The stock market is fractal, and thankfully geometric balancing is too. My preferred version of the strategy focuses on daily returns. It doesn’t necessary trade daily, but it watches daily returns and applies the concepts discussed so far (and many others to come later) to optimize the long term return. I’ve found similar, albeit a tad worse, results with weekly and monthly focus points.
Calculations are my own. Results are theoretical, do not represent returns that any investor actually attained, and are not an indicator of future results. Returns do not reflect trading fees. Dividends are re-invested.
Because the weekly outlook is a slightly more granular view of the market, the maximum drawdown ends up a little larger (1.5% worse) and the return slightly worse(0.3% less per year) than a daily focused portfolio. But all in all the portfolio produces similar results to the portfolio I introduced in the welcome page.
My Current Trading Strategy
Currently, I’m executing the weekly version of Geometric Balancing.* The trading costs I showed in the Geometric Balanced, Unlevered post, assume at least $300K invested. At that point, transaction cost should scale fairly evenly upward. But below $300K, the trading costs as a percentage of your portfolio account increase rapidly. Most of my investable wealth is tied up in my 401K (more on how I deal with this later) and sadly I don’t have $300K of cash to invest. So I’d be stuck with higher transaction costs.
This is where the weekly portfolio and the fractal nature of geometric balancing help. The transaction costs of the weekly focused strategy are around a third of the more frequent trading strategy. If the investment size implies 0.6% transactions costs in the frequent portfolio, you would expect 0.2% transaction costs in the weekly portfolio. Overall, it makes more sense to use the weekly strategy until you have more money to invest.
Publishing My Portfolio.
From here on, I’m going to post the portfolio’s composition on Fridays, when I re-balance the portfolio. I have tried to automate the posting of the portfolio, but haven’t gotten it down yet and am tired of waiting. I’m not recommending you invest in this portfolio1, just recording Geometrics Balancing’s results and my investing actions.
This way I’m transparent. Anyone can call me out if it doesn’t work.
But I’m not worried. I’ve observed and implemented its results live since last June. I’ve backtested it for 41 years and walked through the results day by day as if I was living it at the time to study the results. I’ve created tweaked versions with the 10 year treasury instead of the 30 year to run backtests into the 1960’s and 70’s and confirm it handles inflation. Geometric Balancing works.
I enjoyed May, watching the market fall 6.8% to its low on Monday while Geometric Balancing remained flat. Since then, the portfolio made new all time highs, up 3% for the week. It’s time to share the joy. My portfolio rebalanced on June 7th, 2019 to:
48% SPY , 36% TLT , 16% GLD
1- If anyone tries to copy me, which is not my recommendation, be very weary of costs. I’m using interactive brokers, which has very low trading fees. Rebalancing the portfolio weekly while paying $7 a trade could end up eliminating any profits.
*As of July 2020, I slightly changed my actual strategy so this is no longer technically my current strategy, but it is still the same strategy posted to the blog.