Alpenrose Velodrome – Now closed.
This ITA Wealth Management blog has been chugging along for approximately 16.5 years. Over the last few months I’ve moved several portfolios back to what I call my investing roots or what is known as the Asset Allocation model. While I loosely used this model for years going back into the 1960s through the 1990s, I began to take it seriously after reading William J. Bernstein’s book, The Intelligent Asset Allocator. While I still consider this book an excellent work, it is not easy reading for a beginning investor. Bernstein recognized this and improved on a later volume, The Investor’s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between.
The 15 portfolios I track fall into four basic models and they are: Equities Only, Robo Advisor or Intelligent Portfolio, Asset Allocation, and Sector BPI. Portfolios tracked and reported on by Hedgehunter follow different investing approaches so I am speaking only about those I review regularly.
Portfolio Model Summary
Equities Only: Copernicus is the single portfolio using this model. The philosophy driving this model is to invest only in U.S. Equities such as VOO, VTI, SPY, and ESGV. Save as much as you can as early as you can (Golden Rule of Investing) and never sell unless there is an emergency. This model is for the young and/or those with at least ten years of investing ahead.
Since there is no selling, this portfolio is tax efficient.
Robo Advisor or Intelligent Portfolio: Schrodinger is the single portfolio using the computer managed approach. This portfolio is housed with Schwab and is totally managed by computer. There is zero cost other than the normal fees associated with Exchange Traded Funds (ETFs). Schwab calls these portfolios, Intelligent Portfolios. The Schrodinger is of sufficient size to take advantage of Schwab’s tax managed decisions. To readers who have a spouse or significant other who has little or no interest in the stock market, this style portfolio belongs in your tool box. If the person who manages the portfolio dies first, other managed portfolios can be funneled into this Intelligent Portfolio to form one portfolio. Readers following the Schrodinger know how well it has performed going back many years.
Few sell trades have occurred over the past seven years so this is a tax efficient portfolio.
Asset Allocation: I am currently using the asset allocation model with eight portfolios. Several are still in transition from other investing models. These eight are: Bethe, Bohr, Einstein, Huygens, Kepler, and Pauling. Two other portfolios using this model, but not reviewed publicly are the Curie and Newton. These eight portfolios are very similar to the Schrodinger approach, but use different ETFs.
Reworking these eight portfolios is what I call returning to my basic investing roots.
The asset allocation percentages are based on volatility percentages. The goal is to keep the actual portfolio percentages within +/- 0.5 of the stated goals. It may be months before all the asset allocation portfolios are in balance.
These are tax efficient portfolios as there is minimum selling. New cash infusions and dividends are used to keep the asset classes in balance.
Sector BPI: Five portfolio use the Sector BPI investing model. I’ve yet to find any other source using this approach to investing. The five portfolios following this model are: Carson, Franklin, Gauss, McClintock, and Millikan. All are reviewed approximately every 33 calendar days. Several blogs are posted explaining how the Sector BPI model works. Note when a Sector BPI blog is posted and follow the logic used to implement this rather mechanical model based on Bullish Percent Indicator signals.
Of the four basic investing approaches, the Sector BPI model is the least tax efficient as there are transactions when sectors are deemed oversold or overbought.
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