I’m frequently asked, why did you choose to use a 33-day review period? Why not update the portfolio every month as suggested by Mebane Faber? When I first selected the time frame of 33 days I had no supporting research to back up this decision. Here are the reasons I originally made this decision.
- Reviewing portfolios every 33 days rotates the examination throughout the month. Since I follow multiple portfolio, this scattered the workload, but the motivation was to avoid the end-of-month window dressing that goes on within the mutual fund industry.
- Extending the review beyond 30 days avoids the wash sale rule.
- The 33-day review period eliminates the possibility of a short-term trading fee if one is using commission free ETFs with discount brokers such as TDAmeritrade. TDA is the broker I happen to use.
In the latest back-tests run by Ernie Stokely and Herb Haynes, the 33-day review period contributes to a “robust” return/risk ratio. In other words, we do not lose anything by reviewing portfolios this frequently. David, Ernie, and Herb can add their comments to the logic behind using the 33-day review period.