Preface

Intended Audience

Hopefully anyone can find something to take away from this discussion. I start from the simplest portfolios and add more sophisticated layers while building upon more advanced concepts. You may choose to incorporate any level that is compatible with your level of risk, understanding of the concepts, and how much time you choose to devote to managing your portfolios.

How is this different from other similar approaches

Tactical asset allocation has been a significant development over the past several years, although many aspects related to creating such a portfolio has been researched over the past twenty to thirty years.

The focus is strictly on building well-diversified portfolios of exchange traded funds. Starting with a variety of ETF’s that cover most asset types, I gradually add more sophisticated layers. Some easy to implement, and others maybe not so easy. I will explain each layer as I add them.

Some of the layers I investigate, may be found in the academic literature, under the such concepts as endowments, institutional management, sector rotation, global asset allocation, momentum trading, as well as Capital Asset Pricing Model, the efficient frontier, and mean-variance strategies.

In addition, I will track a real money portfolio at here at this website: mostlyquant.com. I have staked my retirement savings on these ideas discussed on this website.

Necessary Caveats

Let’s get the usual disclaimer out of the way.

As with any investment, there are risks. Any investment may fall in price at any time, seemingly for unfathomable reasons. Anything contained within must not be construed as individual advice. Only you can determine the appropriateness of any particular investment or strategy.

I may buy, sell, hold any security mentioned within, at any time.

Who am I

I have a BS in Math from University of Illinois at Urbana-Champaign, and a MBA from University of Illinois at Chicago. I’ve been a programmer, a systems analyst, a bookstore owner, and a lifelong investor.

I have been around long enough to watch the 1987 crash from the visitor gallery above the Mercantile Exchange floor; convert busted Savings and Loan institutions into a larger bank in the late 80’s; sold off stocks leading into the tech bubble in the late 90’s; and sat anxiously by as the housing bubble burst most recently, and three rounds of quantitative easing so far have kept that last shoe from dropping.

Securing a comfortable retirement should not depend upon getting lucky a few times in your life. Tactical asset allocation is a way to tweak a passive indexing approach while at the same time hopefully limiting the downside risks that has become such a part of life lately, and maybe adding a couple of percentage points extra return on top of a buy and hold strategy.

That is the goal. I hope to share what I have learned, and the decisions I have made to enhance a tactical asset allocation strategy.