Stockbroker here, 40 years. One of the problems I find is that when the market is down people won't buy. The press is viscous and displays disastrous scenarios- lose your house, job may not be there. People just can't buy even when it is ideal. For that reason buy and hold is a better bet for most people. Thx Nath
Roughly £120k in my portfolio are in tech/TSLA stocks, can I get an advice on any other stocks that I can acquire to diversify my reserve across multiple markets while creating a comprehensive portfolio allocation that balances my concerns of risk aversion and returns that meet yearly inflation.
You need to hire a financial advisor to help you diversify your portfolio by including Mutual Funds, Etf's, the 11 GICS groups, inflation-indexed bonds, and stocks of companies with reliable cash flows rather than growth stocks, where prices were based on future prospective earnings.
@@stellaadams593 That's correct. At first, I wasn't too pleased with my gains compared to my previous performances, I was doing so poorly, I thought I needed to diversify into better assets, so I got in touch with an investment-advisor. That same year, I pulled a net gain of £550k, which is about 10 times more than I average on...
@@brendazvandasara I'm happy to have stumbled upon this discussion. If you don't mind, could you tell me the name of the financial adviser who helps you with your investments and how I might contact them?
@@gowonjake Having a counselor is essential for portfolio diversification. My advisor is "Claudia Trinidad Rivas" who is easily searchable and has extensive knowledge of the financial markets.
@@brendazvandasara Thanks for this tip. Her website popped up on the first page immediately I searched Claudia’s name, I read through her resume and it seems pretty tight. So, I dropped a message & hopefully she replies soon.
I came across your video as a youtube suggestion and I have to say that I loved how you can inform with supporting data without pushing anyone. Got a subscriber!
I’ve been doing the Agg-3 version of GTAA since 2017. It was underperforming the S&P500 by around 2% annually until last year, but with lower volatility. Last year it had a 0.2% loss while the S&P 500 was down quite a bit, which flipped the script and the CAGR over that 6 year 1 month period is now higher than the S&P500 by roughly 1.5%. This is exactly what I would have expected based on Faber’s white paper
Nice work! I think large and usually temporary drawdowns are the biggest reason investors lose money. However I would think that buying & holding VOO would beat this strategy for the market after tax implications. But I remember agreeing with you when reading your book about stock prices of financially healthy companies plummeting in being able to buy more with reinvested dividends and thus potentially being a good thing.
Faber really is a great market thinker. I tend to feel that if you don't care about drawdown, you're going to do much better just holding and continuing to add money on the way down. As you point out, you're probably going to make around 150% on the money you added (300%/2) during the downturn, while the rest gets back to breakeven. I may feel differently as I get to retirement age though. 2020 was a great year to see this play out in a very short timeframe.
Several of the biggest market experts have been voicing their opinions on exactly how awful they think the next downturn would be, and how far equities may have to go, as recession draws closer and inflation continues well above the Fed's 2% objective. I'm trying to build a portfolio of at least $850k by the time I'm 60, therefore I need suggestions on what investments to make.
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I've been in touch with a financial analyst ever since I started my business. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders.
Corinne really seems to know her stuff. I found her online-page, read through her resume, educational background, qualifications and it was really impressive. She is a fiduciary who will act in my best interest. So, I booked a session with her.
This seems like the worst period. Even the market are now very unpredictable. Started investing recently when the market prices were a bit high,today I am more than 60% down!
Even with the right technique this days some investors will still make more than others. With the guidance of Trev tait mozingo I learnt nothing beats experience in the market..
I'm your new subscriber ,Love your content. Trev has already made a name for himself his reviews are exceptional I was able to grow an account close to a million,withdraw my profit right before the correction and now am buying again ..
Financially retired here and dividend growth investor. Income is based off of dividends alone. Stocks go up, I don't buy....I get my dividends. Stocks go down, I buy....I get my dividends. There's no stock sales and therefore no withdrawal.
Interesting about the table on 3:45, that foreign stocks had a slightly better annual return above SMA, but they're above it slightly less % of time, thus maybe offset by the slightly worse annual return for more % of time under SMA. In recent decades I've usually heard said that US stocks offer best return. Of course, I've yet to read the paper, and don't know what "foreign stocks" or any of the asset classes actual consist of.
Retired speaking: I’m managing my assets based on the “bottom line”. If I start to suffer I explore from where it’s coming. This the gets closer examination and general trend is THE most important criteria. All in all my approach comes close to this study and I managed to stay black Zero in 2022. Looking back I made my fortune by not loosing much during the tech bubble, GFC and 2022. Great video, thank you! More so because I feel confirmed!
A person who is near retirement but has been very conservative with their investments such holding a significant amount of Mutuals, indexes and so on could invest in stocks. It would be best if thy were to take just a proportion such as 10% and trying to invest that over 20 years. If you invested say $100000 at retirement age and invest that over the long term that person is unlikely to face any sort of loss when it comes near to a maturity stage. I know people might think why would I bother with that but they may need the money when they are 85 for something. It is not unusual to find 85 year old retirees.
Yes trend following does work, the difficulty is in whipsaws during non trending times. But it’s still way better than buy and hold which has no sell discipline.
This is perfect for someone who is retired! That way when you draw income from your investments, you are not taking a draw when your portfolio is down.
I use a service that evaluates 9 different asset classes (U.S. Large Cap Equity, U.S. Small Cap Equity, NASDAQ 100 Equity, U.S. Real Estate, U.S. Long Term Treasury Bonds, Emerging Markets Equity, International Developed Markets Equity, Gold, and Commodities) and it evaluates them on momentum over the past 180 days and chooses the top five and does a minimum variance test of the last 20 trading days to give an allocation percentage (so not a static 20/20/20/20/20 portfolio). It's doing fine, it's gotten things wrong in the past year like everything else by going long into treasuries. It's updated monthly and uses low cost ETFs as the trading vehicles.
Are you ready to unlock the secrets of financial independence and wealth creation? Transform your mindset in just 8 days with this free mini-course. You'll learn the powerful habits and perspectives of the most successful investors of all-time (like Warren Buffett) and people who have successfully built wealth (like the $8 million janitor). If you're ready to take control of your financial future, sign up for the free course here: eepurl.com/iw26Uw
When combining this strategy with some basic monthly risk management you can def outperform the S&P and avoid the big drawdowns. Learn just a few of the basic indicators so that you are informed as to optimal buy windows and u will outperform. I luv the simplicity!
First time that I have noticed your last name. My goodness, that must have contributed to your character building! This strategy sounds interesting, but certainly adds work and stress to the general equation.
Hi Nathan, thanks for all the great info, among the best I have seen. Now here is my problem: I live in Switzerland with CHF as my base currency, year on year probably one of the strongest currencies together with gold. It's hard to achieve the profitability you mentioned, inflation-adjusted, measured against a set of real-world stable factors ( CHF, YEN,. Gold etc.) Would be really great to see the real value and returns. Similar to the electric current (true power, active power and reactive power), the USD just lost 15% to the CHF in the past 6 months. I guess rather than hedge the downside, ETFs should hedge the inflation and currency risks. Would be great to hear your opinion on this.
Did you mention the specific etfs that you’re using for the 5-way tests? I am currently doing some trend following using the 11 SPDR sector etfs plus BITO, GLD, DBC, USO, TLT, FXI, and EEM. haha probably too much diversification!
This is fascinating! Thanks again Nate for sharing your analysis with us. What if you did the same analysis from 2012 to date, aka a more recent and shorter term analysis that’s more relevant to today’s times - post GFC and COVID-19. Would the thesis still hold? Or would the surprisingly quick COVID rebound and recent correction yield an opposing result?
have you ever researched HFEA Strat? would love to see you make video about it. I think since interest rates are leveling off, maybe a good time to start it ?
Super video. I am a subscriber and commented before. About this lesson today as SPY broke thru 200SMA, I am questioning my own losing strategy which was to use solid fundamental but higher payer dividend stocks. I am thinking of this video but using perhaps 50 or 100 or 200 sma crosses. Or perhaps keltner channels. I am thinking perhaps only SPY with selling strangles such as 20 delta strikes at various expirations such as quarterly to LEAP dates. One thing is for sure, losing some requires a larger percentage gain to just break even. Not good. Please create your idea for a retirees portflio. I am 75.
I'd like to see an evaluation with the inclusion of commissions and fees associated with the extra account activity. Also, could it be automated, or what does the practical time commitment look like to execute such a strategy
very little. All this can be done in low cost, no commission ETFs. SPY or VTI for US Stocks, PDBC for commodities, IYR for Real Estate, TLT for Bonds, don't know a foreign one off the top of my head.
How about - Buy only when below the MA and the deeper you go the more you invest and hold until price has been back over the MA for at least 5 x as long. Let's think outside the box !
The returns do NOT factor in expenses from what I read. He does mention at the end of the paper that you need to consider practical things like ETF costs, bid/ask spreads, and taxes. So I don't think it does; it would significantly reduce your returns, particularly the tax part, in a taxable account. That's why I do all of my after-tax money in a coffee can strategy.
There was a FT article on a leading professor who said that over half of published market beating strategies cannot be replicated. It said there are over 400 different strategies in total. So that means about 200 failed to replicate. Is there a list of what those published 200 strategies are? Supposedly each has been studied individually but that will take a lot of time to search out each one individually.
What about short term and long term capital gains taxes? If you are liquidating every time we fall below the 200MA, then we'd get taxed each time. I tend to think that a return difference of less than 1% is probably not worth it.
What is the easiest way to implement this strategy? Start off with 100% in VOO if the market is above the 200dma and then move to 100% TLT or BND if it drops below? How often do you monitor the DMA? I’m curious what I would need to do to get started on this.
Maybe put like 5% in a leveraged volatility ETF, max out your possible losses while also taking advantage of possible 90% returns, best of both scenarios while limiting drawdown significantly
Here's the thing: if the system signals a sell but uses the same signal to buy, you potentially lose out on a lot of potential profit. I've talked to other financial advisors, and they need help understanding there's a way to profit from this system. For example, if you sell stock X at $100, it crashes to $70, and buy signal at $85. A year later, the sell signal comes in at $150, goes down to $135, buy signal at $155. How do you think you could play these two scenarios to your benefit? There is a way, and I'm sure multiple ways. The potential returns would crush buy and hold.
Investment should be based on yearly performances and has to take place over decades. A person that starts investing at 25 for retirement at 65 is unlikely to feel any of those stock market drops when they are about to retire.
It would be interesting to include an annual draw-down (of 4%-5%) in the IRA scenario to see the impact of annual withdrawals on the performance of the two models. Since the volatility is higher in the standard 60/40 allocation the performance with an annual withdrawal may be significant.
That's a great thought! I would imagine you're correct; taking money out of the portfolio when down big should exacerbate risk of running out, further increasing the lead for the GTAA strategy.
Yea taking a constant amount from a depleted account will hasten poverty.Good question though.I suppose if you took out 4% of the current amount that would work though.
Edit: I stand corrected. 200 trading days is very near 10mo. Thanks for pointing out where I was wrong. Original comment: 200 day moving average is Not 10 month moving average. 10 mo is approximately 300 days 200 days is more like 6½ m
It depends. If the 200 days is actual trading days, there are only around 22 trading days in a month. 200 days would be about 9 months. If you go by calendar days, 200 is almost 7 months.
Transaction costs could eat up all the excess return. Have you heard of the Harry Brown portfolio? It's another way of reducing volatility, an produces good returns.
From a tax perspective (as selling means paying taxes) how about a modification to dollar cost averaging the sp500 where rather than drawing money you stop buying sp500 and keep buying after the stocks move over the 200 moving average? I assume it wouldn't make a big difference since over time we contribute less and less significant amounts to out investments but would that even move the needle?
I really like your videos.You are a very good teacher . Im in the process of resetting my portfolio in my IRA . I want a set portfolio for the next 15 years..I'll retire after that. This is what I have in mind . VOO:25%; VUG:25%; SCHD:35%;JEPI:7.5%;JEPQ:7.5%. What are your thoughts ?
Thanks a lot, I’m glad you find them helpful. I can’t give you any thoughts or it may be considered investment advice. I’d suggest finding a qualified financial planner or advisor that might be able to help you. There really isn’t any one-size-fits-all… it depends on whether you’re getting a pension, social security, spending, taxes, location, types of accounts, percentage in each type of account, etc., etc.
Just do something that will earn you money while you sleep, no matter how little. A pandemic is the perfect way to open your eyes to really see what life could be like without your usual income stream and everyone had to stay home. Well I never felt it because I invested in a trading company where I earn 4 digits per week. The best thing you can do for yourself is invest more and spend less.
Talking about investment, the forex market is by far the biggest and most popular market in the world, traded globally by large number of individuals and organization
FLORENCE YAGODA is the best broker, I have tried lots of professionals but only exceptional income trading with FLORENCE YAGODA strategy now earning over $15,300 every 10 days.
Under this 200MA strategy, one would have sold their SPY at 437.98 on Jan 21, 2022 and would be sitting pretty on the sidelines to this day with SPY now under the 500MA and likely dipping further.
Ok any hints on how this strategy would help to increase the safe withdrawal rate for a retirement portfolio? If the drawdown is so much reduced this could considerably boost the SWR to a much higher value than the typical 4%. On the other hand, even with a large drawdown a retirees using a diversified portfolio will still sell the assets that are least affected by the drawdown. It would be interesting to run some Montecarlo simulations or back tests this portfolio and the same (but static) all weather portfolio or other diversified, to see the success rate after 20-30 years of withdrawals for different SWR. My gut feeling is that if you have enough diverse assets in the portfolio (including cash) after all the drawdown does not matter much, as long as you have enough assets (including cash and commodities) you can use in bad years like 2022.
When exactly do you buy or sell? For example, SPY initially fell through its 200ma on Jan 20, 2021, but then proceeded to oscillate above and below 8 times over the next year. Does one dollar-cost average or buy/sell with everything each time it rises or falls below the 200ma?
Thank you for this! As a person that has tried many strategies, this one, on the surface, sounds simple, but in practice it would be challenging. Stocks (or indexes) will flirt with the 200 day MA and may cross it for a short time. If you sell every time the price crosses the 200 day (does this include intra-day?), then you can be selling then buying right away. If you wait for the price to stay below the 200 day, then how long do you wait? A month? A week? Anyway, we would not be following the strategy. The strategy can only be followed in hindsight, which I don't know about you, but my broker doesn't allow me to make past date trades. So, I don't think this strategy (in its current form) would be useful. Other rules would have to be in place in order to be followed by common retirees.
You are absolutely correct that other rules have to be there to implement this strategy. I personally use monthly 13 ma to enter and exit based on last day of the month crossing. It worked well for me over the past 14 years.
I guess you can use the 10-month sma trading at monthly basis. If checking 200 sma daily sure you will buy and sell a lot... I have seem a similar guy research, Steve Burns, he uses 200 sma but he only look at the last month's day and decides if buy or sell S&P
I'm retired and looking into this strategy. I would use the following ETFs to build this portfolio; VOO,VXUS,FBND,VNQ, and DBC. Both commodities (DBC) and bonds (FBND) are below their 200 day moving average. Where do you park the cash in this strategy.? Would you put 40% in a money market...at lease you can get 4% today?
i would just worry about the observer effect. if this is a common enough strategy for me to randomly find out about it maybe it's time for it to change.
How would the wash rule impact this "timing" method of selling and buying? You cant sell and then in one week buy back the same stock(s) because they moved above the 200 day moving average.
Maybe somewhere between doing nothing and selling it all during a bear market!? Get rid of the "junk" in the portfolio and wait to get back in again when the 200-day average is back up. That entry point can be tricky, though....
I'm curious to know how this would work if you bought when below 200 MA, held while it rose, and sold when it crossed over again. I'm a fan of simplicity too but a firm believer in a combination of strategies being best. But, I watch markets daily and have that interest
What do you think the effect on Faber's portfolio would be if you sold covered calls against your portfolio when the market was below the 200 name moving average?
It would just be a lot easier to identify good quality companies, invest over decades and not do lots of knee jerk market reactions. It does not matter if your portfolio starts at $100000 and then drops to $70000 if you are a long term investor.
What age do you think someone should transition assuming they retire at 65yrs of age? Should they transition at 50, 55, 60 or just wait to 65? Btw, ypu create very good content. Very creative.
Thanks, Jonathan! I can't tell you anything without knowing your specific situation; even if I knew your situation, I couldn't give you any thoughts because the SEC would consider it financial advice. (Which I'm not in the business of giving! ;)
👍So the GTAA portfolio sells when an asset class falls below its 200 DMA and buy when it rises above its 200 DMA? So it requires constant monitoring and trading?
When it falls below the 200dma what is the best way to go into treasury bills.? Is there a etf that will do that trick as buying a t bill is some extra paper work .
Nathan I really appreciate your fact based approach to portfolio management. But I'm a bit confused. The graphics in the vid repeatedly show a 10 month ( appr. 300 days) but you verbally and repeatedly refer to 200 days. Which one is accurate? Thanks.
So to recap this in layman's terms, Only purchase when above 200 day moving average, Set stoploss at or just south of 200 day moving average. Sell when it works best for you. Or buy, hold and pray ....
0:50 like I thought... it doesn't perform as good as stocks alone, but can safeguard against stocks dripping. Now what can become $2m will now be $1.2m, so you have to ask, is that safeguard worth $800k to you?
His models are on portfolio DB and don't seem to have done that well in the last 10 years. 60/40 NAV is even surpassing it. Maybe they don't really do 2012-2021? There you go, I'm confused again... lol. Keep on throwing stuff out there, one day I'll understand the markets better 😀
If I sell when the price goes below the 200DMA I won't be collecting dividends. The divi reinvestment is more powerful when the price tanks as the yield increases. I'm a buy and hold for life investor - as sick as it sounds I actually like it when my stocks tank. I buy my favorite companies monthly regardless of price, and I get more bang for my buck when prices are collapsing.
This is definitely the right attitude to have and, ultimately, probably the best long-term strategy. I'll be 100% stocks and never selling them; I might try a small portion to this just to see how it works.
@@NathanWinklepleckCFA You are the man!!!! Like the Brazilians would say: Voce eh o cara!!! The Germans would say Du bist der Hammer!! Thank you for the great content!!
Good bunch of numbers and theoretical talks, how about the practical implementation? What timeframe? How do you deal with choppy markets so you don't get whipped out... Etc. It will be way different to look at the1 year chart vs 100 year chart...
But if you only keep buying when the market is below the 10 month average and simply don’t sold nor buy when the market it’s up the 10month average ? It means you will always buy cheap e never expensive. Does it make any sense?
Has anyone raised the idea of making a substantial commitment to a whole life insurance policy issued by a leasing mutual insurance company? While you must health qualify to be approved for a policy, capital committed after taxes grows tax deferred and may be withdrawn by borrowing against the cash value of the policy when you want capital, tax-free. Policy is guaranteed to grow and add looking as you reinvest annual dividends, you can compound the growth at mid signature digits to high single digits. TAX DEFERRED growth, TAX-FREE withdrawals with little to no volatility. The risk adjusted returns are more than impressive. Of course, the policy pays a tax-free death benefit. Buy a policy when you are young and healthy! No drawdowns...
How do you deal with "whipsaw" transactions with this? The market dips below 200 day, and you sell. THe next day it recovers, and you buy back. Back and forth. Or, the market goes down, and you sell. THen the market jumps back up quickly, and you then were out of the market. Seems hard to manage whipsaw times.
So then, is the strategy that you are buying the stock only when it is above the 200-day moving average and selling the stock when it falls below it? By the way, really enjoy your educational content very much! Congratulations on all of your efforts! 😀
Great question and to add to that - how long does a position have to be above/below the 200d/avg before you push the trigger to buy/sell? Daily, weekly, monthly chart?
Stockbroker here, 40 years. One of the problems I find is that when the market is down people won't buy. The press is viscous and displays disastrous scenarios- lose your house, job may not be there. People just can't buy even when it is ideal. For that reason buy and hold is a better bet for most people. Thx Nath
Same here. Makes no sense things go on sale nobody wants them, why I don't like index funds your doing the opposite of what you should be doing
I agree David. Hold and take the dividends. When stocks go down, buy more. Taxes are a real issue too.
Roughly £120k in my portfolio are in tech/TSLA stocks, can I get an advice on any other stocks that I can acquire to diversify my reserve across multiple markets while creating a comprehensive portfolio allocation that balances my concerns of risk aversion and returns that meet yearly inflation.
You need to hire a financial advisor to help you diversify your portfolio by including Mutual Funds, Etf's, the 11 GICS groups, inflation-indexed bonds, and stocks of companies with reliable cash flows rather than growth stocks, where prices were based on future prospective earnings.
@@stellaadams593 That's correct. At first, I wasn't too pleased with my gains compared to my previous performances, I was doing so poorly, I thought I needed to diversify into better assets, so I got in touch with an investment-advisor. That same year, I pulled a net gain of £550k, which is about 10 times more than I average on...
@@brendazvandasara I'm happy to have stumbled upon this discussion. If you don't mind, could you tell me the name of the financial adviser who helps you with your investments and how I might contact them?
@@gowonjake Having a counselor is essential for portfolio diversification. My advisor is "Claudia Trinidad Rivas" who is easily searchable and has extensive knowledge of the financial markets.
@@brendazvandasara Thanks for this tip. Her website popped up on the first page immediately I searched Claudia’s name, I read through her resume and it seems pretty tight. So, I dropped a message & hopefully she replies soon.
Thank you. You presented the strategy, pitfalls, taxes and age related considerations very well
I came across your video as a youtube suggestion and I have to say that I loved how you can inform with supporting data without pushing anyone. Got a subscriber!
I’ve been doing the Agg-3 version of GTAA since 2017. It was underperforming the S&P500 by around 2% annually until last year, but with lower volatility. Last year it had a 0.2% loss while the S&P 500 was down quite a bit, which flipped the script and the CAGR over that 6 year 1 month period is now higher than the S&P500 by roughly 1.5%. This is exactly what I would have expected based on Faber’s white paper
Nice work! I think large and usually temporary drawdowns are the biggest reason investors lose money. However I would think that buying & holding VOO would beat this strategy for the market after tax implications. But I remember agreeing with you when reading your book about stock prices of financially healthy companies plummeting in being able to buy more with reinvested dividends and thus potentially being a good thing.
Fascinating ... I must follow you on this !
Please do! Hope you’re well, Kimm
Faber really is a great market thinker. I tend to feel that if you don't care about drawdown, you're going to do much better just holding and continuing to add money on the way down. As you point out, you're probably going to make around 150% on the money you added (300%/2) during the downturn, while the rest gets back to breakeven. I may feel differently as I get to retirement age though. 2020 was a great year to see this play out in a very short timeframe.
Several of the biggest market experts have been voicing their opinions on exactly how awful they think the next downturn would be, and how far equities may have to go, as recession draws closer and inflation continues well above the Fed's 2% objective. I'm trying to build a portfolio of at least $850k by the time I'm 60, therefore I need suggestions on what investments to make.
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I've been in touch with a financial analyst ever since I started my business. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders.
please can you leave behind the name of the F/A guiding you?
I happen to know Corinne Cecilia Heaney. She has been my fin coach since 2018, no major losses has been recorded. Totally recommend her too.
Corinne really seems to know her stuff. I found her online-page, read through her resume, educational background, qualifications and it was really impressive. She is a fiduciary who will act in my best interest. So, I booked a session with her.
This seems like the worst period.
Even the market are now very unpredictable. Started investing recently when the market prices were a bit high,today I am more than 60% down!
Even with the right technique this days some investors will still make more than others.
With the guidance of Trev tait mozingo I learnt nothing beats experience in the market..
Most of the pros on YT and IG copy trade him that's how they make enormous profits from seemingly unknown market
Lol. I'm one of them. Not a pro though,started last year in all honesty wish I had known about him earlier
I'm your new subscriber ,Love your content. Trev has already made a name for himself his reviews are exceptional I was able to grow an account close to a million,withdraw my profit right before the correction and now am buying again ..
It's the market, if you can't be on it on the bad days,you shouldn't be in it at all
Financially retired here and dividend growth investor. Income is based off of dividends alone. Stocks go up, I don't buy....I get my dividends. Stocks go down, I buy....I get my dividends. There's no stock sales and therefore no withdrawal.
Nice presentation. Thanks
Great video! Thanks for all your great content!
Interesting about the table on 3:45, that foreign stocks had a slightly better annual return above SMA, but they're above it slightly less % of time, thus maybe offset by the slightly worse annual return for more % of time under SMA. In recent decades I've usually heard said that US stocks offer best return. Of course, I've yet to read the paper, and don't know what "foreign stocks" or any of the asset classes actual consist of.
Great information. Many thanks for it. Question: Is there an etf that does this strategy ? 😊
Here because of Camera Conspiracies. This is a great video. Glad to discover you.
Welcome aboard!
Retired speaking: I’m managing my assets based on the “bottom line”. If I start to suffer I explore from where it’s coming. This the gets closer examination and general trend is THE most important criteria. All in all my approach comes close to this study and I managed to stay black Zero in 2022. Looking back I made my fortune by not loosing much during the tech bubble, GFC and 2022. Great video, thank you! More so because I feel confirmed!
A person who is near retirement but has been very conservative with their investments such holding a significant amount of Mutuals, indexes and so on could invest in stocks. It would be best if thy were to take just a proportion such as 10% and trying to invest that over 20 years. If you invested say $100000 at retirement age and invest that over the long term that person is unlikely to face any sort of loss when it comes near to a maturity stage.
I know people might think why would I bother with that but they may need the money when they are 85 for something. It is not unusual to find 85 year old retirees.
Yes trend following does work, the difficulty is in whipsaws during non trending times. But it’s still way better than buy and hold which has no sell discipline.
Very insightful, thank you!
Glad it was helpful!
This is perfect for someone who is retired! That way when you draw income from your investments, you are not taking a draw when your portfolio is down.
I use a service that evaluates 9 different asset classes (U.S. Large Cap Equity, U.S. Small Cap Equity, NASDAQ 100 Equity, U.S. Real Estate, U.S. Long Term Treasury Bonds, Emerging Markets Equity, International Developed Markets Equity, Gold, and Commodities) and it evaluates them on momentum over the past 180 days and chooses the top five and does a minimum variance test of the last 20 trading days to give an allocation percentage (so not a static 20/20/20/20/20 portfolio). It's doing fine, it's gotten things wrong in the past year like everything else by going long into treasuries. It's updated monthly and uses low cost ETFs as the trading vehicles.
What service do you use? I like your strategy!
Are you ready to unlock the secrets of financial independence and wealth creation? Transform your mindset in just 8 days with this free mini-course. You'll learn the powerful habits and perspectives of the most successful investors of all-time (like Warren Buffett) and people who have successfully built wealth (like the $8 million janitor). If you're ready to take control of your financial future, sign up for the free course here: eepurl.com/iw26Uw
Good video, one question, do you buy and sell each asset on its individual 200dma or buy and sell all assets based on the the us stocks 200dma?
When combining this strategy with some basic monthly risk management you can def outperform the S&P and avoid the big drawdowns. Learn just a few of the basic indicators so that you are informed as to optimal buy windows and u will outperform. I luv the simplicity!
First time that I have noticed your last name. My goodness, that must have contributed to your character building! This strategy sounds interesting, but certainly adds work and stress to the general equation.
Buy-and-hold definitely easier. And, yes, last name made me a great speller LOL
Watched and liked, thanks!
Thanks for the visit
It's difficult if the market index is floating very closely with the 200 days average, any additional parameter can deal with that?
Brilliant!
Hi Nathan, thanks for all the great info, among the best I have seen. Now here is my problem: I live in Switzerland with CHF as my base currency, year on year probably one of the strongest currencies together with gold. It's hard to achieve the profitability you mentioned, inflation-adjusted, measured against a set of real-world stable factors ( CHF, YEN,. Gold etc.) Would be really great to see the real value and returns. Similar to the electric current (true power, active power and reactive power), the USD just lost 15% to the CHF in the past 6 months. I guess rather than hedge the downside, ETFs should hedge the inflation and currency risks. Would be great to hear your opinion on this.
Did you mention the specific etfs that you’re using for the 5-way tests? I am currently doing some trend following using the 11 SPDR sector etfs plus BITO, GLD, DBC, USO, TLT, FXI, and EEM. haha probably too much diversification!
After months of watching investment videos I just found something interesting in yours
Glad you like it!
Would a momentum based strategy accomplish this? There are many ETFs that use momentum factors in their selections.
Great video
Thanks Ryan!
Does any website list the updated performance for this strategy through 2022?
This is fascinating! Thanks again Nate for sharing your analysis with us. What if you did the same analysis from 2012 to date, aka a more recent and shorter term analysis that’s more relevant to today’s times - post GFC and COVID-19. Would the thesis still hold? Or would the surprisingly quick COVID rebound and recent correction yield an opposing result?
Exactly. I was like, wait what? Only to 2012? It's 2023 🤣
have you ever researched HFEA Strat? would love to see you make video about it. I think since interest rates are leveling off, maybe a good time to start it ?
This looks unbelievable with certain options strategies...
Super video. I am a subscriber and commented before. About this lesson today as SPY broke thru 200SMA, I am questioning my own losing strategy which was to use solid fundamental but higher payer dividend stocks. I am thinking of this video but using perhaps 50 or 100 or 200 sma crosses. Or perhaps keltner channels. I am thinking perhaps only SPY with selling strangles such as 20 delta strikes at various expirations such as quarterly to LEAP dates. One thing is for sure, losing some requires a larger percentage gain to just break even. Not good. Please create your idea for a retirees portflio. I am 75.
I'd like to see an evaluation with the inclusion of commissions and fees associated with the extra account activity. Also, could it be automated, or what does the practical time commitment look like to execute such a strategy
very little. All this can be done in low cost, no commission ETFs. SPY or VTI for US Stocks, PDBC for commodities, IYR for Real Estate, TLT for Bonds, don't know a foreign one off the top of my head.
How about - Buy only when below the MA and the deeper you go the more you invest and hold until price has been back over the MA for at least 5 x as long. Let's think outside the box !
Always good to hear different ways of investing and its results. How is the Ray Dalio "Rainy Day Fund" doing during the current market conditions?
Nathal have you done any more with Fabers GTAA strategey? I don't see any follw up videos. Thanks.
Did the returns factor expenses for this strategy? An interesting video would be what ETFs you would use to replicate this stratgey.
The returns do NOT factor in expenses from what I read. He does mention at the end of the paper that you need to consider practical things like ETF costs, bid/ask spreads, and taxes. So I don't think it does; it would significantly reduce your returns, particularly the tax part, in a taxable account. That's why I do all of my after-tax money in a coffee can strategy.
I’m sorry if I missed you saying this, but if one sells at the 200 MA, when does one get back in?
Is this based on the s&p 10 month average or the averages of each individual stock. I'm surprised there isn't an etf that can do this for you
There was a FT article on a leading professor who said that over half of published market beating strategies cannot be replicated. It said there are over 400 different strategies in total. So that means about 200 failed to replicate. Is there a list of what those published 200 strategies are? Supposedly each has been studied individually but that will take a lot of time to search out each one individually.
Interesting! If you find that, would you share the link?
What's the game plan to buy stocks maybe 52 week lows?.
What about short term and long term capital gains taxes? If you are liquidating every time we fall below the 200MA, then we'd get taxed each time. I tend to think that a return difference of less than 1% is probably not worth it.
What is the easiest way to implement this strategy? Start off with 100% in VOO if the market is above the 200dma and then move to 100% TLT or BND if it drops below? How often do you monitor the DMA? I’m curious what I would need to do to get started on this.
Maybe put like 5% in a leveraged volatility ETF, max out your possible losses while also taking advantage of possible 90% returns, best of both scenarios while limiting drawdown significantly
Here's the thing: if the system signals a sell but uses the same signal to buy, you potentially lose out on a lot of potential profit. I've talked to other financial advisors, and they need help understanding there's a way to profit from this system. For example, if you sell stock X at $100, it crashes to $70, and buy signal at $85. A year later, the sell signal comes in at $150, goes down to $135, buy signal at $155. How do you think you could play these two scenarios to your benefit? There is a way, and I'm sure multiple ways. The potential returns would crush buy and hold.
Sorry Just one question. Did you consider Capital gain taxes and transaction costs in the backtest. It counts a lot
Investment should be based on yearly performances and has to take place over decades. A person that starts investing at 25 for retirement at 65 is unlikely to feel any of those stock market drops when they are about to retire.
It would be interesting to include an annual draw-down (of 4%-5%) in the IRA scenario to see the impact of annual withdrawals on the performance of the two models. Since the volatility is higher in the standard 60/40 allocation the performance with an annual withdrawal may be significant.
That's a great thought! I would imagine you're correct; taking money out of the portfolio when down big should exacerbate risk of running out, further increasing the lead for the GTAA strategy.
Yea taking a constant amount from a depleted account will hasten poverty.Good question though.I suppose if you took out 4% of the current amount that would work though.
Edit: I stand corrected. 200 trading days is very near 10mo. Thanks for pointing out where I was wrong.
Original comment:
200 day moving average is Not 10 month moving average.
10 mo is approximately 300 days
200 days is more like 6½ m
It depends. If the 200 days is actual trading days, there are only around 22 trading days in a month. 200 days would be about 9 months. If you go by calendar days, 200 is almost 7 months.
What about capital gains taxes when getting out with this strategy? Wouldn’t that hurt the returns overall?
Transaction costs could eat up all the excess return. Have you heard of the Harry Brown portfolio? It's another way of reducing volatility, an produces good returns.
I think with all your videos there is a current theme. Stick with your plan and you can’t lose for the most part.
Nice! Yes, that's a good summary!
The "don't diddle around too much strategy"
From a tax perspective (as selling means paying taxes) how about a modification to dollar cost averaging the sp500 where rather than drawing money you stop buying sp500 and keep buying after the stocks move over the 200 moving average? I assume it wouldn't make a big difference since over time we contribute less and less significant amounts to out investments but would that even move the needle?
Where can I get a copy of this white paper?
I really like your videos.You are a very good teacher . Im in the process of resetting my portfolio in my IRA . I want a set portfolio for the next 15 years..I'll retire after that. This is what I have in mind . VOO:25%; VUG:25%; SCHD:35%;JEPI:7.5%;JEPQ:7.5%. What are your thoughts ?
Thanks a lot, I’m glad you find them helpful. I can’t give you any thoughts or it may be considered investment advice. I’d suggest finding a qualified financial planner or advisor that might be able to help you. There really isn’t any one-size-fits-all… it depends on whether you’re getting a pension, social security, spending, taxes, location, types of accounts, percentage in each type of account, etc., etc.
It would be really interesting to see if this strategy combined with the dual momentum strategy can give even bigger returns with lower drawdown
That would be interesting!
Just do something that will earn you money while you sleep, no matter how little. A pandemic is the perfect way to open your eyes to really see what life could be like without your usual income stream and everyone had to stay home. Well I never felt it because I invested in a trading company where I earn 4 digits per week. The best thing you can do for yourself is invest more and spend less.
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Under this 200MA strategy, one would have sold their SPY at 437.98 on Jan 21, 2022 and would be sitting pretty on the sidelines to this day with SPY now under the 500MA and likely dipping further.
I don't see the date of your comment, so not sure if this strategy was a good thing or not in your example. can you please elaborate? Thanks!
Ok any hints on how this strategy would help to increase the safe withdrawal rate for a retirement portfolio? If the drawdown is so much reduced this could considerably boost the SWR to a much higher value than the typical 4%. On the other hand, even with a large drawdown a retirees using a diversified portfolio will still sell the assets that are least affected by the drawdown. It would be interesting to run some Montecarlo simulations or back tests this portfolio and the same (but static) all weather portfolio or other diversified, to see the success rate after 20-30 years of withdrawals for different SWR. My gut feeling is that if you have enough diverse assets in the portfolio (including cash) after all the drawdown does not matter much, as long as you have enough assets (including cash and commodities) you can use in bad years like 2022.
When exactly do you buy or sell? For example, SPY initially fell through its 200ma on Jan 20, 2021, but then proceeded to oscillate above and below 8 times over the next year. Does one dollar-cost average or buy/sell with everything each time it rises or falls below the 200ma?
He used 1% under the 200 day moving average
How are you not a character in a harry potter movie with that last name and those glasses? No shade, 100% compliment dude lol.
Thank you for this!
As a person that has tried many strategies, this one, on the surface, sounds simple, but in practice it would be challenging. Stocks (or indexes) will flirt with the 200 day MA and may cross it for a short time. If you sell every time the price crosses the 200 day (does this include intra-day?), then you can be selling then buying right away. If you wait for the price to stay below the 200 day, then how long do you wait? A month? A week? Anyway, we would not be following the strategy. The strategy can only be followed in hindsight, which I don't know about you, but my broker doesn't allow me to make past date trades.
So, I don't think this strategy (in its current form) would be useful. Other rules would have to be in place in order to be followed by common retirees.
You are absolutely correct that other rules have to be there to implement this strategy. I personally use monthly 13 ma to enter and exit based on last day of the month crossing. It worked well for me over the past 14 years.
I guess you can use the 10-month sma trading at monthly basis. If checking 200 sma daily sure you will buy and sell a lot... I have seem a similar guy research, Steve Burns, he uses 200 sma but he only look at the last month's day and decides if buy or sell S&P
I'm retired and looking into this strategy. I would use the following ETFs to build this portfolio; VOO,VXUS,FBND,VNQ, and DBC. Both commodities (DBC) and bonds (FBND) are below their 200 day moving average. Where do you park the cash in this strategy.? Would you put 40% in a money market...at lease you can get 4% today?
Faber parked it in T-bills, which would be roughly equivalent to a money market; either would work fine.
i would just worry about the observer effect. if this is a common enough strategy for me to randomly find out about it maybe it's time for it to change.
What's the observer effect?
How would the wash rule impact this "timing" method of selling and buying? You cant sell and then in one week buy back the same stock(s) because they moved above the 200 day moving average.
The strategy works monthly so that’s not an issue
Maybe somewhere between doing nothing and selling it all during a bear market!? Get rid of the "junk" in the portfolio and wait to get back in again when the 200-day average is back up. That entry point can be tricky, though....
I'm curious to know how this would work if you bought when below 200 MA, held while it rose, and sold when it crossed over again. I'm a fan of simplicity too but a firm believer in a combination of strategies being best. But, I watch markets daily and have that interest
I think your idea would perform much better.
I’m pretty sure he shows in the video that most of the gains happen when above the 200 ma, the gains below are much less
Success in investing is related more to time than strategy.
Great wisdom
It's waiting for me to implement it for the second loss
😂
I would like to see the results of a 50 ma
What do you think the effect on Faber's portfolio would be if you sold covered calls against your portfolio when the market was below the 200 name moving average?
It would just be a lot easier to identify good quality companies, invest over decades and not do lots of knee jerk market reactions.
It does not matter if your portfolio starts at $100000 and then drops to $70000 if you are a long term investor.
What age do you think someone should transition assuming they retire at 65yrs of age? Should they transition at 50, 55, 60 or just wait to 65?
Btw, ypu create very good content. Very creative.
Thanks, Jonathan! I can't tell you anything without knowing your specific situation; even if I knew your situation, I couldn't give you any thoughts because the SEC would consider it financial advice. (Which I'm not in the business of giving! ;)
👍So the GTAA portfolio sells when an asset class falls below its 200 DMA and buy when it rises above its 200 DMA? So it requires constant monitoring and trading?
Monthly 10 month moving average and only checks at end of each month
When it falls below the 200dma what is the best way to go into treasury bills.? Is there a etf that will do that trick as buying a t bill is some extra paper work .
Yeah there’s a BIL by Ishares that’ll do the trick probably
Would it be an idea to use levrage when we go Long in the portfolio? Maybe an bull 1 or 2x certifikat?
Or is this stupid?
No leverage imo
Nathan I really appreciate your fact based approach to portfolio management. But I'm a bit confused. The graphics in the vid repeatedly show a 10 month ( appr. 300 days) but you verbally and repeatedly refer to 200 days. Which one is accurate? Thanks.
Both are the same… 200 trading days is 10 months. But 10 months I’d the official way to calculate
So to recap this in layman's terms,
Only purchase when above 200 day moving average,
Set stoploss at or just south of 200 day moving average.
Sell when it works best for you.
Or buy, hold and pray ....
In GTAA you will have to pay tax each year while buy and hold only pay capital gain above 80k?
Sorry, I jumped ahead of your video 😁
Considering that the qqq returned more than sp500 should not people just buy it instead of trading ?
0:50 like I thought... it doesn't perform as good as stocks alone, but can safeguard against stocks dripping. Now what can become $2m will now be $1.2m, so you have to ask, is that safeguard worth $800k to you?
His models are on portfolio DB and don't seem to have done that well in the last 10 years. 60/40 NAV is even surpassing it. Maybe they don't really do 2012-2021? There you go, I'm confused again... lol. Keep on throwing stuff out there, one day I'll understand the markets better 😀
If I sell when the price goes below the 200DMA I won't be collecting dividends. The divi reinvestment is more powerful when the price tanks as the yield increases. I'm a buy and hold for life investor - as sick as it sounds I actually like it when my stocks tank. I buy my favorite companies monthly regardless of price, and I get more bang for my buck when prices are collapsing.
This is definitely the right attitude to have and, ultimately, probably the best long-term strategy. I'll be 100% stocks and never selling them; I might try a small portion to this just to see how it works.
I agree totally with this mindset although I try to use my dividends on what I think is the Best Buy that day. My favorite companies on sale if I can.
An ETF based on this strategy would be interesting
There may be something out there?
legend!!!!
LOL yes if you're talking about Faber, maybe...
@@NathanWinklepleckCFA You are the man!!!! Like the Brazilians would say: Voce eh o cara!!! The Germans would say Du bist der Hammer!! Thank you for the great content!!
Good bunch of numbers and theoretical talks, how about the practical implementation? What timeframe? How do you deal with choppy markets so you don't get whipped out... Etc. It will be way different to look at the1 year chart vs 100 year chart...
This is literally a 100% practical implementation. Faber spells it all out. I don’t understand
@@NathanWinklepleckCFA Oh, I see, so you just rechewed a bunch of numbers and say go read Faber...
May sound crazy, but if someone is trading, could the same be applied on an hourly chart basis?
No, that's a horrendous idea.
How would it be possible to be an investor in hourly cycles?
What would you be investing in bacteria growth?
But if you only keep buying when the market is below the 10 month average and simply don’t sold nor buy when the market it’s up the 10month average ? It means you will always buy cheap e never expensive. Does it make any sense?
On the surface it does but that's not what this strategy suggests!
Nathan what stocks or etfs are you using in your coffee can portfolio
It depends on the quarter. I’ve been publishing them to a smaller group on UA-cam and Patreon
@@NathanWinklepleckCFA send links I'll join . Thanks!
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Let me know if you do a gtaa account
why not use 200 day stop loss?
How do you deal with "whipsaw" transactions with this? The market dips below 200 day, and you sell. THe next day it recovers, and you buy back. Back and forth. Or, the market goes down, and you sell. THen the market jumps back up quickly, and you then were out of the market. Seems hard to manage whipsaw times.
Trade monthly only
@@NathanWinklepleckCFA You are brilliant! That makes so so much sense.
Stocks down 75% 100k to 25k doubles 100% is 50k doubles again 100% is even. 200% not 300.
investing is easy, buy quality companies under 400ma daily, more aggressive under/around 400ma weekly
So then, is the strategy that you are buying the stock only when it is above the 200-day moving average and selling the stock when it falls below it? By the way, really enjoy your educational content very much! Congratulations on all of your efforts! 😀
That is correct. And I don't know if it works as well for individual stocks; haven't looked into that. Thanks for the nice comment!
@@NathanWinklepleckCFA Thank very much you for your reply. So then, would the stretegy be if you own an S&P500 index ETF?
Great question and to add to that - how long does a position have to be above/below the 200d/avg before you push the trigger to buy/sell? Daily, weekly, monthly chart?