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 18, 2017. You can also find the re-balance calendar for 2017 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.

As we are approaching to the holiday season, we would like to thank our users for their continuing support through out the years. We wish everyone a relaxing and warm Thanksgiving! We will not have a newsletter on 11/27/2017 and will return in December. 

Thankful And Mindful

The first thing comes to mind when reviewing one’s investment accounts this year is that many would be very pleased. By looking at the following returns, it’s hard to imagine what can go wrong unless you are totally betting against markets right now: 

Major Asset Performance (as of 11/20/2017):
Asset Index Fund YTD
1Yr AR
VTI (Vanguard Total Stock Market ETF) 17.1% 20.2%
VEA (Vanguard FTSE Developed Markets ETF) 22.4% 25.6%
VWO (Vanguard FTSE Emerging Markets ETF) 27.9% 29.7%
VNQ (Vanguard REIT ETF) 7.5% 15.1%
DBC (PowerShares DB Commodity Tracking ETF) 3.0% 12.2%
BND (Vanguard Total Bond Market ETF) 3.5% 3.3%


 All of the major assets have had positive returns. 

Taking a longer time frame, if we look at the total return (dividend reinvested) of S&P 500 index ETF SPY from 3/6/2009 (the bear market low) to 11/17/2017, a $100 investment would have become $450 today!

So in this holiday season, we should be thankful for the good market environment and probably good fortune (varies from person to person, of course). 

In our last week’s newsletter and many other previous newsletters, however, we also pointed out that stock and bond markets are fairly overvalued and investors should be wary of a possible correction at some point in the future. So be mindful. 

Mindful but staying the course

However, being mindful of the dangerous investment environment going forward does not mean one should just simply abandon his/her strategies and going to an unscripted sideline. In fact, quite opposite, it’s more important than ever to stay the course. 

Changing or deviating from an existing strategy means, as we have pointed out many times,  you are now adopting no strategy: a strategy is not a strategy if you change your course off the script. For example, several years ago, US stocks were already very overvalued based on some well known long term valuation metrics such as Shiller’ CAPE 10 (see, for example, Market Indicators page). If you were concerned then and liquidated your stock allocation and went to cash or other ‘safer’ bonds, you would have been disappointed now. Of course, if you are conscious to do so by adopting a strategy like P Shiller Cyclically Adjusted PE 10 SO SU Stock Market Timing Strategy Weekly Total Return Bond Funds As Cash on our Advanced Strategies page, that would be a different story. But then, you should be contented to stay investing in some total return bond funds and getting some reasonable returns (after all, a 6.4% year to date return is nothing to sneer at). You shouldn’t be forced to flip flop and change your mind again: (being forced) to get back to stocks at a later time for a much higher price. Such a tactic is very dangerous: imagine you can’t stand the underperformance because you went to bonds 2 years ago and now started to get back to stocks (at a much higher value) and only to lose quite more if stocks go into a deep dive in a couple of months. 

The point here is that one has to stay the course once you have decided. If switching back and forth among a few strategies in some calculated way, that would mean you are effectively adopting a new strategy and that implies you will need to stick to that calculated (or planned) way. But even with this, you should ask yourself: do I understand (or at least have some historical data backing) its behavior? What happens if it goes wrong? How wore can it be and can I still remain to the plan when that occurs? 

On the other hand, if you are just doing this randomly, you essentially are becoming an impulsive speculator. More often than not, this can’t be well. 

Current US stock trend

Looking at several tables on 360° Market Overview, we see: 

  • In general, US stocks are still in a strong up trend. Similarly, emerging market and international stocks are all doing well. 
  • Among the nine styles, growth style is the deciding factor: growth stocks are better than value stocks regardless of their capitalization. This often occurs in a market that favors risk (and high growth without much regarding risk). Furthermore, small cap stocks, though lagging their large cap counterparts, are still commanding positive up trend scores. 
  • Technology, materials, financial sectors have the highest trend scores, indicating again a strong risk appetite. 

Percentage of stocks in S&P 500 companies that are above their individual 200 days moving average stood at 71%, a reasonable improved number, though still below their recent average 73.58%: 

The internal of US stocks is relatively healthy though there have been reports on their divergence recently. 

To summarize, barring from some unforeseen events, this is a season investors should be very thankful but also mindful and be prepared. 

Market Overview

Last week, stocks recovered from a mini correction and they are now again close to the record high area. However, maybe it’s due to the holiday season or maybe it’s due to the investors’ fatigue, investors are not showing a strong conviction. High yield bonds, for example, are still trying to recover from their recent low. Furthermore, interest rates have started to climb up again, reflecting the upcoming interest rate raise. As always, there are several under currents. For now, enjoy the holiday and stay the course. 

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

Now that the Trump administration has been in the office for more than half a year, it has stumbled and encountered many difficulties to implement its promised changes in terms of tax cuts, job stimulation and infrastructure spending. On the other hand, stocks continued to ascend, regardless of the progress. Looking ahead, however, we remain convinced that markets will experience more volatilities at some point when reality finally sets in. 

In terms of investments, U.S. stock valuation is at a historically high level. It is thus not a good time to take excessive risk. However, we remain optimistic on U.S. economy in the long term and believe much better investment opportunities will arise in the future. 

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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