The markets have had downward action, and very high volatility. The Russell 1000, IWB, is down 8.53% YTD, and almost 13% from all time highs. Looking at the IWB drawdown as the DMS strategies do, from month month end close as of 03/31/2025 the drawdown is 7.66%, and if we look at mid-March the current month end drawdown would be 11.28%.

Note that Smart Leverage won't kick in until there is a month end high to month end low of 15% or greater. If April were over today we would not have hit that trigger yet. If the market drifts lower either before April is over, or in a future month, then Smart Leverage will be triggered.

Fortunately the strategies went Risk Off for April and so far it has been a benefit, avoiding as much drawdown as the market and side stepping a tremendous amount of volatility.

YTD the Russell 1000 is down 8.53%, and a 60/40 portfolio down 4.35%.

By comparison here are the Model Portfolio's YTD performance: Conservative +1.41%, Moderate -0.58%, Aggressive -3.68%. All three are faring better than the Russell 1000 and a 60/40.

Month end Drawdowns through mid-March are shown above. The only strategy with larger than market drawdowns this year is The Russell, all of the other strategies are performing very well in this market.

Let's take a look at how those drawdowns would be affected if the following strategies stayed in IWB: Global Navigator+, LT Gain+/++. In other words, if they didn't get the call to move out of the market, how would the drawdowns then look.

Below is what it would look like. Conservative has no change, Moderate is only a little worse, and still noticeably better than a 60/40, the Aggressive portfolio has a bigger drawdown, but still comes in between the 60/40 and Russell 1000 drawdown.

Even if the markets continue to roar back from the lows and April ends with positive returns, I will still be glad to have been largely on the sideline with all of this volatility. I have heard people say that negative returns are about twice the pain as the joy of a gain in the market. I think it may be more like 3X for me!

Only time will tell where the markets go from here. We certainly have more tariff news to come, and so far tariff news has had a seemingly large impact on the market action.

I am happy to be mostly in the Model Aggressive Portfolio, look forward to staying the course. As mentioned in Deviant Behavior, I am now personally using CAOS instead of BND/AGG in my holdings. And I am splitting DBMF into ½ DBMF and half CTA. I am also considering just going into CAOS for LT Gain+/++, The Russell, and Global Navigator+ when they go risk off.

Happy Investing.

I 'eat my own dog food', meaning that I invest in the DMS strategies. I want to briefly go over two slight deviations that I make in my personal investing compared to the DMS strategies.

DBMF & CTA
First let me say that following the DMS strategies works extremely well for me, I just follow what they say to do, it works out to my benefit compared to using my own personal thoughts and judgements about what do to with investments at any given point in time. The models are far more objective.

Anywhere that the Managed Future ETF DBMF is used in DMS individual strategies, or in a holding as in the Model Aggressive Portfolio, in my accounts, I actually split that 1/2 to DBMF and 1/2 to CTA. I don't see that it would be a bad idea to go 1/3rd each into DBMF, KMLM, and CTA; but since DBMF and KMLM tend to move more similarly to each other I don't go thirds. This was driven from a bit of FOMO as CTA just kept ripping while DBMF kept drifting lower. I am not at all giving up on DBMF, but I appreciate the combination of DBMF+CTA. I have thought about changing Bamboo Allocation to include CTA, but for now will leave as is with DBMF.


BND & CAOS
The Bamboo Allocations are were designed to be the buy and hold part of your portfolio. Something more diverse than a 60/40, with lower volatility and good long term performance, unaffected by going Risk On and Risk Off - riding out ups and downs but with a 60% holding of non-equity market holdings.

I have recently become aware of the Alpha Architect ETF CAOS. I just love it for Bamboo to replace the Bond holding, but CAOS is fairly new and doesn't have long term performance results.

CAOS is a tail risk ETF but unlike the others that I aware of, it tends to generally match the Total Bond performance day in and day out (with less volatility) with the added kicker of large increases when there are big drops in the market.

I will be swapping out BND for CAOS in my personal Bamboo Allocations, with the idea of just holding it. However, if when encounter a large drop in the markets, if CAOS results in outsized gains as a result, I will likely sell the CAOS and park that money in another Alpha Architect ETF, BOXX, for a year and then re-deploy into CAOS. Hopefully this will make positive gains when market chaos reigns, with CAOS.

I did a Zoom presentation on the Bamboo Allocation Strategies, and the Model Portfolio's to the AAII Silicon Valley Computerized Investor Group last week. As I was preparing my information to go over, I realized that the Model Moderate Portfolio had too much maximum leverage. While the average leverage was only 104%, the maximum leverage was 170%, that's pretty aggressive.

The Model Moderate Portfolio had a change of the mix of strategies in it which brought down the maximum leverage to 149%, and the average leverage remains at 104%. If 149% max leverage is too high for anybody's definition of Moderate, I don't think I would argue that. However, out of 537 months from 1980 through now, only 44 of those months had 125% or higher leverage, 38 of those 44 months being at 149%. The percent of months over 125% is 8%, and 7% were at 149% leverage.

The Model Aggressive Portfolio, should really be called the Model Very Aggressive Portfolio, it now has an average leverage of 127% and a maximum leverage of 220%. It previously had a maximum leverage of 237%.

The Model Conservative Portfolio is unchanged.

All three Model Portfolios have outstanding returns, and most particularly risk adjusted returns, it is how I invest for me and mine.

Happy investing.

May results, and June investments were emailed out to subscribers after May closed, if you would like to receive these reporting decks as soon as they are ready, subscribe for free. Info gets posted to the website later.

The reporting Deck is now available to all.

Which of the many benchmarks is the correct one to use? We have the S&P 500, the Dow, 60/40, Aggregate Bonds, QQQ…

At the end of the day, I think there are two primary ways that I see fit to pick the right benchmark. One is that the benchmark be relevant to the investment. In other words, If you are looking at a Value stock strategy, why would you benchmark it to something other than a value index. If you're looking at a broad US stock strategy, I would think the S&P or Total US Market would be the right benchmark, etc. The other way I see to pick the right benchmark is when it comes to your personal risk comfort. If you are not willing to ride out the volatility and drawdowns of the S&P 500, then it may not be the right benchmark for you, maybe some other allocation such as the 60/40 is more appropriate.

Sometimes I struggle with which benchmark to compare a specific strategy to, I often think I should just compare everything to a 60/40 which I think is probably a more common approach by the masses than the S&P. But for strategies with higher return, I tend to think it makes sense to match them to the S&P. Wiggle room here for sure and I am not sure there is a correct answer.

Model Portfolios have been in the reporting deck, and I've been talking about them for a while now, I am super excited about the three Model Portfolios and the returns and associated metrics with them. On the metrics pages for the Model Portfolios, there are comparative benchmarks for both the Russell 1000 and a 60/40 portfolio, same as with the metrics for the individual strategies.

My apologies to who sent me a note a while back and asked why I didn't use BIL / Cash returns as one of the Risk Off options for the Triad strategies. Ironically this is one of the changes that I made from GPM to GPMv is adding BIL as a Risk Off option, but inexplicably left it out of Triad. It doesn't make a large difference including or excluding BIL, but it does lower the Ulcer Index a little bit and ultimately a worthy inclusion especially as it is more adaptable to higher rate periods.

Sorry that I don't remember who asked me about this, would like to give credit where credit is due, thank you.