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, July 1, 2019. You can also find the re-balance calendar for 2019 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.

Latest Performance Comparison Among Several Advanced Strategies

Many of our subscribers might have felt the recent underperformance of MyPlanIQ strategies. This is especially true for Tactical Asset Allocation(TAA) based portfolios in the context of soaring US stock market. We have addressed this issue several times. In this newsletter, we look at the long term performance comparison on several strategies listed on Advanced Strategies page. 

Long term returns since 2001

Our representative portfolio P Goldman Sachs Global Tactical Include Emerging Market Diversified Bonds (the GTAA portfolio) operates among a list of candidate funds that represent major assets of global stocks, REITs and bonds. As US stocks have been a lone superstar asset for the past 10 years, this portfolio’s recent returns have been discouraging, causing more and more people to doubt its long term effectiveness. 

In the following table, we pick several good US centric stock strategies listed on  Advanced Strategies page and compare their returns with the representative portfolio as well as S&P 500 index (Vanguard 500 index fund). All returns are total returns that include dividend reinvested. 

Portfolio Performance Comparison (as of 6/14/2019):
Ticker/Portfolio Name Max DD 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR Since 2001
P Goldman Sachs Global Tactical Include Emerging Market Diversified Bonds 17% -6.7% 6.3% 4.0% 8.5% 10.7% 11.6%
STS Seasonal Timing Using VFINX Total Return Bond Fund As Cash 35% 17.6% 12.4% 9.4% 12.7% 10.5% 9.6%
P Warren Buffett Total Stock Market Valuation to GNP Ratio SO SU Weekly Strategy Total Return Bond Funds As Cash 19% 4.7% 4.9% 5.4% 11.4% 11.5% 11.1%
P SMA 200d VFINX Total Return Bond As Cash Monthly 21% -10.7% 7.5% 5.9% 11.8% 10.8% 11%
VFINX (Vanguard 500 Index Investor) 55% 5.9% 13.7% 10.4% 14.3% 8.5% 8.7%

Max DD: Maximum Drawdown (Peak to Trough)

See detailed comparison >>

We want to point out that choosing 2001 as the starting comparison starting date is solely because several of these portfolios only had data since then. The reason is because these portfolios use a total return bond fund portfolio like Schwab Total Return Bond that only started since 2001. 

We make the following observations:

  • For the past 1, 3, 5 and 10 years, S&P 500 (VFINX) has been the best performer, outperforming all other strategies by some big margins. The current bull market, still being close to its record peak, has enabled this fantastic outperformance. 
  • The US centric timing strategy like P SMA 200d VFINX Total Return Bond As Cash Monthly had encountered some trouble since late last year because of market fluctuation This seriously impacts its recent performance that now extends beyond last five years. However, this strategy is still outstanding when we look at its long term performance. 
  • If we extend our horizon to the past 15 years (i.e. since 2004), we see all of the tactical/dynamic strategies have outperformed VFINX by some meaningful margins. This period spans the Great Recession in 2008. 
  • Extending to include 2002 to 2003, we see that the GTAA portfolio still delivers the best annualized returns. 
  • In terms of risk or volatility, we can see that the tactical portfolios have much lower maximum drawdown, as low as 1/3 when comparing the GTAA portfolio with VFINX. 

We want to point out that the long term GTAA’s outperformance is actually very impressive as right now, US stocks have been consistently at its current bull market high levels.  


We have stated in several pervious newsletters that our rules of thumb on strategic and tactical strategies are: 

  • For a buy and hold strategic portfolio, one should be prepared to hold such a portfolio for at least 15 years, preferably 20 years or so. 
  • For a tactical portfolio, one should be prepared to stick to it for at least 10 years, preferably more than 15 years. 

However how discouraging the recent tactical portfolios’ underperformance has been, the above data show that the rules of thumb are still intact. The long term practice of a strategy is essential to its success. This is the very key every investor should remember and stick to it. 

As the US stocks are close to their record high, their future returns are not optimistic. This is very intuitive as asset prices/returns are always reversed to their means. Given the current extended high prices (thus the outstanding recent returns), many have suggested that US stocks are likely to return close to nothing for the next 10 to 12 years. In fact, GMO’s 7-year asset class real returns forecast -4.2% for U S large stocks. Interested readers can look at DShort Valuation Review and Hussman’s commentary for more detailed discussion. 

Though we have no idea when the next US stock market weakness will begin and how severe it will be, mean reversion will most likely make the (global) tactical strategies outperform again. However, to fully take advantage of this, one has to be patient and withstand the current underperformance. 

Market overview

Stocks are pretty much in a holding pattern: it’s actually amazing that US stocks quickly ascended in the past two weeks to close in to its record highs. However, without strong earnings growth, all investors can hope is the Federal Reserve’s rate cutting and/or some sort of ‘good’ trade deal news to propel markets higher. Again, we have no idea on where markets will go next and the best we can do is to stay the course while keeping an eye on 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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