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The Logical-Invest monthly newsletter for November 2017

Logical Invest Investment Outlook November 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 52.51% return. The Leveraged Universal strategy with 34.36% return.   The NASDAQ 100 strategy with 29.34% return. SPY, the S&P500 ETF, returned 16.68%. Market comment: Just like September, October was positive for the S&P 500. The index gained +2.36% continuing its multi-month rise to new highs. U.S. Treasuries did not manage to recover after last month's losses, staying almost flat at -0.04%. Gold showed weakness returning -0.75%. Our strategies recovered quite well as they shifted weights into equity and decreased or replaced treasury positions with inflation protected notes (TIP) and convertible bonds (CWB). Our Nasdaq 100 strategy returned +7.81% for the month, while the Maximum Yield strategy added 5.94% passing the 50% return mark for 2017. Our leveraged Universal Strategy (UIS 3x) added 4.68%. Our Global Market Rotation (GMRS) and World Top 4 (WT4) strategies added 2% each. As our subscribers may remember, we recently updated the hedging mechanism of our strategies. In an article posted on December 2016, Frank explained why we are moving into a more dynamic hedging of the equity component by allowing strategies to choose from inflation protected Treasuries (TIP) as well as other types of bonds. This was done in anticipation of possible under-performance of Treasuries due to the Fed's normalization policy. These strategy "upgrades" are now working and paying off as our Universal Investment strategy has already shifted to TIPs and our other two strategies to convertible bonds. We are entering the traditionally best performing months of the year. Seasonally, equity markets exhibit some type of correction during the summer, followed by a volatile and often bearish September and October. Typically they end the year with strong November-December performances. This year we only had a minor correction back in August but no corrections since then. The index [...]

2017-11-01T06:35:46+00:00 By |0 Comments

The Logical-Invest monthly newsletter for October 2017

Logical Invest Investment Outlook October 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 43.96% return. The Leveraged Universal strategy with 28.36% return.   The NASDAQ 100 strategy with 19.97% return. SPY, the S&P500 ETF, returned 13.99%. Market comment: The S&P 500 has reached new heights, gaining +2% for the month, influenced by a more optimistic tax reform outlook. On the other hand, president Trump's proposed tax cuts and the possibility of a growing U.S. deficit caused U.S. Treasuries to sell off, pushing the benchmark 10-year yield to 2.26% and the TLT price down by -2.32%. Most of our strategies had a pullback partly due to our strategies using the TLT etf (or TMF) as a hedge. Strategy losses ranged from -3.76% for the Nasdaq 100 to -0.11% for the non-leveraged BUG strategy. Winner for the month was the U.S. Sector strategy (+1.28%).  The Bond rotation strategy managed to stay positive at +0.21% despite the widespread bond sell-off. Our Gold-USD strategy lost -0.12% managing to hedge the gold correction (GLD: -3.37%) for the month. Seasonally, October is a volatile month but often leads to a favorable pre-Christmas equity environment. We wish you a healthy and prosperous 2017. Logical Invest, October 1, 2017 Strategy performance overview: Logical Invest Performance October 2017 Visit our site for daily updated performance tables. Symbols: BRS - Bond Rotation Strategy BUGST - A conservative Permanent Portfolio Strategy BUGLEV - A leveraged Permanent Portfolio Strategy GMRS - Global Market Rotation Strategy GMRSE - Global Market Rotation Strategy Enhanced GSRLV - Global Sector Rotation low volatility NASDAQ100 - Nasdaq 100 strategy WORLD-TOP4 - The Top 4 World Country Strategy UIS - Universal Investment Strategy UIS-SPXL-TMF - 3x leveraged Universal Investment Strategy AGG - iShares Core Total US Bond (4-5yr) SPY - SPDR S&P 500 Index TLT - iShares Barclays Long-Term Trsry (15-18yr) Follow my blog with Bloglovin

2017-10-05T00:01:43+00:00 By |2 Comments

The Logical-Invest monthly newsletter for September 2017

Logical Invest Investment Outlook September 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 47.47% return. The Leveraged Universal strategy with 31.15% return.   The NASDAQ 100 strategy with 24.65% return. SPY, the S&P500 ETF, returned 11.74%. Market comment: After more than three months of extremely low levels of volatility, VIX spiked on August 10th peaking at the 16.04 level. The index has now dropped around the 10 - 11 level awaiting further possible market disruptions. The move has triggered an upward reaction to traditional safe heavens assets with TLT  (Treasury ETF) returning 3.41% and GLD (Gold ETF) 4.2%, for the month. This has benefited our strategies since a majority of them use these assets as a hedge. For September, the upcoming U.S. Congress needs to agree on a budget for fiscal year 2018 and raise, once again, the so-called debt ceiling, The Federal Reserve may start a large winding down of its crisis-era balance sheet while the European Central Bank is considering scaling back its asset purchases. Tensions between N. Korea and the U.S. may escalate. All these factors could cause VIX to spike. As mentioned in the previous newsletters, the dollar index continues to show weakness, benefiting foreign (non-U.S.) equity and emerging market bonds. The Euro continues to show some strength. Gold has been showing strength in 2017 after reaching a low on December 2016. Our best strategy performers for August are: The Nasdaq 100 strategy, recovered from last month's correction adding +4.56 %. The Bug Leveraged strategy added +3.54% to reach a very respectable 11.10% year-to-date. Our 3x Universal Investment strategy returned 3.17% for the month. The Gold-USD strategy made a 2.32% profit and finally turned positive for 2017. The performance of the Bug Leveraged strategy was due to holding full (leveraged) positions in 'safer' assets: GLD (+4.2%),  TLT (+3.4%) and PCY (2.18%). Our flagship [...]

2017-10-05T00:01:56+00:00 By |2 Comments

The Logical-Invest monthly newsletter for August 2017

Logical Invest Investment Outlook August 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 46.05% return. The Leveraged Universal strategy with 27.11% return.   The NASDAQ 100 strategy with 19.29% return. SPY, the S&P500 ETF, returned 11.42%. News: Our professional portfolio software QuantTrader has reached version 5.0 with improvements including being able to load your custom set of strategies and a new consolidated signals screen. You can now allocate your funds in multiple strategies and have QuantTrader calculate the number of shares of each stock/ETF you need to buy.   QuantTrader Consolidated Signals   Market comment: Just as we mentioned in our last June newsletter, we continue to observe low volatility and a weakening dollar. The VIX index hit a record low on July 26th, falling temporarily to 8.84, a level last seen back in 1993. Moreover the index stayed under the 10 level for 10 consecutive days showing persistence.  The U.S. dollar fell to a 13-month low against a basket of currencies. The Euro has broken to the upside, reaching 1.18 against the dollar, a level last seen before December 2014. The Euro is 11% up year-to-date. Certain commodities that have had terrible returns for the past years are this month's top performers: Sugar, Gasoline, U.S. diesel Heating oil, Nickel, Coffee and U.S. oil (USO) ETFs all gave more than 10% returns for the month. Of course if you look at a graph you will see this is just a tiny reaction to multi-year bear markets. Taking advantage of the extended low volatility environment, out top strategy, the Maximum Yield strategy, added another +5.93% to reach +46.79% return for the year.  The Universal Investment 3x strategy added 2.54% for a +27.11% YTD return. All our other strategies were positive in July. The exception was the Nasdaq 100 strategy that corrected -3.1% causing this month's allocations to change significantly. As [...]

2017-10-05T00:02:10+00:00 By |2 Comments

The Logical-Invest monthly newsletter for July 2017

Logical Invest Investment Outlook July 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 38.54% return. The Leveraged Universal strategy with 23.91% return.   The NASDAQ 100 strategy with 23.07% return. SPY, the S&P500 ETF, returned 9.17%. News: Our professional portfolio software QuantTrader continues to evolve and can now download data from 3 different providers: Tiingo, Yahoo and Google. Tiingo is an inexpensive solution for DYI investors that need good quality dividend-adjusted end of day data. Market comment: The U.S. Federal Reserve raised its benchmark federal-funds rate on June 15th by a quarter percentage point and hinted to further hikes. Individual investors remain skeptical of the bull market as the AAII survey shows 43.4% being neutral (historical average is at 38%). Mainstream market analysts keep a positive outlook quoting decreased risks and equity strength in Europe, global strength in developed and emerging markets, low unemployment in the U.S. and a sense that the Fed's tightening is predictable. We continue to see a low volatility environment and a weakness in U.S. dollar for 2017 which benefits non-U.S. stocks, bonds as well as gold. The European market returned 17% YTD while India and China achieved 20%+ returns for the year. UUP ETF (U.S. Dollar Index)   Out top strategy, the Maximum Yield strategy, added another +6.85% to reach +38.5% return for the year.  The Universal Investment 3x strategy had a correction in the last few days of July but came out positive adding +1.66% for a +23.9% YTD return. Both the Nasdaq 100 and the U.S. Sector strategies had corrections: -1.98% and -2.47% to achieve +23% and +5% YTD  respectively. All other strategies remained flat with gains/losses below 1%. A final note: We do keep a watchful eye on recent developments in the crypto-currency markets as Bitcoin and Ethereum are attempting to make their way into the mainstream. It may be [...]

2017-10-05T00:02:29+00:00 By |6 Comments

Harvesting Contango: How To Build An ETF Rotation Strategy With More Than 50% Annualized Returns

In this paper I want to explain the readers how the Maximum Yield Rotation Strategy of www.logical-invest.com is built. This strategy harvests the so called Contango. Harvesting Contango by investing in inverse volatility This Strategy harvests contango and achieves very high returns investing in inverse volatility. From 2011 to today the annual performance was more than 70% per year. Year to date the performance is 40.9%. The Sharpe Ratio (Return/Risk) of 2.12 is a "DREAM VALUE" and I doubt that someone can show me a strategy with a higher ratio. The strategy invests in 4 different ETFs and harvests the contango: US Market (MDY - S&P MidCap 400 SPDRs) U.S. Treasury Bonds - (EDV Vanguard Extended Duration Treasury 25+yr) Volatility - (ZIV VelocityShares Inverse VIX Medium-Term) cash - (SHY Barclays Low Duration Treasury) only if Treasury correlation to SPY > -0.25 The Maximum Yield Strategy switches semi-monthly between these 4 ETFs. For the switching I use a ranking system like the one I explained in my SeekingAlpha article of the Global Market Rotation Strategy. The ranking system is also using 3 month historical performance and 20 day volatility. Using also volatility is quite important for harvesting contango, because it reduces the ranking of high volatile ETFs like ZIV. However, if you want to play such a rotation strategy by yourself, then you can also just look at the 3 month historical performance to benefit from contango. In this strategy the ZIV ETF is the most important performance driver. ZIV can only be backtested since 2011, so that I cannot present a longer backtest for the whole strategy, but the way the strategy is built, you can backtest parts of it for more than 10 years. Benefit from Contango The Maximum Yield Rotation Strategy is composed by several smaller sub-rotation strategies. Here is an overview of [...]

2017-10-02T20:00:00+00:00 By |2 Comments

New Maximum Yield Rotation Strategy backtest charts

Here are two backtests charts of the new MYRS strategy with adaptive allocation, now also suitable for your retirement account. The annual return of the old and the new strategy is more or less the same. During low volatility markets, the return of the new strategy is probably slightly lower, however during difficult volatile years like 2014, the return of the new strategy is significantly higher and the drawdowns and the risk is reduced nearly by a factor of 2x. The slightly lower return is due to the fact that some time a part of your capital is invested in the Treasury hedge to reduce risk. An option for your retirement account? The overall risk/return (Sharpe) ratio is about 2x higher than the one of the old strategy, so there is no question, that the new strategy is significantly better and maight be a suitable option for your retirement account. See the updated performance charts also here.   If you are new to our site, here a summary of our strategy: "The Maximum Yield Rotation Strategy is our top performing investment strategie. The Strategy invests on a semi-monthly basis in two US asset classes or cash. These US asset classes are: U.S. Treasury Bonds – (EDV Vanguard Extended Duration Tsy 25+yr) Volatility – (ZIV VelocityShares Inverse VIX Medium-Term) cash – (SHY Barclays Low Duration Treasury) Treasury bonds and inverse Volatility ETFs have significant negative correlation to each other. This means, that whatever the market sentiment is, there is always one assets performing well. The strategy is a good way to profit from VIX contango without risking heavy losses during a volatility spike. The incredibily high return of this strategy does not mean that this strategy is very risky.  The strategy minimizes the risk of losses during financial crisis by switching early into Treasurys or even switching [...]

2017-10-02T20:00:00+00:00 By |10 Comments

The Logical-Invest monthly newsletter for April 2017

Logical Invest Investment Outlook April 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 21.58% return. The  NASDAQ 100 strategy with 15.00% return.   The Leveraged Universal strategy with 13.02% return. SPY, the S&P500 ETF, returned 5.92%. News: Try our QUANTtrader software with our 30-day free trial. There is no better way to understand how our strategies work. Join our new QUANTtrader forum were users dare adjust the strategies and share new ones! Check our new European section.  Our in-depth 2-hour QUANTtrader webinar, with Frank Grossmann. Get a behind-the-scenes look at our strategies. We updated our web-site home page and menu.   Market comment: For the second time in three months, the Federal Reserve increased its benchmark interest rate a quarter point taking the overnight funds rate to a target range of 0.75 percent to 1 percent. Treasuries had small comeback since then signalling that the market had already priced in the Fed move and was bracing for a much more hawkish tone. Treasuries are once again negatively correlated to the equity market which is a positive for our strategies. The market is expecting two more hikes, in June and December. Volatility continues to be extremely at low levels, sending the ZIV etf (medium term inverse VIX etf) and our Maximum Yield strategy to new highs. Just like last month, what is interesting is the unnaturally low expectation of future volatility, with 8-month out VIX futures being below the 17 price level. Last month's VIX Futures term structure:   VIX term structure February 28th 2017 This month's VIX Futures term structure:   VIX term Structure March 31st 2017 This continuing "flattening" of the curve is unusual. In plain terms, future expected volatility levels seem to be low even though we are looking at upcoming French elections, Brexit negotiations as well as U.S. policy uncertainties. Investors seem fearless as the U.S. market is still at the top of the price chart. Investors may want [...]

2017-10-02T20:00:00+00:00 By |0 Comments

The Logical-Invest monthly newsletter for May 2017

Logical Invest Investment Outlook May 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 25.75% return. The  NASDAQ 100 strategy with 18.26% return.   The Leveraged Universal strategy with 16.86% return. SPY, the S&P500 ETF, returned 6.97%. News: Our new U.S. Sector Rotation strategy is live (and for a limited time, free!). Unlike what you may have seen before, this strategy consists of 5 sub-strategies tracking sector momentum, mean reversion and relative under-performance to create a variable-beta play on the U.S. market. And yet it is very simple to implement. Give it a try. Thank you for your support of our QUANTtrader forum were you can share and discuss your own custom strategies.   Market comment: As we are heading into early summer, most assets classes are performing well partly due to a weakening U.S. dollar. Domestic equity continues to reach new highs, foreign and emerging equity markets are up while junk bonds and foreign bonds have now recovered from past corrections. Commodity performance is mixed but commodities do present a longer term opportunity for portfolio unclusion, as inflation resistant assets. Treasuries remain flat. The story in the media is that we are entering a more mature business cycle in the U.S. while foreign markets (China, India, Brazil and partly Europe) are also in growth and recovery mode. The sentiment is positive, at least as far as the major management companies go while individual investors are cautious, expecting a possible U.S. equity correction. The year long expectation of higher volatility due to tighter policy still is discussed but we have not seen this in the actual market. Far from it, we are seeing extremely low volatility levels compared to historical norms as well as perceived political risk in the U.S. and Europe. Our strategies performed as expected. Maximum Yield strategy added another 3.42% in April, keeping it in our top spot at +25.75 for the [...]

2017-10-02T20:00:00+00:00 By |1 Comment

The Logical-Invest monthly newsletter for June 2017

Logical Invest Investment Outlook June 2017 Our top 2017 investment strategies, year-to-date: The Maximum Yield strategy with 29.66% return. The Leveraged Universal strategy with 21.89% return.   The NASDAQ 100 strategy with 21.80% return. SPY, the S&P500 ETF, returned 8.48%. News: Our brand new U.S. Sector Rotation made its live debut with a +2.53% return for the month. You can subscribe for free. Market comment: Both the U.S. equity and the U.S. bond markets were positive for May. SPY (S&P 500 ETF) added +1.41% and TLT (30-Year Treasury ETF) added +1.89%. Even though SPY is reaching new all-time heights, it under-performed many of our strategies and in particular the ones with foreign exposure, such as the World-Top 4, Global Market and Global Sector Rotation strategies. This shows that the U.S equity market is slowing down compared to foreign and emerging markets. On the other hand, Brazil, with a, -18% drop on May 18th reminds us that these markets suffer from local political risk and need to be properly hedged and diversified. Our top 3 strategies continue to be the biggest gainers for May. Our 3x UIS strategy added another +4.3%, the MYRS added +3.11% and the Nasdaq 100 added +2.99%. On the 4th and 5th spot are the Global Market rotation(+11.23% YTD) and Global Sector Rotation (+11.75% YTD) strategies. Summer is often volatile. Our slow and steady risers cam limit your risk: BRS (+6.81 YTD%) and the BUG (+6.29% YTD) bond-based strategies. We wish you a healthy and prosperous 2017. Logical Invest, June 1, 2017   Logical Invest strategy performances May 2017 Strategy performance overview: Visit our site for daily updated performance tables. Symbols: BRS - Bond Rotation Strategy BUGST - A conservative Permanent Portfolio Strategy BUGLEV - A leveraged Permanent Portfolio Strategy GMRS - Global Market Rotation Strategy GMRSE - Global Market Rotation Strategy Enhanced GSRLV - Global Sector Rotation low volatility NASDAQ100 - Nasdaq 100 strategy WORLD-TOP4 - The Top 4 World Country Strategy UIS - Universal [...]

2017-10-02T20:00:00+00:00 By |0 Comments