This blog is a continuation of prior advice where I recommended using different models to manage the “family portfolio.” While this approach is a little more complicated than managing a single portfolio, there is added diversification tied to timing or look-back periods. While I also recommend using different investment quivers, in this post I’ll focus on one model, Dual Momentum, but vary the look-back periods. Only four ETFs are required to populate a Dual Momentum portfolio and we concentrate 100% in a single ETF at any given time.

Other portfolio reviews focus on using different arrays of ETFs or what I call, the investment quiver. We place different ETFs (arrows) in the investment quiver. Many examples are give within this blog.

**Franklin Main Menu**

Model number of of this three pronged Dual Momentum approach varies only in the look-back periods. I call this the fast moving model as the periods are 13- and 49-trading days. Nothing else changes. The investment quiver remains the same as you will see below.

**Franklin Dual Momentum Recommendation**

Using the 13- and 49-trading days look-back combination, the recommendation is to place 100% of the portfolio in U.S. Equities or VTI. If you have a $75,000 portfolio, $25,000 is invested in this model, represented by the Franklin portfolio.

**McClintock Main Menu**

The second model is what I refer to as the medium model. In this example, the look-back periods are 22- and 65-trading days or tad longer than shown for the Franklin portfolio. I think there is at least one Platinum member who uses this combination of look-back periods. Again, nothing else changes.

**McClintock Dual Momentum Recommendation**

The medium look-back periods come up with the same recommendation as the shorter (Franklin) combination. Once more, 100% of the portfolio is invested in VTI. The second third of the $75,000 portfolio ($25,000) is invested in VTI. Thus far, two models recommend investing in VTI or U.S. Equities.

**Pauling Main Menu**

Now we come to the main menu of the Pauling or what are the default settings of the basic Kipling spreadsheet. The 60- and 100-trading days look-back comes from extensive testing. This main menu is the last third of the larger portfolio. Check the red arrows in each of the three portfolios to see the different look-back periods.

**Pauling Dual Momentum Recommendation**

When using the 60- and 100-trading days look-back, the recommendation is to hold the last $25,000 in TLT.

By splitting the portfolio this way, one diversifies the portfolio over time. Every few days, run the “Franklin” model as that is the fastest one to react. If there is a recommended change, make the change and then run the “McClintock” and “Pauling” models to see if they show recommendations. Otherwise, review this combination of three look-back models on the last business day of the month.

If this were the end of the month and our total portfolio were $75,000, we would invest $50,000 in VTI and $25,000 in TLT.

Questions and Comments are always welcome.

Robert Petersen says

Lowell,

I see the changes in the three examples and can also see it on my SS as I change the numbers.

But it’s not clear to me how to “split” a large portfolio. Are you suggesting liquidating a portfolio say with Fidelity in my case, and then creating 2 or more new accounts with the proceeds? That seems to me to make life more complicated.

Bob

Lowell Herr says

Bob,

I set up new portfolios within Schwab accounts. Let’s assume you have a $30,000 account with a discount broker and there is a recommended change. Assume the DM recommendation is to move from TLT to VTI. Instead of investing all the money in VTI in the original portfolio, set aside some of the cash from the sale and open up new accounts. Then invest the available cash in those new accounts and invest 1/3 with VTI in the original portfolio.

Yes, it is slightly more complicated and may not be for all investors. I’m a strong proponent of diversification.

Lowell

dav har says

Lowell, I know many people who run a very large percentage (50%+) of their personal portfolio with these type of dual momentum approaches. What is the fewest to most strategies you’d recommend for someone who wants to keep their life simple (but not so simple that they are taking on too much eggs in one basket risk). I assume you personally wouldn’t put more than 25% into any one model but likely some readers do?

Lowell Herr says

Dav,

Twenty (20%) percent to 25% in a give model is reasonable. If one is just starting out and the portfolio is below $25,000, I recommend using only one model. As one saves and the portfolio grows, branch out into different models.

With a $100,000 to $500,000 portfolio I recommend using four or five models.

Lowell

Lowell Herr says

Here is another Portfolio Visualizer setup you might wish to examine. It sure supports the Dual Momentum strategy.

https://www.portfoliovisualizer.com/test-market-timing-model?s=y&coreSatellite=false&timingModel=4&startYear=2000&endYear=2020&includeYTD=false&initialAmount=10000&periodicAdjustment=0&adjustmentAmount=0&inflationAdjusted=true&adjustmentPercentage=0.0&adjustmentFrequency=4&symbols=VB%2C+VEU%2C+LQD%2C+TLT&singleAbsoluteMomentum=false&volatilityTarget=9.0&downsideVolatility=false&outOfMarketStartMonth=5&outOfMarketEndMonth=10&outOfMarketAssetType=1&outOfMarketAsset=VFIIX&movingAverageSignal=1&movingAverageType=1&multipleTimingPeriods=true&periodWeighting=1&windowSize=12&windowSizeInDays=20&movingAverageType2=1&windowSize2=-1&windowSizeInDays2=35&excludePreviousMonth=false&normalizeReturns=false&volatilityWindowSize=0&volatilityWindowSizeInDays=0&assetsToHold=1&allocationWeights=1&riskControl=false&riskWindowSize=10&riskWindowSizeInDays=0&rebalancePeriod=1&separateSignalAsset=false&tradeExecution=0&comparedAllocation=-1&benchmark=-1&benchmarkSymbol=VTHRX&timingPeriods%5B0%5D=60&timingUnits%5B0%5D=1&timingWeights%5B0%5D=50&timingPeriods%5B1%5D=100&timingUnits%5B1%5D=1&timingWeights%5B1%5D=30&timingUnits%5B2%5D=2&timingWeights%5B2%5D=0&timingUnits%5B3%5D=2&timingWeights%5B3%5D=0&timingUnits%5B4%5D=2&timingWeights%5B4%5D=0&volatilityPeriod=10&volatilityPeriodUnit=1&volatilityPeriodWeight=20&symbol1=VWEHX&allocation1_1=50&symbol2=VFIIX&allocation2_1=50

Lowell