It’s sometimes uncomfortable when the portfolio goes heavily into one asset. It feels more exposed, and in some ways it is. But often it works out for the best as there are always reasons for the position sizes.
This week was definitely one of the good times, up about two and a third percent.1 Not only did the strategy nearly fully experience the large stock advance, but treasuries pulled back when only comprising a small portion of the portfolio. The best of both worlds.
Correlations fell slightly, so the bond position rises a bit, but not much. On August 28st, 2020, the strategy rebalanced to:
76% SPY , 16% TLT , 8% GLD
*All investing strategies come with the risk of loss, including this one. This portfolio may not be appropriate for your investment goals and requirements, and it is not investment advice.
It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.
1-There are definitely times when the strategy would have fallen more than this week’s gain when strongly in one asset. This was an extremely good week and at some point the other side of the coin will show up.
Don’t you incur substantial capital gains taxes with all of the trading you do? Or is this strategy only implemented in retirement accounts? Apologies if I missed this somewhere.
I do incur them. But much more of my wealth is in the tax advantaged accounts. I’ll have a post shortly about taxes.