Welcome the Economic Pulse about page. Here we’ll take you through what we’re trying to do, why it matters, and the impact it can have on your investment results.
In Econ Pulse, we are primarily focused on doing the following.
- Providing market beating TAA (tactical asset allocation) models: 4 fundamental models with multiple options.
- 100% quantitative based models that help filter out the signal from the noise and help investors stick with the models over the long term.
- Guidance to help subscribers implement the models in a way to meets their risk profile.
- Support on a weekly and monthly basis to help 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 true for all investors; both those in wealth building mode and especially for investors in the withdrawal phase of their lives (retirees) who do not have the time to recover from a large drawdown. 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.
What Are Our Models?
In Econ Pulse we offer four fundamental TAA models:
- MODCOMP – this is our flagship model and can be used on its own by most investors. It is one of the best performing TAA models in the industry and is also one of the easiest to use. It offers the best bang for the buck.
- FAST – this model is a fast reacting model that trades often in order to capture quick turns in the market
- GPM – This model offers diversification and more risk management than the other models. It is focused on risk-adjusted returns over absolute returns.
- TAA Bond – this model focuses on bonds in order to add even more diversification to a portfolio. It captures momentum in the bond market to provide better returns at lower risk than traditional bond indices.
All our portfolio options are based on these 4 basic models.
How Do We Provide Higher Returns With Lower Risk?
MODCOMP is our flagship model. It is unique in that it focuses on identifying the primary economic trend and using that information in making asset allocation decisions.
The basis of all this is our proprietary SPY-COMP indicator that we first researched and developed over 10 years ago. It uses 7 key economic indicators to produce a monthly risk-on, risk-off signal that indicates when to be in equities (risk-on) and when to withdraw to safe assets (risk-off). This indicator has identified all the US recessions since 1973 within one month of their start, a significant advantage to investors, as avoiding recessionary periods also means avoiding the worst market drawdowns in history.
SPY-MODCOMP(V2) is an updated version of this indicator that adds an extra level of protection against future unknowns. It is the indicator we use in all our current MODCOMP portfolios.
The chart below shows SPY-MODCOMP(V2) in action by plotting SP500 drawdowns vs a simple risk-on (invest in SPY), risk-off (invest in 10yr government bonds) investment model based on the SPY-MODCOMP signals going back to 1970.
With SPY-MODCOMP drawdowns are reduced from ~30% to about 15%. Those lower drawdowns also come with higher returns and improved portfolio statistics across the board.
Based on this model we have developed a few select portfolios to invest in various different risk assets. Below are the current options, details of which are available to all Econ Pulse subscribers.
The MODCOMP portfolios are among the best and simplest of models offering high performance and lower drawdowns. But like any model, they don’t outperform all the time. They can be used on their own by many investors, but by combining them with other well-performing models with low correlation to MODCOMP some better portfolio outcomes can be achieved. Below is a description of the other models we offer.
FAST: the FAST model is a very fast reacting model that attempts to react to market changes very quickly. It measures market momentum by overweighing recent returns in order to make risk-on risk-off decisions. It then invests in the top performing risk or risk-off asset. It chooses among global equites in risk-on mode and bonds in risk-off mode.
GPM: generalized protective momentum is a very risk averse model and also offers diversification into alternative assets like gold and commodities. It uses momentum and correlations among a broad set of assets to make asset allocation decisions. It then adds a further hedge to the strategy based on market breadth.
TAA-Bond: this model uses momentum among different bond types to enhance returns and lower risk. This model has the lowest correlation to all the other models and thus it works great as a portfolio diversifier.
Let’s add these models to the comparison above.
Combining Models Can Yield Even Better Results
The real power comes when you combine these models. Due to the low correlations among the models combining them can yield better results and increased diversification. In the table below I show two potential combinations of these models. One for an investor with a higher risk tolerance and a more conservative investor.
Econ Pulse Has Been 15 Years In the Making
I’ve been doing this for a long time now. I’ve been living off my investments for 15 years and have been writing the Investment for A Living blog for over 10 years. I launched this newsletter in 2016 and since then real out of sample performance has been consistent with historical results. Since starting my blog, I’ve been transformed from a fundamental individual stock picker to a 100% quantitative investor. 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.
What’s Included In The Subscription
Econ Pulse includes the following features:
10 market beating TAA portfolios (8 equity and two bond TAA model)
Monthly COMP indicator and TAA model analysis and updates
Monthly in-depth newsletter including analysis and commentary on the economic and investment landscape
Weekly email updates on the economy and portfolio
Clear, actionable risk-on risk-off signal, updated on a monthly basis
Simple, easy to use website with all model signals and indicators broken out separately
Monthly subscriber calls, and a member forum to post and answer questions and discuss investment topics with other subscriber
Econ Pulse
- 10 TAA strategies
- Weekly and Monthly Newsletter
- Monthly subscriber call
- Member forums
$35/month
I hope you’ll join us at the Economic Pulse Newsletter!
If you have any questions or would like a FREE sample feel free to contact me HERE
Already an Quant Pulse Newsletter subscriber? If so, you get a DISCOUNT for the Econ Pulse service and pay only $20/mo for this addition (get your Discount Coupon Code from the Quant Pulse Member Home Page)
Not yet a member, but interested in BOTH Econ Pulse and Quant Pulse (learn more here)? Subscribe to the combo for a 20% discount compared to the individual subscriptions.
Combo Price: $60/mo.
