Moderate Risk new allocations for September… TLT

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  • #69796
    robininni
    Participant

    So I see we are now boarding the TLT train heavily. I watched TLT’s performance all last month as I have a good portion of a similar allocation in another portfolio. The whole time I thought to myself we should have been in TLT and not TIPS. After a 12% run in one month, last month, I guess I question whether now loading up on TLT is a sound strategy. Seems like the wrong time to be buying in. I guess I’m just asking for moral support in following the strategy when it seems to have missed. Any other stories like this where a strategy told you to invest in something that just had an incredible run up last month and it still worked out good the following month?

    #69800
    Vangelis
    Keymaster

    Take a look at the top3 strategy: https://logical-invest.com/app/strategy/mst3/top-3-strategies
    It a bit more adaptive and has a shorter lookback period.

    #69840
    werner_m
    Participant

    Okay, but the Top 3 is also using TLT this month.
    Anyway, I think the key point is that any momentum based strategy has the risk of chasing profits. In the long run it should work out.
    Good luck

    #69843
    Alexander Horn
    Keymaster

    Yes, that’s indeed the main point. I agree both TLT but also Gold had an incredible run, and we’re at historical low rates, and a very strong Dollar.

    That’s the psychologically tough part of Momentum driven strategies: Buy when things have already moved quite a bit, sell even if you think the party might re-start.

    However, we’re late in the cycle, and despite the ‘bit’ of volatility recently we’ve not seen any serious correction yet, were the flight to safety moves such safe-haven prices much more violently.

    Just some days ago replied to a comment re how negative yields feel like in Europe, so who says they 1.5% in the US is the bottom? See the comment by Vangelis today what it would take to devaluate the USD rate-wise.

    If you feel uncomfortable with long term bonds or gold, the signal basically says ‘risk-off’. Cash is an alternative, even if historically in our models you’d lost some of the performance.

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