With the BREXIT decision causing market volatility, it is prudent to take a little time to reset and go over the four basic investing models followed here on the ITA Wealth Management blog. The four basic models are as follows.
- Passive Management or Strategic Asset Allocation Model as exemplified by the Schrodinger, Copernicus, and Pasteur.
- Options Model where the two examples are the Hawking and Rutherford portfolios. The Rutherford also has a Tranche Momentum component. Think of the Rutherford as a dual managed portfolio where one can go the options route or stick with a momentum approach.
- Tranche Momentum Model where we have seven examples. They are:
- Mosaic Mode where we have four examples. These portfolio are a combination of the SAA and Tranche Momentum models.
Of all the models, the Strategic Asset Allocation model is the easiest to follow in that all one needs to do is construct an asset allocation plan and then keep the various classes within the target ranges. Select one of the three passive models as an example to follow. The Schrodinger is by far the oldest example.
On the other end of the management spectrum is the Hawking portfolio, managed by HedgeHunter where he uses options. The Rutherford portfolio is managed as a momentum portfolio, but it also has an options component. Check out the Hawking and Rutherford if you are inclined to use options.
A third model has the greatest number of followers among the 14 portfolios I track and these are the Tranche Momentum portfolios. The following screenshot shows the “default” settings I use for the TM portfolios. The look-back periods vary slightly from what HedgeHunter uses so be aware of the differences. Examples of how portfolios are managed using this model are posted nearly every week. Coming up later this week is a classic example – the Galileo portfolio.
The fourth and last major management model is the Mosaic Model. This management style is a combination of the SSA and Tranche Momentum model. Calling it hedging ones bets. A percentage of the portfolio is set up under the SSA guidelines and the remaining percentage is managed using momentum principles. Tomorrow the Einstein is up for review and it is one of the Mosaic portfolios so readers will see a current update of that Mosaic portfolio.