Fundamental Trends offers model portfolios as guideposts for building your own portfolio. These are not jump in right now portfolios, these are get there over time portfolio strategies. The three guideposts are:
Punch Card Stocks Portfolio – A 20-30 stock model portfolio that has two component parts, growth stocks and equity income stocks. Many people, particularly retirees, will stick to the equity income stocks. We use fundamental, as well as, quantitative data to find companies that offer value and growth characteristics.
Global Trends Tactical ETF Portfolio – A core and tactical model portfolio that is primarily a long-only portfolio. This strategy attempts to consistently overweight the strongest broad sectors and regions of the global economy. In times of extreme overvaluation, we will retreat to cash and treasury holdings.
Half Million Dollar Portfolio – An asset allocation portfolio using ETFs and stocks designed to mimic the risk profile of traditional 80/20 portfolios, i.e. 80% equity and 20% fixed income. This strategy is designed to offer total return of being invested in 100% equities. Our bogey is the S&P 500 for 3-5 year performance, but with 20% less risk.
Model performance should be judged over full market cycles. Any one year, positive or negative, is not an appropriate measuring stick.
Money flows are observable and somewhat predictable for markets. In December, I discussed how money flow was negatively impacting the stock market. Here is that article: 4 Pieces of Missing Money Crushing Markets In short, outflows from liquidating hedge funds, tax-loss selling, a Fed that had ramped up QT to $50 billion a month, virtually no foreign investment (see China’s 90% plus fall off) and the permanent dribble out of […]
I am providing two model portfolios for equities in order to give some guidance to portfolio structure. We know that volatility is about 90% dependent on portfolio asset allocation and construction. As a result, we want to have a process that is easy to understand visually for building our asset allocations.