Playing Defense With The “Holy Grail” Portfolio

While there is no such thing as a "Holy Grail" portfolio, humor me for a few minutes and think of this simple seven ETF portfolio as a sound basic portfolio. The purpose of this post is to test how one might play portfolio defense and when is such a move necessary.  First, we take a look at the current QPP analysis for this seven ETF portfolio.

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Up Coming Changes in Two Portfolios

In addition to working on providing some defensive moves for the "Holy Grail" portfolio, I am thinking of how I might bring both the Maxwell and Euclid portfolios into positive territory when measured against the VTSMX benchmark.  Both are older portfolios and they are not part of the group of portfolios that Platinum members have intimate access.  Nevertheless, they are portfolios I track and I do have full command of their operations.  With permission of the owners, I am seriously thinking of using a modified version of Sy Harding's "Seasonal Timing Strategy," knowing full well the dangers involved when it comes to market timing.  One of my favorite quotes comes from a friend and it goes like this. "Market timers do not need estate planners."

The reason for moving away from a disciplined asset allocation program for these two portfolios is to make a concerted effort to push these portfolios into positive territory when measured against the VTSMX benchmark.  The plan I'm thinking of is actually less risky than the current asset allocation plan I am now following with these two portfolios.  So it is not completely a "nut job" of portfolio management.  In the investment world of "Boglehead" investors, I will be "sinning" twice in that the strategy will require some technical analysis and market timing.  No doubt about it, these are considered very experimental in nature and I am not recommending it for all investors.

The strategy will only be made available to Platinum users and I will be taking full responsibility for all errors of judgment.  I'm assuming Platinum readers are sufficiently sophisticated to understand the perils involved with a market timing approach.  Stay tuned for more details this week and next week.

Lowell Herr 

Investing: What Should I Do?

"Pay no attention to the advisors. The Markowitz-Sharpe theory says what to do." So writes Michael Edesess in his book, "The Big Investment Lie: What Your Investment Advisor Doesn't Want You to Know."

Just what does the Markowitz-Sharpe theory tell investors to do.

1. Develop a plan for the portfolio.

  • Determine the percentage between equities (index stock funds), bonds (index bond funds), and cash.
  • What index funds or index ETFs will be used to populate the portfolio?  Answer this question. [Read more...]