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

Regular AAC (Asset Allocation Composite) portfolios are always rebalanced on the first trading day of a month. 

For regular SAA and TAA portfolios, the next re-balance will be on Monday, December 23, 2019. You can also find the re-balance calendar for 2019 on ‘Dashboard‘ page once you log in. Please note that we are phasing out this rebalance calendar. 

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 schedule

We will not publish newsletters on 12/23 and 12/30 because of holiday schedule. We will resume our publication on 1/6/2020. 

We wish everyone a joyful holiday and happy New Year!

Q&As On Our Services

The recent changes of our services have caused many questions. In the following, we answer some of our users’ questions. 

  • I’m interested in switching to AAC from an existing portfolio. What should I do? 
If you are switching from an existing TAA portfolio, right now it’s a very good time to do so. For those portfolios that have holdings in US stocks, US REITs and/or international stocks (our TAA portfolios currently should hold these assets), you don’t need to do anything right now as they are pretty close to the holdings of an AAC portfolio with the same risk profile. All you need to do is to monitor the next monthly end rebalance of the AAC portfolio and make changes of your TAA portfolio to conform with AAC’s if AAC portfolio has some drastic change (such as stock exposure change). Similarly, you can do the same for an existing SAA portfolio. Of course, you can always just simply switch to the AAC’s holdings right now. Doing so will not disturb very much of your portfolio’s behavior as right now, TAA and AAC holdings are very similar and both are at the full risk exposure level. 
  • I see the weighting of asset classes is different between SAA OPT and AAC.   Do you have some data that backs up this difference?  Do you expect the weightings to change over time?   
In terms of weighting of asset classes, the AAC uses three principles to arrive that 1). the relative global economy (factored in about 30-40% of US assets are global actually). So a even a balanced global portfolio should overweight US stocks (as 30% or so actually goes to intl). 2). It’s also from a well known allocation detailed by David Swensen’s Unconventional Success: A Fundamental Approach to Personal Investment 3. our somewhat subjective view on asset trends in a very long (10-20 year) time frame. 
Yes, the weightings can be changed if a huge secular trend builds up (for example, US flips to current Europe and Europe or Japan becomes more US today). But even that, the weighting change will not be dramatic. 
  • I noticed an increase in the percent allocated to REITs, compared with SAA optimal. Is this normal and why? 
Yes, AAC has sizable REIT allocation which makes it more balanced as REITs historically have similar (slightly better) long term returns but behave differently in some periods than broadbase US stocks. So it’s more diversified but it doesn’t sacrifice much in returns (actually increases a little bit). We have discussed US REITs asset in our newsletters. For example, see October 16, 2017: REITs As An Asset Class

The following is a recent user’s comment that has several questions embedded: 

  • I’ve been a subscriber since the beginning.  Please permit me to express a bit of skepticism about your service.  We have been in one of the biggest bull markets in history.  I haven’t done a careful analysis, but I would submit that if an investor had simply been in the Vanguard VBINX from the beginning the investor would have beaten all of your portfolios, including most of the advanced ones. Using the past to predict the future is futile.  Now you have pretty much abandoned your theories and gone to what appears to be a hybrid portfolio,  the AAC.  Why did it take you so long to come up with this portfolio? How did you come up with it?  Did you simply use trial and error techniques, changing this and changing that, until you could come up with a mixture that has a backdated performance that’s better than your prior underperforming portfolios. How much money have your subscribers lost by adhering to your TAA portfolios over the last 10 years?  Maybe your subscribers are owed that kind of calculation.  Show total gross dollars, not just annual percentages.  I’ll bet the total is staggering.  Sorry, but despite all your sophistication and mathematics and historical references, you have produced very little.  That’s just one very unsophisticated investor/subscriber’s opinion.  Following your portfolios has been more amusement than investing.  And buying and selling the positions each month makes the whole process even more absurd.  Thank you for listening.  
This is a rather long comment, so we had the following replies: 
  • VBINX vs. MyPlanIQ portfolios: yes, it’s very much likely that a simple 60% US stocks/40% bonds VBINX has outperformed most of our portfolios since 2009 (and we have been pretty clear on this throughout our newsletters performance tables). But there are a couple of things to note: A). if you look at the full cycle from 2001 or 2007, VBINX’s returns and risk would be mostly lower than our portfolios. So it’s important to keep in mind that while 10 years is a long time, it’s simply because as you said, ‘we have been in one of the biggest bull markets in history’. So when the next downturn hits, it’s still not clear whether VBINX will outperform. B). as we always maintain, our portfolios are to make a reasonable return while keeping risk manageable. Our portfolios, even though lagging behind in returns, have not lost money in a long term (10 years, for example). C). our portfolios are more global oriented, so one should at least benchmark, if desired, against a global allocation fund or portfolio such as DFA global balance fund DGSIX.
Some of the data backing up the above: the following table and chart compares MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate with VBINX:
As of 12/13/2019:
Name YTD*
Since 1/2/2001
MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate 5.1% 2.7% 1.8% 2.0% 4.7% 7.0% 7.0%
VFINX (Vanguard (S&P 500) Index) 28.7% 21.9% 13.8% 11.7% 13.3% 8.8% 6.9%
VBINX (Vanguard Balance (60% stocks/40% bonds) 20.3% 17.0% 9.7% 8.1% 9.5% 7.3% 6.5%
Since 1/2/2001 $10,000 growth:


The following compares Schwab Core Mutual Funds Tactical Asset Allocation Moderate with VBINX and DGSIX:
Portfolio Performance Comparison (as of 12/13/2019):
Ticker/Portfolio Name YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR Since 1/2/2001
Schwab Core Mutual Funds Tactical Asset Allocation Moderate 9.4% 7.0% 4.5% 2.6% 6.5% 9.2% 10.8%
DGSIX (DFA Global Allocation 60/40 I) 15.9% 13.1% 7.0% 6.2% 7.3% 6.1% 6.1%
VBINX (Vanguard Balanced Index Inv) 20.3% 17.0% 9.7% 8.1% 9.5% 7.3% 6.5%

Of course, we also want to remind users that VBINX had a -36% maximum drawdown (peak to valley) from 2008 to 2009 while our TAA portfolios had about -15% and -18% maximum drawdown respectively. 

  • The new AAC portfolios. First, we want to emphasize AAC is just an improvement over SAA and TAA. In fact, the key improvement is that we now take relative momentum between stocks and bonds out of a risk asset fund selection (such as US stocks) and use a combined market indicator/momentum to guide risk exposure. The utilization of relative stable allocation among US stocks, foreign stocks etc. is to minimize rebalance activities (thus making it much easier to implement). Our advanced one, as mentioned in last week’s newsletter (Advanced Global Asset Allocation Moderate ) is still using the same TAA method to choose top (2) risk assets. So, again, we are not abandoning TAA or SAA. 
  • We want to emphasize the new AAC portfolios and the restructuring of just furnishing AAC portfolios instead of SAA optimal and TAA to basic subscribers are just to simplify our offerings, making it much simpler for new subscribers to utilize our service. For advanced subscribers, we also try to select a set of practical (and we believe ‘good’) portfolios for them to implement instead of just listing all of those interesting portfolios (though not necessarily easy or good to implement) for them. 
  • To answer how we came up with AAC, it’s actually not a much new thing. Our TAA has always taken relative momentum among stocks (assets/funds) and we further use their relative strength over bonds to guide our asset allocation. However, a much simpler model is so called dual momentum that uses an absolute momentum (market momentum) to guide risk (stock) allocation and relative momentum to select stock funds. AAC is just to use the absolute momentum (we call market indicator) instead of relative momentum between stocks and bonds to guide risk (stock) exposure. The dual momentum model has been widely known and practiced in industries. We are not the first one to utilize this but just to make it practical (and applicable to predefined plans like a 401k plan).  
  • We also want to point out that in the past, we have provided various styles of portfolios and we do not advocate an exclusive style (such as TAA). For example, we have always emphasized using a hybrid SAA and TAA combo portfolios (core satellite) if possible. 
  • Finally, we want to emphasize again that however how long the current bull market might have seemed, a downturn will eventually come. Now, it’s actually more than ever important to adhere a risk managed strategy. investing is a very long term process. 

Finally, we want to thank for our subscribers for their trust and patience. As always, we strive to be as transparent as possible. We encourage our users to get more in depth understanding and comfortable with our methodology and process. 

Market overview

Global stocks rose last week. Investors have been getting more ‘good’ news: US employment figures are still strong; US-China trade deal finally got some phase one resolution; UK’s election result and Brexit are now a certainty. It looks like global economy has avoided a near term slowdown and probably will re-accelerate a bit next year. However, as we always maintain, this is highly overvalued environment and one should follow a carefully vetted strategy, stay on the course and don’t take excessive risk. 

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

In terms of investments, even after the recent retreat, U.S. stock valuation is still at a historically high level and a bigger correction is still waiting to happen. It is thus not a good time to take excessive risk. However, we remain optimistic about 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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