We discuss using leveraged ETFs for timing and momentum rebalancing. To this end we choose ETFs over low-volatility indices. In high volatility environment leveraged ETFs can be risky as explained here. Defensive sectors and large indices as well as some commodities are suitable for this approach.
Annually rebalance stocks/bonds
Usually we prefer more active hands-on approach, but sometimes all we can do is balance stocks/bonds. This strategy still is better then choosing only one of them.
Stop losses
This article recommends to issue put options for the assets (commodities) we invest in, as protection against market changes. In a similar way one may invest in stock market and volatility. Either one or the other will go up… If timed properly (buy low sell high) this method may work. Occasionally (very rare) market and …
Picking stocks
The best way to pick stocks is using screener of undervalued stocks. Unfortunately, screener access costs around 400USD per year. We will try to recreate the tools for free. This article describes a decent method for choosing large cap stocks, and here mid cap are addressed. And these stocks are probably too risky right now. …
Using sector rotation model
Most indexes are biased to the large-cap assets. Each month some assets perform better than others. Sector rotation model assumes that from every index we invest say 60%-80% into leading industries and 20%-40% into lagging industry, where within each sector we weight the assets equally [independent of cap]. The rebalancing can probably be performed each …
Benefit of monthly rebalancing
This article recommends monthly asset reallocation with 10-20 weeks lookback. The methods was used for relatively slow indices during profoundly bull market. Probably the allocation frequency depends on market volatility, but should happen at least once a month for most markets. Moreover, the same author mentions that it is best to reallocate at the end …
Never user market orders
This article explains why market orders are bad when low liquidity asset or large order.
Fighting drawdown via aggressive timing
Our main portfolio should be by default diversified and low volatility, basically buy-and-hold type. However we may get long drawdown periods in the main portfolio. To fight the drawdown we use further diversification into yet more markets and cache assets. However all assets are correlated to some extent. To fight this correlation we can use …
How to pick REIT
There are many real estate sectors with varying sensitivities. Picking individual REIT is as tricky as picking a stock, or more. Here is an example of due diligence. And here is a cool list of some REITs. A different REIT combination is here… There is a mild indication of REIT issues ahead of us…
Fortifying market-neutral position
While long-term equity positions are probably the most lucrative positions to hold, they are most prone to luck of market entry. There have been years in which the market did not recover from a systemic event. Consider Japanese markets since 1980-s… There are also large regulatory shifts and events that can modify the market. Therefore …