Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

For regular SAA and TAA portfolios, the next re-balance will be on  Monday, December 29, 2014. You can also find the re-balance calendar for 2014 on ‘Dashboard‘ page once you log in.

As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.

Please note that we now list the next re-balance date on every portfolio page.

Holiday Readings

As Thanksgiving is approaching, we have compiled the following list of articles that we think are of interests to our readers.

  • GMO Jeremy Grantham, Bubble Watch Update. Likely that S&P 500 reaches 2250 before crash, as bubbles always will reach a far extended level before crashing. Also has GMO 7 year asset return prediction: 

 It also gives the following asset allocation:

  • John Hussman, November 10, 2014 – Do the Lessons of History No Longer Apply? This time is not different: when stock market reaches an overvalued and over-extended level by various long term valuation metrics, it will also reverse back. Usually it will undershoot even. It is just a matter of when. Like it or not, Hussman still has one of the most plausible arguments when it comes to economies and market valuations, even though his fund has some implementation issues. 
  • FPA Fund Robert Rodriquez, Reality Check. Rodriquez and his firm FPA runs some of the best conservative funds. His opinions on the fundamental structural issues in the US and developed countries and these countries’ fiscal (ir)responsibilities are worth listening. Things have not changed substantially since the financial crisis and it might get worse before it gets better. 

  • Bill Gross, The Trouble with Porosity and Prosperity. Deflation or inflation? Bill Gross thinks the deflation is still very likely. When central banks around the world are adopting loose monetary policies to boost their domestic economies, with the expense of other countries, it is likely that the globalization and/or global trades will only make deflation worse before inflation rises.  

  • Gray Halbert, Retirement Saving Crisis is Worse Than We Thought: A third of middle class Americans are not saving for retirement. Half of workers in their 50s think social security will be their main retirement income. 

  • Mohamed A. El-Erian, The Return of the Dollar: Will the U.S. become the last resort for other countries’ export again? While US stops quantitative easing and poses to raise interest rates, other countries are still engaged with large scale of monetary stimulus. China just cut its interest rate, not to mention Japan’s relentless quantitative easing and Euro zone’s further plan in this direction. Maybe we are getting real close to a full scale currency war? Is this time for real?

  • Richard Bernstein, Tired of Being Scared Yet?: Maybe we are just too worried? Maybe we are in one of the biggest bull market. Any way, Bernstein lists 50 worrying items and claims these might be just on a “wall of worry” in a bull market. For us, adopting a balanced view to see arguments on both sides is always a prudent way to position our investments.

  • PIMCO Nicholas Johnson, Price of gold vs. real yield: Gold has been called a “barbaric relic” by Charlie Munger. However, there might be a way to see how this barbaric relic can be used for portfolio hedging purpose. Johnson points out that gold price is tightly correlated with the 10 year real yield, or the difference between 10 year bond yield and 10 year inflation protected bond yield. 10 year real yield is also called 10 year inflation expectation. Here is the latest figure from Cleveland Fed: 


Happy Readings and Happy Thanksgiving!


Portfolio Review

Many lazy portfolios are again doing well, especially for those that have heavy exposure in US stocks and long term bonds: 

Portfolio Performance Comparison

Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 10Yr Sharpe
P David Swensen Yale Individual Investor Portfolio Annual Rebalancing 13.0% 13.6% 13.7% 11.5% 8.3% 0.49
Fund Advice Ultimate Buy and Hold Lazy Portfolio 4.8% 4.4% 9.7% 7.2% 6.4% 0.43
The Coffee House Lazy Portfolio ETFs 8.6% 9.2% 13.1% 10.6%    
Harry Browne Permanent Portfolio 7.3% 6.7% 2.8% 5.8% 6.9% 0.83
Wasik Nano 9.8% 10.1% 11.9% 9.4%    
VBINX (Vanguard Balanced Index Inv) 9.7% 11.3% 14.3% 11.5% 7.2% 0.52

**YTD: Year to Date

Market Overview

US stocks and long bonds continue their strength while high yield bonds’ weakness continues. Again, we remain cautiously optimistic at this moment. 

For more detailed asset trend scores, please refer to 360° Market Overview.

We would like to remind our readers that markets are more precarious now than other times in the last 5 years. It is a good time and imperative to adjust to a risk level you are comfortable with right now.  However, recognizing our deficiency to predict the markets, we will stay on course. 

We again copy our position statements (from previous newsletters): 

Our position has not changed: We still maintain our cautious attitude to the recent stock market strength. Again, we have not seen any meaningful or substantial structural change in the U.S., European and emerging market economies. However, we will let markets sort this out and will try to take advantage over its irrational behavior if it is possible. 

We again would like to stress for any new investor and new money, the best way to step into this kind of markets is through dollar cost average (DCA), i.e. invest and/or follow a model portfolio in several phases (such as 2 or 3 months) instead of the whole sum at one shot. 

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