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I enjoy reading Dr. Madell's monthly newsletter and this month was no exception.
This month I averaged all the model portfolio's recommened asset allocations for cash, bonds and stocks. With this, for his three models, stocks averaged 45%, bonds 40% and cash 15%. Not sure if this has any great meaning but it is something I have been doing for the past couple of years in an attempt to follow the true shift in his asset weightings between stocks, bonds and cash.
When I detect a shift in his averages I then check my allocation to see where I stand in relation to his averages. Currently, we are the same for stocks at 45%, he is heavier in bonds at 40% and I am at 25%; and, I am also heavier in cash than he is. But wait, his model allocations are for the buy and hold investor and my weighting allows for some near term movement by using an adpative allocation model and strategy. In general, when stocks are expensive I hold less of them and when they are cheap I hold more of them thus rebalancing my equity allocation downward as stocks, in general, become more and more expensive.
My allocation model and investment sleeve system also allows for a seasonal strategy and its positioning along with taking advantage of market pullbacks and the associated swing. However, since bonds are not currently providing much yield and might soon face a rising interest rate environment I have chossen to carry a heavier cash allocation than normal this year thus foregoing my usual shift into bond funds from equity funds throuh nav exchanges. Since, I parked the cash proceeds from the sale of equity funds in the respective fund family's money market fund I can buy their funds again at nav without paying another commission or transaction fee. In addition, I pay no wrap fee on my accounts. With this, what some state and consider to be a high cost due to the frontend sales load, on the first purchase, actually turns out to be a low cost way to invest for an active investor, like myself, that likes to reconfigure their portfolio from time-to-time due to market movement and seasonal trends.
Comments
I enjoy reading Dr. Madell's monthly newsletter and this month was no exception.
This month I averaged all the model portfolio's recommened asset allocations for cash, bonds and stocks. With this, for his three models, stocks averaged 45%, bonds 40% and cash 15%. Not sure if this has any great meaning but it is something I have been doing for the past couple of years in an attempt to follow the true shift in his asset weightings between stocks, bonds and cash.
When I detect a shift in his averages I then check my allocation to see where I stand in relation to his averages. Currently, we are the same for stocks at 45%, he is heavier in bonds at 40% and I am at 25%; and, I am also heavier in cash than he is. But wait, his model allocations are for the buy and hold investor and my weighting allows for some near term movement by using an adpative allocation model and strategy. In general, when stocks are expensive I hold less of them and when they are cheap I hold more of them thus rebalancing my equity allocation downward as stocks, in general, become more and more expensive.
My allocation model and investment sleeve system also allows for a seasonal strategy and its positioning along with taking advantage of market pullbacks and the associated swing. However, since bonds are not currently providing much yield and might soon face a rising interest rate environment I have chossen to carry a heavier cash allocation than normal this year thus foregoing my usual shift into bond funds from equity funds throuh nav exchanges. Since, I parked the cash proceeds from the sale of equity funds in the respective fund family's money market fund I can buy their funds again at nav without paying another commission or transaction fee. In addition, I pay no wrap fee on my accounts. With this, what some state and consider to be a high cost due to the frontend sales load, on the first purchase, actually turns out to be a low cost way to invest for an active investor, like myself, that likes to reconfigure their portfolio from time-to-time due to market movement and seasonal trends.
And, so it goes.