Dynamic Asset Allocation Strategy (DAAS)
The Dynamic Asset Allocation Strategy (DAAS) was created by Matt Pavich in 2000 to assist investors in what appeared then to be the beginning of a Secular Bear Market. The dominant strategy among investors at that time was “Buy and Hold” which was certainly validated by a Secular Bull Market that had begun in 1982. Previous Secular Bear Markets had provided little if any gains over periods lasting one to two decades, yet the possibility of new Bear Markets occurring was missing in the message most Wall Street firms conveyed to their clients.
A Secular Bear occurred in the late sixties and seventies which had the Dow Industrials stuck in a range between 600 and 1100. The Japanese Nikkei had experienced its own devastating correction in the nineties, falling over 60% at one point from its peak in 1989. Even after the 50% correction in the S&P 500 from March of 2000 to October of 2002, the “Buy and Hold” Wall Street mantra did not vary. A second correction cutting the S&P 500 in half later in the decade still has not convinced some advisors and investors that a more tactical strategy could add value.
A main focus of DAAS is to steer clear of stocks when they appear to be Vulnerable and to be invested during constructive periods. We feel missing steep corrections is more important than missing opportunities. Having a sell discipline is a key in preserving capital. If you suffer a 50% correction, your portfolio has to gain 100% to return to even. As of this writing the Japanese Nikkei is at the same level it was in 1984! Some believe that the financial and economic issues we currently face are similar to those that kept the Nikkei in the doldrums for so long.
DAAS uses the Rydex Mutual Funds as a platform to allocate among a wide variety of asset classes, indices, and sectors. The strength of the program lies in its flexibility and ability to move to the sidelines quickly if the markets become uncooperative. Since inception of the strategy the portfolios have spent nearly half the time – typically in relatively brief periods of days or occasionally weeks -- invested 100% in money market funds. This dynamic has produced comparatively strong results by effectively blending the strategy’s goals of capital preservation and growth. Volatility and losses do occur, but concerted efforts are made to manage risk and keep losses at a minimum. Remember past performance is no guarantee of future results.
For a more detailed description of the DAAS program CLICK HERE.
|
|
ETF Powerstroke
The ETF PowerStroke system is an investment advisory (fee-based) actively managed "black box" portfolio strategy which varies significantly from traditional asset allocation and financial planning tenets.
The goal of the PowerStroke system is to seek significant investment returns through the purchase of ETFs which are currently demonstrating clearly defined, strong relative strength characteristics, holding them in the portfolio while those characteristics are intact, and exiting positions when appropriate for one of the following reasons: 1) protect principal, 2) protect profits, or 3) selling a dead-in-the-water position in order to reinvest the proceeds to help keep money working as efficiently as possible.
Relative strength is a measure of the recent price action of an investment such as stock or ETF and how that compares to other items in a database. In a very general sense, relative strength is based on the notion in physics which contends, “an object in motion will stay in motion, and an object at rest will stay at rest unless acted on by an outside force.” In addition to a modified relative strength matrix, the system incorporates a measure to determine the overall market environment before making purchases in the portfolio.
We feel the system may be appropriate for that portion of an investor’s portfolio which seeks above-average returns within a clearly defined structure having distinct, dynamic exit points in an effort to control risk and maximize performance. The investor should consider the system as “Aggressive Growth” and be accepting of certain risks, volatility, and turnover inherent in such a non-traditional, non-buy-and-hold investment approach. Past performance is not a guarantee of future performance.
Click HERE to visit the ETF Powerstroke website
PERFORMANCE RESULTS
ETF Powerstroke Performance Sheet 3/31/2010 |
