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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

Fail-Safe Investing – The “straight” BUG with no leverage

In a previous post we introduced our new investment strategy, the BUG. There has been a lot of interest but also some concerns when it comes to using leverage. We are introducing a version of the BUG for non-leveraged accounts.In this version we allocate amongst 6 ETFs: SPY, TLT, GLS, CWB, TIP and PCY. Again as in the original strategy we use these heuristics: Timing (using a simple average rule), Volatility Targeting (we reduce exposure to more volatile ETFs), Momentum (we reduce the size of the worst performer and add to the rest). We don’t employ short term mean reversion and we only trade up to 4 assets.

2017-10-02T20:00:00+00:00 By |8 Comments

The World Country Top 4 ETF rotation strategy – A way to fight rising rates and a stalling US stock market

Summary of World Country Top 4 ETF rotation strategy • The World Country Top 4 ETF rotation strategy is a strongly momentum driven strategy creating high returns. • The strategy profits from a maximum global diversification. • With a 20-year CAGR of 20.7% the strategy has a much lower volatility and lower risk than an S&P 500 investment. In my last articles I described various momentum ETF rotation strategies with variable allocations using our maximum Sharpe method. A good example how to build such a strategy is the Universal Investment Strategy (UIS) which always invests in a variable allocation of TLT and SPY. However, UIS is a strictly a U.S.-based equity and bond strategy. In the short term, this strategy cannot do much better than its own underlying ETFs, namely SPY and TLT. Today, many market analysts are less optimistic about the US market. The US stock market may have culminated after 6 very strong years following the 2008 subprime crash. Treasuries, at least in the past 2 months, are underperforming as they begin to anticipate rising yields. It is possible that the UIS strategy underperforms for a few months. Keep in mind that the UIS strategy has been backtested for more than 20 years and I am quite sure that it will continue to work in the future. However, as with ETFs, every so often, one has to evaluate which strategies outperform and possibly switch some capital to the better performing ones. Several new ETF rotation strategies under development We have several new strategies under development (e.g., Countries, Nasdaq 100, Dow 30, US Industries) and we are already investing in these strategies, as to validate them before publication. To address an underperforming US market, I think the best of these strategies is the Country rotation strategy, which always invests [...]

2017-10-02T20:00:00+00:00 By |17 Comments

The Logical-Invest monthly newsletter for July 2016

Logical Invest Investment Outlook July 2016 Our top year-to-date strategies: The Leveraged Universal strategy with 29.4% return. The Maximum Yield strategy with 24.6% return.  The World Top 4 with 12.6% return. SPY, the S&P500 ETF, returned 3.82%, year-to-date. Market comment: The big event for June was the British E.U. membership referendum. Contrary to widespread expectations, Britain's vote was in favour of leaving the Eurozone. Anyone trading on the 23rd experienced unprecedented volatility as the VIX first crashed on expectations of the "remain" camp winning and subsequently spiked up as the actual results came in. As of this writing the SP500 has almost recovered. Still, this provides an excellent opportunity to see how our strategies perform under a real and unprecedented market shock. Our core strategy, UIS saw a drawdown of barely -1.45%. Our BUG leveraged strategy, being 200% invested, lost no money and returned +7.4%, its majority allocation being in gold, treasuries and inflation protected treasuries (TIPS).  Our year-to-date top performers, the UIS 3x and MYRS strategies, returned +10.4% and +7.4%, completely ignoring the 'black-swan' event. So let us take a closer look and see why our strategies remained robust in this type of risky environment. Most of our current subscribers are familiar with the fact that all our strategies are hedged using treasuries, some using gold as well. The idea is to participate in longer term growth through equity investment while hedging  part of the portfolio in a leveraged treasury ETF. When a market negative event materializes, money flows to traditional safe heavens like treasuries or gold. Having a (variable) allocation to these will dampen the shock to the portfolio and sometimes even provide profit, especially if the shock to the system is temporary and the equity part recovers. Of course all this assumes that ETFs like SPY and TLT/GLD are inversely correlated, which is mostly the case. No wonder that most our strategies had a good June return: The two BUG strategies, being exposed to both TLT and [...]

2017-10-02T20:00:00+00:00 By |4 Comments

Top Performing ETFs Strategies – Portfolio Idea

In the follow up to our webinar about how to compose top performing ETFs strategies among the QuantTrader community last weekend, we received many interesting questions and ideas to follow up. One question in particular I´d like to share in a post, as it involves all our “All Strategies” subscribers.John L. asks: “Using a simple meta strategy by choosing the top two strategies from the previous month (from the monthly newsletter), and investing in them the next month (repeating that each month). I wonder if that can be backtested and compared to past 3 months or a static meta strategy. Perhaps comparing the top 2 each month strategy to the choosing the top 2 from the last 3 months. And comparing the top 2 each month or 3 months to a static strategy of the top 2 - 4 over the full backtest period or past 5 or 10 years.”So in other words, what´s the best way to pick from the Top Performing ETFs Strategies of the last months, and allocate equal amount of money among them? We publish the performance of all our strategies monthly in a handy ranking table, so it´s easy to pick each month the best performers of the last months, and repeat this throughout the year.The idea is appealing, as it is an enhancement from our Portfolio Builder Approach, where we apply modern portfolio theory to assemble a fixed weighting portfolio based on the historical performance and co-variance between the strategies. By modifying this to a momentum style “strategy picking” of top performing ETFs strategies we react to changes in the market and therefore overcome one of the critiques MPT receives frequently.Top Performing ETFs Strategies in one PortfolioI modelled this quickly in QuantTrader, following the “Strategy of Strategies” approach we introduced in QuantTrader in the last [...]

2017-10-02T20:00:00+00:00 By |3 Comments

The new reviewed Bond Rotation Strategy

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 High-Yield Bond (3-4yr) SHY - Barclays Low Duration Treasury (2-yr) TLH - iShares Barclays 401k 10-Year Treasury (9-11yr) Ro the new ETF selection: CWB - SPDR Barclays Convertible Bond JNK: SPDR Barcap High-Yield Junk Bond (4-7yr) PCY: PowerShares Emerging Mkts Bond (7-9yr) TLT: iShares Barclays 401k Long-Term Trsry (15-18yr) The new BRS strategy does not need the total US market bonds AGG and BOND anymore. In fact for the old strategy, these bonds have been used to simulate an intermediate mix between treasuries and corporate bonds. The new BRS strategy can now invest in any mix of these bonds due to the adaptive allocation. Also the SHY (cash) ETF is not necessary anymore, because the allocations will be automatically reduced to zero if this would be necessary. Excellent features as an IRA or 401k Investment Strategy We also go back to the passively managed JNK high yield junk bond after the actively managed HYLD junk bond was showing an extremely bad performance these last months. So better don't have any fund manager interfering with the strategies in the future. New is the emerging market sovereign debt bond PCY which gives the strategy some international diversification. TLH has been replaced by the more liquid TLT treasury ETF. All together, the strategy becomes simpler, with less ETFs, but with a significantly better performance. We recently were approached by a subscriber [...]

2017-10-02T20:00:00+00:00 By |5 Comments