Covering Your Assets

The objective of the strategy is to use momentum to identify and capitalize in the upward price movements of individual Asset Classes (like Stocks, Bonds, Commodities or Real Estate). It also attempts to compensate for market crashes, by investing in "safe harbor" and "short" instruments during market downturns.
Minimum investment:
The strategy generates a number of trades so a minimum initial investment of $3,000-$5,000 is required in order to generate adequate returns to make this a viable strategy. The strategy will work with either a lump sum amount or ongoing contributions.

Recommended Holdings

Invest in up to the 3 holdings with the top three scores which are not negative. Re-balance once per Quarter.
Position sizing AND stop loss are critical components to manage risk. IMPORTANT Update stop loss DAILY!
When a position stops out, sell the holding, pick the ETF with the next highest score not already invested in.
Rebalance in Feb, May, Aug, Nov to arbitrage seasonal effects of financial industry fund/ETF rebalancing caused by quarterly reporting requirements.


posted Dec 25, 2017, 10:57 AM by sms investing

After significant research and refactoring this strategy, I have reopened this. You should expect that there will be periods of time which the strategy WILL ABSOLUTELY not beat the market. Research in momentum based strategies suggests that it may underperform for significant time periods as long as 3-5 years. However, over the long term, the same research suggests that momentum will outperform the general market in the long term with as much as 20% average per year returns. It works very well when paired with value investing. See the book Quantitative Momentum for more information about this research.

Dec 2016 Update

posted Jan 1, 2017, 5:41 PM by sms investing

Covering Your Assets Performance
After 3 years of running the "The Covering Your Assets" strategy, it is dead even with a "Buy and Hold" of the S&P 500. Given the amount of effort that it takes to buy and sell every month, it may seem like a passive strategy may be just as effective. Given this, I am planning to retire this strategy.

Dec 15, 2016

posted Dec 15, 2016, 2:59 PM by sms investing

Our "Covering Your Assets" strategy has updates this month!
  • Buy PXI (energy)
  • Sell AGG - Bonds
  • Keep SPY - S&P 500
  • Keep XME - mining/precious metals

Nov 15th 2016

posted Nov 14, 2016, 6:38 PM by sms investing

New updates this month!

Sell PXI (energy)
Buy AGG - Bonds
Keep SPY - S&P 600
Keep XME - mining/precious metals

Oct 15 2016

posted Oct 16, 2016, 5:56 PM by sms investing

Our "Covering Your Assets" strategy has updates this month!
  • Sell EFA
  • Sell EEM
  • Buy SPY
  • Buy PXI
  • Keep XME

Sept 15th Update

posted Sep 16, 2016, 6:43 AM by sms investing

Sell PXI
Keep XME
Keep EEM

Aug 15th 2016

posted Aug 14, 2016, 7:51 PM by sms investing

Sell VNQ - real estate

Buy EEM - emerging markets
keep XME - metals and mining
keep PXI - Energy

July 15th 2016

posted Jul 18, 2016, 3:00 PM by sms investing

July 15th 2016
Sell AGG buy PXI

Jun 15th, 2016

posted Jun 15, 2016, 8:30 AM by sms investing

There are no changes this month

May 16, 2016

posted May 16, 2016, 8:44 AM by sms investing

After we issued the stop loss on CLF this month, this strategy is returning to a somewhat defensive stance by purchasing Bonds (AGG).

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