Investment Strategies

Use Market Volatility to Save Your Portfolio

Many investors are liquidating their portfolios with huge losses. They sell all asset classes from equity to Treasuries and gold. I will explain here a better strategy to cut losses. Below is a chart of our Logical Invest Permanent Portfolio Strategy which invests in the 3 main assets: equity (SP&500), Treasuries and gold. The strategy uses a variable allocation of Treasuries and gold to hedge against equity losses. As you can see in the below … Read more

The Coronavirus Market Crash – Lessons learned

coronavirus market crash 2020

Logical Invest in Bearish Mode Since January At the start of the year, before the CORVID-19 outbreak was known, we updated our strategies to better withstand a possible bear market or large correction. You can read the details here. A Two-Stage Correction In the first stage, hedges like gold and Treasuries worked well. Although the SP 500 took a free fall, the 30-year Treasury ETF went parabolic up as the 10-year yield touched 0.6%. Gold … Read more

2020 Logical-Invest strategy update

Starting January 1 2020, we are implementing several modifications to our strategies to make them less volatile and more stable. The biggest modification concerns the Hedge strategy. As this sub-strategy is a major part of all of our ‘hedged’ strategies, any change in this sub-strategy automatically affects the strategies themselves. We are also implementing a new limit for allocations between hedge and equity. The equity/hedge allocations will now range from 40%-60%, which makes sure our … Read more

Why we employ walk-forward testing to avoid curve-fitting

walk forward analysis backtesting

How we backtest our trading strategies, how we avoid overfitting by using walk-forward testing and why we adapt our strategies from time to time. One of the main questions we get is this: Why do we change  the set of parameters from time to time? Is this not just curve-fitting to improve the system performance? Some think, that once you developed a strategy, you should never change it. They argue this is the only way to … Read more

Enhancing Harry Browne’s Permanent Portfolio strategy using ETFs and monthly rebalancing

Harry Browne Permanent Portfolio allocation

Enhancing Harry Browne’s Permanent Portfolio The Permanent Portfolio is a simple, diversified portfolio You can construct it using 3 ETFs: SPY, TLT and GLD We enhance it by allowing variable allocations and monthly rebalancing We offer a free subscription so you can implement it in your own account including 401k or IRA  What is the Permanent Portfolio by Harry Browne Harry Browne’s intention was to find a solution for the money “you need to take care … Read more

Logical-Invest Investment Strategy changes for 2019

investingmoneykStrategiesInvestments

We have made some quite important changes to the Logical Invest strategies for 2019. Please note that the January strategy allocations will be calculated based on these updated strategies. 401 / IRA compliant base strategies The new strategies will not use leveraged or inverse ETFs, making them and the portfolios derived from them, more 401 / IRA friendly. The changes have been backtested and do not reduce the performance of the strategies due to a … Read more

How to create a hedge strategy in times of market troubles

Hedging US Markets Drawdown Gold TLT

In this article I would like to explain how to create a hedge strategy for an equity position, so that draw-downs, like the current one (December 2018), are minimized. During this 10-year bull market, many investors have forgotten that investing only in equities can be quite risky. It has been simple to buy the SPY S&P 500 ETF and profit from rising valuations. This year-end 20% correction makes many investors reconsider safe haven assets like … Read more

Portfolio Builder: How to create a Portfolio of Portfolios

We’ve received a couple of request in the last weeks whether it is possible to create a “Portfolio of Portfolios” in our Portfolio Builder. For example, to create a portfolio holding several of our Core Portfolios plus a custom portfolio in a fixed-weight or custom blend. Or to combine a one of the portfolios in the Portfolio Library with a single strategy or ETF. Cases for this include: You like two of our preset portfolios … Read more

The new reviewed Bond Rotation Strategy

BRSnew

From the next strategy email on, the Bond Rotation Strategy will also use adaptive ETF allocation, to make is more suitable as IRA or 401k Investment Strategy. This new technique allows a 30% higher Sharpe (return to risk) ratio. Together with this change we have also changed the ETF selection from the old: AGG – iShares Core Total US Bond (4-5yr) BOND – PIMCO Total Return ETF CWB – SPDR Barclays Convertible Bond HYLD – AdvisorShs Peritus … Read more

Enhancement of the Treasury hedge in our strategies

Hedge

For many years, most of our strategies used long term Treasuries (TLT, TMF) as a hedge against market corrections. These Treasuries have been a safe haven asset with negative correlation to the stock market and have been used successfully to reduce the risk/volatility of our strategies. With rising rates and inflation, long term treasuries lose a part of their value as a safe haven asset. Their hedging value depends mainly on the speed interest rates … Read more