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.

Beaten Down Assets

It is always our intention to be a value investor. Even though we opt to use broad base asset allocation investment strategies, the following are some reasons why one should keep an eye on valuation: 

  • Valuation helps to understand the general market conditions and thus re-enforce one’s risk profile or risk tolerance. For example, in an extremely overvalued environment, risk increases and one should pay more attention to the risk exposure. 
  • Similarly, valuation helps to set one’s return expectation. For a strategic portfolio, in a highly valued environment such as today, one should expect to have a low return in the coming years. For example, currently, the long term 10 year average annual return for US equity is around 3 plus or minus percent by various metrics (see, for example, November 24, 2014: Holiday Readings). For a tactical portfolio, understanding the general environment will help to understand the possible difficulties ahead. In general, even for a tactical portfolio, if the more assets are fair or overvalued, the harder it gets to find a good opportunity. 
  • Valuation helps us to find good possible investment candidates. For example, a globally diversified portfolio that takes emerging market and international stocks as well as commodities can present more opportunities over time. So if some of these assets are substantially undervalued, investing in one of those portfolios that have these assets as possible candidates opens up a possibility to invest in these beaten down assets. 

Although 2008-2009 financial crisis presents an opportunity that some people termed as once in a life time, we believe there will be many such opportunities ahead of us. Even though we are in no way predicting a similar event of such magnitude will happen soon, it is nevertheless interesting to see some of assets have been beaten down a lot, even approaching to their 2008-2009 levels.

Gold, Silver and Gold Mining Stocks

This group has been substantially beaten down, especially for GDX (Market Vectors Gold Miners ETF) and GDXJ (Market Vectors Junior Gold Miners ETF). In fact, GDX is about as low as what it reached in 2008 while GDXJ is now only about 12% of its peak!

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