In the Economic Pulse Newsletter we’re primarily focused on doing the following.
- Providing a fundamental risk-on risk-off indicator based on the economic 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.
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 15%. 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 two primary models we use in the newsletter.
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.
What you get with your Economic Pulse Newsletter subscription
- Monthly in-depth newsletter
- Clear actionable signals on a monthly basis
- COMP indicator and TAA model 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
I think you’ll find the newsletter quite useful and profitable. I’ve been doing this for a long time now. I’ve been living off my investments for 12 years and I’ve been writing the Investment for A Living blog for close to 8 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.
What’s also exciting is that I have a partner in this new venture. Tony Alvarez, is the co-author of the Economic Pulse Newsletter. Tony has an engineering background like me, and also has a broad background in statistics, business processes, and decision making that are a huge benefit to what we’re trying to do in the letter. You can read more about Tony’s background here.
I hope you’ll join us at the Economic Pulse Newsletter!