Fintech executive, writer, math geek, and investment systems developer. Founder and CEO of Altruist and Founder of FormulaFolios.

Tactical Asset Allocation (TAA) Update - November 2014

Tactical Asset Allocation (TAA) Update - November 2014

Below are the most up to date allocations for the Tactical Asset Allocation model I've written about on the blog.  For those needing a refresher on what TAA is and why I think it's important as part of an investment plan just click here to revisit the first post. [table id=6 /]

Previous Month Recap

2014 is nearly in the books, and is closing out much the same is it's been performing all year, mostly good and with minimal volatility. Real Estate has been the big winner this year, with US Stocks slightly trailing. Although these asset classes have been solid all year, Non-US Stocks have been quite poor (barely positive for the year) and Commodities have been terrible. Bonds have been mostly slow and steady all year, posting consistent returns that are likely to finish in the mid-single digits.

YTD the model I publish here is slightly underperforming the benchmark, but doing so with slightly less volatility. This is par for the course for this model, as it will typically lag slightly in strong bull markets. The real value only comes when the markets go into a 6 month+ downturn, which hasn't happened now in quite some time.

Allocation Changes for This Month

There have been very few allocation changes this year for the model. It still favors US stocks and Real Estate over all other asset classes. Gold and Non-US Stocks have been completely out of the model for a few months or longer.

Since the model I share here is "balanced" keep in mind it always keeps at least 50% of the portfolio in either bonds or cash.  The whole idea of this balanced tactical asset allocation (TAA) approach is to keep a highly diversified portfolio that can get through the markets major ups and downs without the dizzying volatility of just growth investments.  It's not perfect, but so far so good.

The model is mechanical, so it takes no lead from my opinions.  My opinion, however, is that stocks will not be able to sustain their current trajectory (forever).  A correction, even if mild, is due sometime in the near future (if not already under way).

Long Term Model Performance Versus Benchmark

For those that want to track the performance of this model here's the most up to date info:

[table id=5 /]

I've also added some long term metrics on return and risk here (complete with data going back to 1997):

[table id=9 /]

To see how performance is measured just check out the static page on TAA here. **Note** I only update the long term metrics quarterly versus monthly like the other tables above.

As mentioned in past posts I'll update this model/strategy each month roughly 1 week into each new month.  This way scalpers can't just steal the research as their own and other financial professionals can't simply use the research to manage their clients money.

If you like what you see here feel free to pass this on to others via email, use the Facebook icon below to share it there, or just suggest in personally to a friend.  If you are not currently a client, and would like to know more about this strategy - feel free to reach out to me directly via this contact form.  If you have general questions, just use the comment form a couple inches below this post.

Thanks for stopping by my blog and have a great day!


Jason Wenk

Tough week for the markets // New trends emerging soon...

Tough week for the markets // New trends emerging soon...

Market Update // October 9, 2014

Market Update // October 9, 2014