WEEK 15 2023APR08

April 8, 2023
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Brokers Statement

Portfolio Allocations

Portfolio PDF

FREQUENTLY ASKED QUESTIONS

Who is this website aimed at and what is its purpose?

Our aim is to help non-professional investors manage their money better, by showing them in not more than 20 minutes per week, what development occurred during the past week and how it makes sense to respond to them, by increasing or decreasing the risk of their portfolios. At the very least our aim is to furnish our followers with insights and arguments they can use when discussing appropriate portfolio allocations with their broker or wealth manager.

Which positions will you carry in your account?

Only liquid ETFs and options on those ETFs, together with cash bonds or bills. Mostly index ETFs (SPY,
QQQ, etc.) and their subcomponents like sector ETFs such as XLY, XLF, XLK, etc. A list can be found here.

Will you leverage or go short?

No. We will employ no leverage and we will only hedge what we own, never go short. This is a long only portfolio and we will not really look for alpha gains but rather to minimize risk and volatility of returns and only outperform by avoiding periods of weak or negative asset performance.

How will you attempt to add value to an average 60-40 equity/bond split or long only portfolio that might be constructed by any wealth advisor/broker for their clients?

By strategically overweighting and underweighting core portfolio assets and cash, actively using timing of entry and exits and option overlay strategies. In the environment of the foreseeable future, switching between playing defense (having very limited risk in a portfolio) and offence (being aggressively invested) will be of paramount importance to generate positive returns in excess of what benchmarks might provide, which could well be a negative return in real terms, after inflation. Within asset classes we will also position across countries, equity and bond sectors, which our macro narrative tells us should under/outperform in the current environment.

How will you communicate your decisions on portfolio changes with clients?

We will do a regular video every week, which will be published on Saturdays. This video will be no longer than 20 minutes and will cover what has happened the previous week, what the investment implications might be and what changes we need to make, if any, to our allocations as a result and why. These changes will be input as orders into our live account, so no changes will occur without clients being able to see them. Should there be an “emergency” because something very significant has occurred, we will do an emergency video and notify clients immediately via email.

What will you provide on a weekly basis?

A video with a discussion of current market developments and explanations, together with a chart pack reflecting these, with a list of orders we are inputting into the live account for the next week, if any, and a file with the percentage allocations in the account. Any new orders will be in the video with full explanations as to why and exact price levels. No changes will occur in the live account without clients having the opportunity to review them. Moreover we will provide research from many investment banks that has caught our attention the previous week, for you to do your own research, should you be so inclined.

What will be the size of your live account be?

We are starting with $250,000 approx. That is large enough to accommodate all the strategies that we wish to employ and is easily scalable for clients. All one has to do is divide your account size by $250,000 to arrive at the correct multiple of position size.

What are your performance goals?

Quite simply to outperform a 60:40 portfolio mix of equities and bonds over the very long term. In addition, within asset classes, our goal is to outperform each benchmark. For example, for our equity allocation our goal is to beat the SPX.

But our main aim is to produce good volatility adjusted returns. We want to outperform while keeping drawdowns under the volatility of the SPX. Given that we will not employ leverage, we can only achieve this aim via market timing and avoiding periods of negative returns for the index.