The summary is, I have roughly 40% of my investments in investment real estate, and roughly 70% of my equity investments in GPMv and Triad, strategies which are multi-equity and are both very low volatility with market like returns. And then I have 30% buy and hold, half in the Russell Mid-Cap and half in a managed futures ETF.

Should the strategies go fully in equities for December, including going into 33% of Triad++ into UPRO, I’ll be fine, knowing my overall allocation is otherwise pretty moderate. If possibly you worry about going into December's investments, maybe you are allocated too risky?

DBMF has only been around since mid-2019 so I can't chart my current allocation back too far, but here is what it looks like from 2020 through mid-November 2022.

(My allocation is the dark blue, SPY orange, and 60/40 gray.)

The next chart below is similar to my allocation, but without any DBMF and going with a 30% market allocation the entire time via IWB, the Russell 1000. It is a bit more volatile with 30% buy and hold, but you can see it still is often above either GPMv or Triad+ from 1980 through mid-November 2022, and light years ahead of the Market or a 60/40 over that time period.

Several people have written nice "Thank You's" the past couple of weeks, it was really nice to receive these comments.

Given that these DMS strategies are for a DIY investor who appreciates the strategies, understands how they work, and appreciate their goals, pros and cons. I really appreciate that these strategies strike a chord with some investors. :)

When I glanced at the Finviz.com heat map this morning, I was reminded of the saying "All correlations go to one in a bear market."

Housekeeping: Swapping out DBC in favor of PDBC in the strategies which use Commodities, GPMv and the Triad trio.

Thanks to Garrett B for alerting me to PDBC. Both DBC and PDBC are fund from Invesco they have extremely similar results, PDBC has the advantage of no K1. DBC is structurally a Commodity Pool (managed futures), while PDBC is an ETF. Both trade easily and similarly, but PDBC does not issue a K1 which is simpler at tax time.

For more information on the distinction between Commodity Pools and ETF's: Investopedia link

You can see in the chart below of returns for both DBC and PDBC, they are virtually in lock step.