The volatility continued in November, will we see a Santa Claus Rally?
The strategies and markets were on target for a slight gain for the month, and then Omicron fears hit the market on November 30 and we had a big down down.

There were changes in Triad and The Russell strategies, see the full report for the details.

September was no bueno! However, October was Fantastico!
The strategies and markets had a very good October, earning back well more than the loses from last month. Triad dropped the Russell Mid-Cap Value ETF [IWS] for October which was unfortunate because it had a great month. See the previous post about FOMO regarding this.

October was still a volatile month, but how we more appreciate it - to the upside. Two months left in the year, we will have to wait and see what is in store.


November Investment Changes:
Triad goes back into IWS, no other changes for any of the other strategies.

See the November 2021 investments and October 2021 results, and link to the full reporting deck here.

September was a big down month in the markets and as a result the Triad strategy exited it's position in the Russell Mid-Cap Value [IWS] (it did maintain it's holding in the Russell 1000 [IWB].)

FOMO: Fear Of Missing Out

October has been a booming month so far in the markets, and IWS is up almost 4.5%, this means that Triad would have realized an additional 1.5% gain this month if it had maintained the position in IWS.

Let's take a look below at how the Triad equity positions do over time when compared to a Buy & Hold approach and see if there is reason to justify FOMO.

The blue line in the chart above of the Russell 1000 [IWB] buy and hold equity line. The golden colored line is Triad's holding in IWB when it's lookback methodology says to be in IWB, and alternatively in bonds when it says to be out of equities.

Without running the metrics, we can visually see that the Triad line is far less volatile than is the Russell 1000 line, especially with regard to the two large drawdowns in the IWB. We can see that in the 1990's buy and hold outperformed Triad's methodology, but the two equalized after the 1990 boom and then early 2000's bust, and when we get to the 2008 drop in the markets - we witness IWB taking a massive dive but Triad only has a dip and keeps moving upward.

Yes there are period of time when the B&H in IWB outperform Triad's IWB position, but with far greater downside risk and higher overall volatility.

Below we will compare the Russell Mid-Cap Value B&H vs Triad.

Overall this is very similar to the IWB chart above. MidCap Value saw less of an outsized return in the 1990's, but similar to the Russell 1000 the Russell Mid-Cap Value also have a major drubbing in the 2008 market dump, but Triad's strategy of being in equities when it sees upside performance, and in Bonds when the equities are not seeing upside performance results in less volatile results and avoids the major drawdown of market meltdowns.

It's ok to be a little sad that you missed out on a bit of extra gain this month in Triad. Just keep in mind that long term Triad gets the calls far more right than wrong which result in better performance with less volatility - no reason for FOMO.

September was no bueno!
August was a very good month for the markets, however, September was even worse. I am personally down 5.14% for the month of September, and my YTD returns now stand at 14.49%. For comparison, the S&P is down 4.65% for the month, and up 15.93% for the year.

There was a lot of volatility and an obvious downward bias this past month. In September we have seen the 2nd largest drawdown of the year, I am not expecting but would not be surprised for more drawdown to come in October, even with all the stimulus money. I am hoping for a Santa Claus rally toward the end of the year.


October Investment Changes:
There are changes to the Triad and Russell strategies for October. Triad goes out of both Gold and Russell Mid-Cap Value, and the Russell strategies exit Russell 1000 in favor of Russell Mid-Cap Growth.

See the October 2021 investments, September 2021 results, and link to the full reporting deck here.

Muhammed Ali towering victoriously over a beaten Sonny Liston, if the Triad strategy could feel victorious for crushing the Permanent Portfolio, I imagine this is how it would feel.

I recently highlighted the new Triad strategy and detailed how it works, here. Investing in Triad since coming up with this strategy has made me realize that I find the potential Gold allocation to be too large, a 1/3rd position in Gold is more volatile than Triad was designed to be, and I have modified Triad going forward. Up to 1/3rd of the strategy will go into IWB, the Russell 1000, and up to 1/3rd will go into IWS, the Russell Mid-Cap Value, and up to 1/6th of the strategy will be allocated to SGOL, Aberdeen Standard Physical Swiss Gold Shares; this means that there will always be a minimum of 1/6th allocation to the best performer of VGIT, VCSH, or VGSH, Intermediate Treasuries, Short Term Corporate Bonds, or Short Term Treasuries. This reduction of the allocation to Gold only slightly reduces the long term CAGR, but reduces the Ulcer Index appreciably, as was the goal.

First a quick primer, why was Triad created - what was the goal? This is a conservative strategy that uses no leverage, aims to have a low ulcer index with great returns over a full investing cycle including good and bad years, it will underperform in the good years, however, it will outperform in the bad years.

The two charts below show why a 60/40 (or a 70/30, or an 80/20) will suffer going forward, Bonds have already given what they can, there isn't much left in that allocation.

I was recently asked if I could compare Triad to Harry Browne's Permanent Portfolio, I was curious myself how they would compare, so here is the crushing story.

The data below was compiled with results through September 22, 2021. The results go back to May 1992, not a date I picked, but rather because that is how far back Portfolio Visualizer had results.

Permanent Portfolio is 25%/25%/25%/25% into Stocks/Gold/Long Term Treasuries/Cash

For this exercise I gave Permanent Portfolio the benefit of the doubt and instead of actual "cash" I went with Short Term Treasuries which provided more return. The allocation and funds used are: VTSMX / ^GOLD / VUSTX / VFISX

The Portfolio Visualizer link to the data is here.

For the comparison, I did Permanent Portfolio vs Total US Market vs Triad from May 1992 through current, and then the same comparison for what I refer to as the modern era, 2000 forward.

The results from mid-1992 forward show Triad returning over 2.75X the return that the Permanent Portfolio returned, in fact it bested the Total US Market by a noticeable margin as well.

Not only are the results superior to PP, but the Maximum Drawdown was also less, and all with a virtually identical Ulcer Index. So on a risk adjusted return basis, Permanent Portfolio was absolutely crushed by Triad over this time period, as was the Total US Market.

2000 to current is shown in this second chart. Similar results to the full time period. Triad delivers superior results, as with the full time period in this time period it also has a slightly better Maximum Drawdown than Permanent Portfolio, and a virtually identical Ulcer Index and with over double the total returns. Triad on a risk adjusted basis is towering over the bloody Permanent Portfolio which is broken and lying on the floor.

Enjoy the strategies, feel free to ask questions.

Happy Investing, please be strategic and thoughtful by using Dual Momentum Systems.

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August was a very good month for the markets, and the strategies. You can get this and past reporting decks by going to the Reporting Decks item on the menu. This months reporting deck can be found right here.

There are no change of investments for September, same investments as in August. Pinch me, is this year really going so well after last year, I hope I'm not dreaming! In full disclosure, I was up 3.47% in August over all accounts.