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You are here: Home / Beginning Investors / Focusing On Portfolio Risk

Focusing On Portfolio Risk

January 20, 2016 By Lowell Herr

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Here at ITA we pay little attention to the underlying fundamentals as to why the market is trending up, down, or sideways.  Perhaps this is a mistake, but then I am not an economist.  Instead, we focus on price movement which under-girds our momentum model.  If you are looking for reasons as to why the market continues to drift downward, check out this article from Advisors Perspectives, one of the bookmarked web sites here at ITA.

Each day the market drops, our basic momentum model looks better and better as it is keeping us out of equities such as VTI, VEA, and VWO.  The latest tranche model recommends SHY, TLT, and BIV for those using the Rutherford 10 or a quiver of ETFs similar in global diversity.  If you are using the “Swensen Six,” “Swensen Eight,” or “Baker’s Dozen,” the recommendations are the same.  Remain on the sidelines when it comes to equity ETFs as we are in a corrective stage.  To see what this looks like with the “Baker’s Dozen,” check out this worksheet of the Tranche Model.

Tranche Model Recommendations:  The first eight (8) offset portfolios or the last eight trading days recommend SHY, TLT, and BIV.  This past week was not friendly to equity oriented ETFs, and that is what the momentum model is all about.  CONTROL RISK!  If you are not using the tranche model, but a basic momentum model, then you are focusing your investments in SHY and TLT.

Note that only SHY, TLT, and BIV are currently priced above their 195-Day Exponential Moving Average.  Similarly, those are the only three ETFs that have positive “Golden Cross” (X/O) signals.

This market will eventually snap back so I recommend paying attention when we have a several consecutive good days.

ITA1279 Jan. 20

 

 

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Filed Under: Beginning Investors, Critical Material, Risk Management Tagged With: Risk Management

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