Risk Off, Leverage, and my personal allocation
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.)
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.
