“The individual investor should act consistently as an investor and not as a speculator.” – Ben Graham
Dual Momentum (DM) is a popular investing model developed by Gary Antonacci. The Galileo portfolio is one of several examples of the DM styles of investing. Here at ITA Wealth Management numerous investing models are used for purposes of diversification.
ETFs or mutual funds provide the first level of diversification while different investing styles provide the second level of diversification. Dual Momentum, Relative Strength, Passive or Buy & Hold, and Income Oriented are other investing models.
Recommendations for this October review of the Galileo shows no change. Based on current prices when using the Kipling spreadsheet, the Galileo will remain 100% invested in U.S. Equities or VTI.
The red arrow in the right-hand corner indicates the investing model (DM) and the blue arrow on the left points to the default look-back periods and associated weights given to each period.
Below is performance data for the Galileo running from 7/31/2019 through mid-morning of 10/8/2021. With an Internal Rate of Return of 22.6%, the Galileo continues to sprint ahead of the VTHRX benchmark as well as all other tracked benchmarks.
We frequently write about the luck-of-review-day and the Galileo is a classic example. This portfolio was reviewed shortly before the Covid-19 Crash and the timing took us out of equities. Moving back into the stock market was also timely and that is a major reason why this portfolio is performing so well.
When the portfolio goes to “cash” or any low volatile security, the portfolio beta is lowered and when that happens, both the Treynor and Jensen move higher. Therefore, it is natural to see the Jensen and Treynor curves vary more than they do for most of the other ITA portfolios. Despite the dip since August, a Jensen Alpha value of 11 is still very high.
The Galileo now goes into neglect mode for another 33 calendar days.
Platinum members wishing to save money and move to a Lifetime membership should contact me at itawealth@comcast.net for further information.
Thank you for today’s article in Seeking Alpha about the DM and Robo methods. In your examples, the IRR of the Robo method was close to that for the Target mutual fund. If an investor is looking for a low-effort method, and not necessarily interested in extracting the absolute highest return, are there significant disadvantages to just using the mutual fund?
Steven,
No, there is no disadvantage. Using one of the Vanguard Target Mutual Funds is perfectly acceptable. Moments ago I finished reading an article in the Sunday New York Times, written by a fellow who helped a friend set up a simple investment portfolio. The person seeking help said she would follow his advice so long as the advice ended up with a simple and understandable portfolio. The helper ended up suggesting two mutual funds.
Lowell
Thank you.