Normally I don’t review two portfolios in one blog post, but the Franklin and Galileo are both Dual Momentum™ portfolios and both use the same look-back combination. While neither portfolio is scheduled for an update this morning the down market last week “demanded” a fresh look to see if a new recommendation was in the cards. I checked on both the Pauling and McClintock and the longer look-back periods have investors staying with U.S. Equities (VTI). That recommendation could change if equities decline further today.
The Franklin and Galileo are held by two different investors, yet the portfolios follow the same investing model – including the look-back combination. After the market opens I’ll update prices and see if there are changes that differ from the recommendation below.
Franklin Dual Momentum Recommendation
When using the 60- and 100-trading days look-back combination (green arrow) the recommendation is to sell all shares of VTI and move to bonds (BND). I’m not a big fan of bonds at this time as interest rates are rising. However, I’m going to follow the investment model. The other option is to override the DM recommendation and leave the cash in the money market or purchase shares of either SCHP or VGIT. This is where individual management decisions come into play.
Here is an example strategy I frequently use in this type of situation.
- Sell all 56 shares of VTI at market.
- With BND priced at $83.39 and the recommendation to purchase 152 shares, set up multiple limit orders. I would not have done this when the trades were $15 per trade as they were in the late 1990s.
- Set a limit order to purchase 50 shares at $83.35.
- Set the second limit order to purchase 50 shares at $82.00
- Set the third limit order to purchase 52 shares at $80.00
Since this is not a full review of either the Franklin or Galileo, I’ll not report on performance or the risk ratio results. Search either portfolio for this data elsewhere on the blog. A full review for the Franklin is scheduled for February 10th with the Galileo coming up for a full update on February 16th.
Later this week full reviews are coming for Bethe, Millikan, and McClintock portfolios. Use the search engine if interested in any of these portfolios.