In the Economic Pulse Newsletter, we are primarily focused on doing the following.
- Providing a fundamental risk-on risk-off indicator based on the economic and market trend
- Run TAA models based on the fundamental risk-on risk off indicator that provide higher returns and lower risk than buy and hold and other TAA portfolios
- 100% quantitative based models that help filter out the signal from the noise and help investors stick with the models over the long term
If you prefer I’ve put together a short screencast the covers what the newsletter is about and what it does.
Why are we doing this and why does it matter?
Most investors cannot stick with the traditional buy and hold portfolios that are most often recommended. This is especially true when times are the toughest, in the midst of a bear market. There are many reasons for this but the drawdowns associated with buy and hold portfolios is one of the primary causes. This is especially detrimental for investors in the withdrawal phase of their lives (retirees) who do not have the time to wait for their portfolios to recover. Also important for investor performance in today’s world is to be able to filter out the noise from the important investment and economic news. Most of financial information on a daily basis, is just that, noise. TAA based portfolios can provide better outcomes for all types of investors.
How do we provide higher returns and lower risk in the Economic Pulse Newsletter?
We do that with our COMP indicator which takes economic data and produces a monthly risk-on risk off indicator for our TAA models. During risk-on periods we want to be invested in equities and during risk-off periods we want to be in safe assets. Our models our 100% quantitative. Let’s see how it works briefly. First, here is the problem. The chart below shows monthly drawdowns for the SP500. Even though long term performance is great, over 10%/yr, this is painful to live through. Drawdowns of over 50% over this period.
Our risk-on risk off indicator (COMP) avoids US recessionary periods and other periods of high risk based on economic data. Here is how the model signals compare to US recessions since 1973.
The COMP indicator has identified all the US recessions since 1973 within one month of their start . Not bad. How does this solve the main problem we identified above, large drawdowns? The chart below shows SP500 drawdowns vs a simple risk-on (invest in SPY), risk-off (invest in 10yr government bonds) investment model based on the COMP signals.
Drawdowns are reduced from ~50% to about 28%. Those lower drawdowns also come with higher returns and improved portfolio statistics across the board. The table below shows the returns and other portfolios statistics for the investment models we use in the newsletter and how they rank vs more than 50 other TAA strategies tracked on AllocateSmartly over various time periods.
Besides the TAA models we track in the newsletter, the COMP indicator can be used as an overlay in any risky portfolio . For example, I use it as an overlay in ALL my individual quant stock portfolios. Returns are also much improved over the basic quant portfolios. Also, SPY-COMP has been independently tested on AllocateSmartly .
The table below shows the relative ranking of the Economic Pulse TAA strategies vs the best performing strategies out there over various time periods.
What you get with your Economic Pulse Newsletter subscription
- Monthly in-depth newsletter
- Clear, actionable risk-on risk-off signal, updated on a monthly basis
- Ten market beating TAA portfolios (8 equity and two bond TAA model)
- Monthly COMP indicator and TAA model analysis and updates
- Analysis and commentary on economic and investment landscape
- Simple, easy to use website with all model signals and indicators broken out separately
- Weekly email updates on the economy and portfolios
- Member Forum to post and answer questions and discuss investment topics with other subscribers (NEW)
I think you’ll find the newsletter quite useful and profitable. Update Dec 31, 2017: I put together a quick video that gives a tour of the newsletter website, what if offers, and the different sections.
I’ve been doing this for a long time now. I’ve been living off my investments for 15 years and I’ve been writing the Investment for A Living blog for 10 years. Since starting I’ve been transformed from a fundamental individual stock picker to a 100% quantitative investor. Many of you have seen that transformation over the years. Quant stock models and TAA portfolios make up 100% of my investments and I now use the COMP indicator in all my portfolios. The change has made a huge impact on my wealth and my behavior. I’m much better equipped to tackle the worst enemy in investing we have = the person staring back at you in the mirror. I think these changes can be beneficial to most investors.
I hope you’ll join us at the Economic Pulse Newsletter! For those interested in seeing the content and format of the newsletter here is a link to a sample of the Economic Pulse Newsletter December 2020 .
For an even better deal, get both Econ Pulse and the Quant Pulse subscriptions for a 20% discount from the individual subscriptions.