Allocate Smartly Strategy Implementation

Just recently I had to make changes to the tactical portfolios I established in Allocate Smartly for the monthly rebalances.

Let me briefly explain/update you.

I invest (and do financial coaching teaching) a professionally developed ETF strategy that rotates in and out of asset classes as indicated.

Why?

It’s beaten a traditional buy and hold stock and bond portfolio by about 5% in 35 years of back-tested data… with a lot less risk – a 63% better drawdown.

There’s the stellar performance data, plus, I detest “riding out” bear markets.

(Been there and done that already.)

Below is the back tested data on a chart for the strategies I combined and now implement using Allocate Smartly (for whom I am also now an affiliate because I use and love their product.)

That orange line is the strategy I’m using; the black line is a 60% stock and 40% bond index portfolio.

(No, unfortunately, I didn’t invest in the orange strategy in 1990 because it wasn’t available then – Again, this is back tested data until 12-8-23 based on past index performance.)

Allocate Smartly ETF strategy

(If this is confusing to you so far, get my How to Retire When You Want Course where you’ll know what every investor needs to know before investing a dime.)

Below is the meat and potatoes data (highlighted in holiday colors just for fun) from my Allocate Smartly account:

Allocate Smartly strategy

So, back to my story about the portfolio rebalancing recently.

I’ve enjoyed sitting in extra “cash” lately with money markets paying over 5%.

This recent rotation I referred to above was from that higher level of cash to a low level of cash, putting some funds into:

  • VNQ (REITs)
  • SPY (S&P)
  • And more ETF’s
  • While also increasing funds in:
  • GLD (gold)
  • QQQ (tech heavy Nasdaq)

Yikes!

I was feeling hesitation in buying and selling the necessary ETFs.

Why the Hesitation with my Allocate Smartly Strategy?

Usually, I can stay in the mindset of simply implementing the strategy rebalances when they occur.

Yet this time I caught myself wanting to second guess the strategy I had confidently put together in Allocate Smartly; I was looking at charts and pricing much more than usual.

Maybe this is why.

  • I tend to be a very conservative investor.
  • I dislike buying overvalued assets (and almost all of them are now).
  • I see real estate prices falling right in front of me (and I got signaled to buy REITs).

I had to absolutely force myself to buy and sell the ETF’s to follow the strategy.

The fact is only time will tell if these assets continue to go up in the near term.

And like all investors who are paying attention, this concerns me.

But I do love that the strategy has done an excellent job of limiting losses during bear markets when compared to a traditional buy and hold portfolio of 60% stocks and 40% bonds.

Why did I make these changes when I knew I was buying into overvalued assets?

Some time ago I made a very deliberate decision to follow this strategy after much evaluation based on data for the past results seen above.

  1. Reliable data doesn’t lie.
  2. This strategy is easy to implement.
  3. It’s free to buy and sell the ETF’s. (Allocate Smartly is $33 a month with an annual subscription which I get.)
  4. I don’t have to try to know if stocks, bonds, or anything else is going up or down because I can’t know for sure (but I do like to contemplate this if I’m honest).
  5. The risk and returns work for me based on very long term data and my financial goals.

What don’t I like about this strategy?

It’s defensive so it can underperform during very strong bull markets, at least temporarily.

The short term gains increase tax rates when we have higher gains. (Is that a bad thing?)

These strategies aren’t based on buying undervalued assets – which I enjoy doing.

But it’s done so well based on the data I’ve let go of my need to buy cheap assets (at least for some of our money:)

That’s why I’m investing this way.

One of the best questions we can ask (about anything in life:) is “why am I doing what I’m doing?”

Why are you investing the way you are?

 

If you decide to get Allocate Smartly use my affiliate link so you can get my video training on getting started. (Just screen capture your receipt showing the email you used to purchase and email me so I can email you access.)

 

The information on this website is for education only and is not to be construed as personal financial advice.