In an effort to improve performance results and reduce portfolio volatility, a Tactical Asset Allocation (TAA) plan has been activated for both the Maxwell and Euclid portfolios. Checking the latest Portfolio Performance data table, we see these two portfolios are trailing the VTSMX benchmark, an unacceptable condition. Keep in mind this is an extreme strategy, but it is based on reasonable logic. In fact, I used a similar plan with success back in the mid-1980s. Sites such as StockCharts did not exist in the 1980s so we were required to program our own Exponential Moving Averages.
It would be easier to take a "clean" portfolio holding only cash rather than begin working with a portfolio that is holding ETFs we do not plan to use in this TAA model. However, we work with the assets dealt to us. Yesterday I showed the ETFs we will using in this experimental approach. The Maxwell currently holds ETFs other than the primary ETFs shown in the QPP analysis. For now, we will work with the ETFs in the portfolio.
How does it work? I'll run through one example as a model.